GENERAL INTEREST Quick Takes

Projects selected for unconventional recovery R&D

The US Department of Energy’s Fossil Energy Office has selected 12 projects to receive $44.5 million in federal funding for cost-shared research and development in advanced technologies for recovering unconventional oil and gas. The 12 selected projects will help enhance the characterization and improve the recovery efficiency of emerging unconventional reservoirs.

In 2018, oil and gas accounted for 57% of all US energy production, with crude seeing an increase of 17% and gas an increase of 12% from 2017 production, FEO noted.

Chisholm, Gastar Exploration to merge

Chisholm Oil & Gas LLC, Tulsa, and Gastar Exploration LLC, Houston, have agreed to merge. The combine—Chisholm Oil & Gas—will be based in Tulsa and have net production of 20,000 boe/d and a combined acreage position of 165,000 net acres, primarily in Kingfisher County, Okla.

Chisholm is currently running three rigs and has a dedicated frac crew. Gastar’s assets will be synergistic to upstream operations as well as to Chisholm’s ownership stake in Great Salt Plains Midstream Holdings LLC and its wholly owned salt water disposal subsidiary, Cottonmouth SWD LLC.

Chisholm, formed in 2017 with backing from funds managed by Apollo Global Management LLC affiliates, is owned through private equity funds affiliated with Ares Management Corp. The company is focused on acquiring and developing oil and gas assets throughout the STACK play in Blaine, Canadian, Kingfisher, Logan, and Major Counties, Okla.

Gastar’s Midcontinent assets in the STACK Play in Oklahoma, which includes the Hunton Limestone, Meramec Shale-Mississippi Lime, Woodford Shale, and Osage and Oswego formations. Gastar Exploration Inc. emerged from Chapter 11 as privately held Gastar Exploration LLC in November 2018 (OGJ Online, Jan. 23, 2019). The transaction is expected to close in this year’s third quarter.

LaFleur opts not to seek another term as FERC member

Cheryl A. LaFleur announced on June 20 that she will not seek another term as a US Federal Energy Regulatory Commission member, which effectively will reduce the commission to the three-member minimum required for it to continue operating.

“After 9 amazing years, I will be leaving FERC at the end of August. The July open meeting will be my last and I have a lot of people to thank,” she said in a posting on Twitter.

Her upcoming departure put pressure on the White House to nominate her successor and move FERC closer to a full complement of commissioners. “During her 9 years of service, Commissioner LaFleur has been a source of wisdom and stability at FERC,” Chairman Neil Chatterjee said.

While at FERC, LaFleur was acting-chairman twice—from November 2013 to July 2014 and from January to August 2017—as well as chairman from July 2014 until April 2015.

US Sen. Joe Manchin (D-W.Va.), the Energy and Natural Resources Committee’s ranking minority member, said, “FERC was designed as a five-member commission and I urge the administration to move quickly to nominate individuals to fill the two open seats simultaneously in a bipartisan manner.”

Meritage Midstream names COO, CFO

T. Jeffrey Layne and Matthew DeNezza have joined Meritage Midstream as chief operating officer and chief financial officer, respectively. Prior to joining Meritage, Layne was vice-president of engineering and operations for Kingfisher Midstream. He has more than 25 years of oil and gas experience.

Exploration & Development Quick Takes

Lundin strikes oil on eastern Edward Grieg

Lundin Petroleum AB said its subsidiary, Lundin Norway AS, made two oil discoveries in exploration wells 16/1-31 S (Jorvik) and 16/1-31 A (Tellus East) on the eastern edge of Edvard Grieg field on Production License (PL) 338 on Utsira High.

Combined oil and natural gas gross resources were estimated in a range of 4-37 MMboe. Reserves from both discoveries can be developed with wells from the Edvard Grieg platform.

Jorvik encountered oil in 30 m of conglomerate reservoir of Triassic age with a thin sandstone above.

The well flowed on test at around 130 b/d in the conglomerate interval. Pressure measurements show the area is in communication with Edvard Grieg field. This combination of conglomerate and sandstone reservoir types also exist on the southern and eastern parts of Edvard Grieg.

The Tellus East discovery involves a 60-m oil column in a porous, weathered basement reservoir.

The Tellus area, on the northern edge of Edvard Grieg field, already produces from two horizontal production wells. Lundin Petroleum executives said the Tellus East discovery provides them with more confidence in the basement potential from this part of Edvard Grieg field.

Crews drilled the dual branch Jorvik-Tellus East well 4 km northeast of the Edvard Grieg platform using the Leiv Eiriksson semisubmersible drilling rig. Lundin Norway operates PL338 with 65% working interest. Partners are OMV with 20% and Wintershall DEA with 15%.

Plans call for the Leiv Eiriksson rig to stay in the Utsira High area to drill numerous shallow gas pilot wells in the Solveig development project.

The rig will move to drill the Goddo exploration well 16/5-8S in PL815. Goddo will test the extension of the Rolvsnes weathered basement oil discovery into the adjacent license, where the combined area is estimated to contain gross potential resources of more than 250 MMboe.

Rolvsnes-Goddo, south of Edvard Grieg field, is targeting the same porous, weathered basement reservoir currently being produced from Edwad Grieg’s Tellus area. Lundin Norway operates PL815 with 60% working interest. Partners are Concedo and Petoro with 20% each.

Caspian Sunrise updates Kazakhstan operations

Caspian Sunrise PLC said an interval in its BNG asset in Western Kazakhstan appears to be larger than previously believed. The company issued an operations update saying a core sample from its Deep Well A8 on the Airshagyl structure showed traces of oil-bearing carbonate.

The company took an 18-m sample core at 4,440 m. The initial evaluation showed that the core contained oil-bearing carbonate for all but 2 m out of the 18 m.

In addition, a core was collected at 4,346-4,350 m, and a core was collected at 4,370-4,379 m. Preliminary analysis from the two core samples showed them to be porous with oil and natural gas.

Caspian Sunrise plans to drill additional 40 m before running a wireline analysis over the entire 110-m interval. The well will be cased to 4,500 m.

Joint Louisiana Austin chalk work planned

Prime Rock Resources, Midland, a portfolio company of Lime Rock Partners, and New Dawn Energy LLC, Houston, have agreed to jointly develop properties contributed by both firms in the Cretaceous Austin chalk play of Louisiana.

The effort involves 120,000 net acres in Allen, Avoyelles, Beauregard, Rapides, and Vernon parishes, with most in Masters Creek oil and gas field. The companies expect development to begin in the fourth quarter.

Prime Rock and New Dawn will collaborate to acquire additional acreage.

Louisiana’s traditional Austin Chalk play is in Vernon and Rapides parishes in the western half of the state, where Masters Creek, West Masters Creek, and Sugartown oil and gas fields are the strongest producers, according to the state Mineral and Energy Board (MEB).

With horizontal drilling and modern completions, operators in recent years have extended the productive fairway eastward.

An MEB report last year cited a late-2017 completion of a horizontal well in Avoyelles Parish, EOG Eagle Ranch 14-1H, which tested 1,120 b/d of oil and 1.157 MMcfd of natural gas.

W&T Offshore makes oil find with Gladden Deep well

W&T Offshore made an oil discovery with its Gladden Deep well on Mississippi Canyon 800 block in the US Gulf of Mexico, reported partner Kosmos Energy Ltd. of Dallas.

Gladden Deep is a subsea tie back expected to be brought online through the existing Gladden pipeline to the Medusa spar in this year’s fourth quarter. Based on preliminary analysis of drilling and wireline logging results, the recoverable resource is expected to be in line with the predrill estimate of 7 million boe gross.

Gladden Deep is the first well of a four-well infrastructure-led exploration (ILX) program in the US Gulf this year. Kosmos will drill the Moneypenny prospect in the third quarter, followed by the Oldfield and Resolution prospects in the fourth quarter. These three prospects are collectively targeting 100 million boe, net to Kosmos.

Gladden Deep is the smallest prospect in Kosmos’ drilling campaign this year, said Chairman and CEO Andy Inglis, but “it is a prime example of our ILX strategy in action—targeting high-margin, high-return barrels that can be quickly brought online through existing facilities.” The development of Gladden Deep, where Kosmos holds 20% interest, has a full cycle rate of return of over 100% at $60/bbl Brent, Inglis said.

Drilling & Production Quick Takes

LLOG Exploration brings Buckskin wells on stream

LLOG Exploration Co. LLC reported it brought two Buckskin oil wells on stream in the deepwater Gulf of Mexico. Buckskin field is on Keathley Canyon Blocks 785, 828, 829, 830, 871, and 872 in 6,800 ft of water.

Once fully established, the project’s first phase is expected to reach 30,000 b/d (gross) of oil (OGJ Online, Jan. 26, 2018).

Phase 1 involves two wells in Keathley Canyon Block 829 and a 6-mile subsea tieback to the Lucius platform at Keathley Canyon Block 875. LLOG in 2018 finished drilling and completion of the initial two wells, which were drilled to 29,000 ft.

Subsea equipment was installed to complete the tieback this year. The drilling, completion, and subsea installation were completed ahead of schedule and on budget.

Additional phases will fully develop the field, which is estimated to contain nearly 5 billion bbl of oil in place.

LLOG operates the field. LLOG affiliate companies own 33.8% working interest in the Buckskin development. Additional partners are Repsol E&P USA Inc. 22.5%, Beacon Offshore Energy Buckskin LLC 18.7%, Navitas Buckskin US LLC 7.5%, and Ridgewood Energy 1 with 17.5%.

Philip LeJeune, LLOG’s president and chief executive officer, said Buckskin is the company’s first deepwater development in the Lower Tertiary trend.

LLOG plans to spud a delineation well this month at the Leon discovery with the goal of bringing it to development in the near future. Leon also is in the Lower Tertiary trend.

IPC starts drilling program off Malaysia

International Petroleum Corp., Vancouver, BC, has spudded the first well in a multiwell drilling program on Block PM307 off Peninsular Malaysia’s east coast.

It plans two infill landing pilot wells in the southeastern and northeastern areas of Bertam oil field to be followed by an exploratory well designated Keruing in the southeastern part of the field and three infill wells.

Success of the first pilot, testing upside potential in the A15 area of the field, might lead to the drilling of another infill well in the 2019 program. The second pilot will attempt to confirm commercial amounts of hydrocarbons in the A14 area and derisk development drilling.

The target of the Keruing well will be a reservoir designated I-35 about 600 m shallower than pay in Bertam field.

On production since April 2015, Bertam field is 175 km offshore in 74 m of water. It has an unstaffed wellhead platform and 12 horizontal wells producing light, high-quality oil to a spread-moored floating production, storage, and offloading vessel.

IPC holds a 75% working interest and is operator. Petronas Carigali holds 25%.

TPAO’s second ship to drill off Cyprus

Turkish Petroleum AO (TPAO) has launched its second drillship for internationally disputed work offshore Cyprus.

The Yavuz drillship on June 19 sailed for the Bay of Gazimagusa, also called Famagusta, off eastern Cyprus to drill the Karpaz-1 well. Target depth is 3,300 m.

Movement of TPAO’s first drillship, the Fatih, to drill the Finike-1 well in waters claimed by the Cypriot government off western Cyprus drew protest from the US State Department, which called the drilling “provocative.”

The Turkish government says Turkish Cypriots should share in decision-making about offshore drilling and opposes activity licensed by the government of Cyprus.

“The Greek Cypriot administration does not have a right to take decisions on its own or even have a say in any matter concerning the whole island,” Turkish Energy and Natural Resources Minister Fatih Donmez said at the Yavuz launch ceremony, according to Turkey’s Andalou Agency.

“We will continue our drilling activities, which is rooted in our own legitimate rights,” Donmez said. “Yavuz will show the nation’s determination to the whole world once again.”

Aker BP granted North Sea drilling permit

Aker BP has been granted a drilling permit by the Norwegian Petroleum Directorate for well 25/2-20 in production license 442 in the North Sea.

The well will be drilled 20 km east of Frigg field using Odfjell Drilling’s Deepsea Stavanger semisubmersible drilling rig after it completes drilling well 15/6-16 S for Aker BP in PL 777.

This is the eight exploration well to be drilling in PL 442. The area in PL 442 consists of parts of Blocks 25/2 and 25/3.

Aker BP is operator with 90.26%. Lotos Exploration & Production Norge AS holds 9.74%.

PROCESSING Quick Takes

Investigations begin into Philadelphia refinery blast

Different agencies began formal investigations on June 24 into the cause and origin of an explosion and ensuring fire that broke out early June 21 at Philadelphia Energy Solutions LLC’s (PES) combined 335,000-b/d refining complex in Philadelphia.

Following the final extinguishing of the fire on the afternoon of June 23, a gas valve fueling the fire was shut off and the tank involved in the explosion-fire was isolated, the City of Philadelphia said in a release.

Agencies including the Occupational Safety and Health Administration, Bureau of Alcohol, Tobacco, Firearms, and Explosives, the US Chemical Safety and Hazard Investigation Board, and the Philadelphia Fire Department (PFD) Fire Marshal’s Office were to begin investigating the cause and origin of the fire starting on June 24, the city said.

In the meantime, PFD’s hazmat unit and the Philadelphia Department of Public Health are continuing to monitor air quality around the refinery.

Further details regarding the incident were not disclosed.

While PES has yet to respond to inquiries from OGJ regarding the incident, the operator did confirm a series of three separate explosions occurred in an alkylation unit at the site, injuring five refinery workers and prompting a temporary shelter-in-place for residents in the surrounding area, according to the Philadelphia Inquirer.

Footage of the blast aired by local news affiliates showed portions of unidentified equipment at the refinery propelling into the air and flames engulfing surrounding units at the site, with reports of local residents feeling the explosion for miles.

PES’s Philadelphia refining complex is made up of both the Point Breeze and Girard Point refineries.

CPCC, QP plan petchem complex in Ras Laffan

Chevron Phillips Chemical Co. LLC (CPCC)—a joint venture of Chevron Corp. and Phillips 66—and Qatar Petroleum (QP) have signed an agreement to develop, build, and operate a petrochemicals complex in Ras Laffan Industrial City, Qatar, that will produce ethylene and high-density polyethylene (HDPE).

The proposed complex will include a 1.9 million-tonne/year ethane cracker as well as two HDPE derivative units with a combined capacity of 1.68 million tpy, CPCC said.

In addition to exclusive licensing of its proprietary MarTECH loop slurry process for manufacturing HDPE, CPCC will provide project management, engineering, and construction services to develop the project.

As part of the development phase, the companies also will study potential efficiencies that could be realized by harnessing existing capabilities of Qatar Chemical Co. joint ventures to provide overall operational management of the completed complex.

CPCC said planned start-up of the complex is targeted for late 2025. QP will own a 70% majority share of the joint venture, while CPCC will hold the remaining 30%.

Sasol starts up unit at Louisiana petchem complex

Sasol Ltd. has commissioned the second of seven production units scheduled to come online as part of its long-planned Lake Charles Chemicals Project (LCCP), an integrated ethane cracker and downstream derivatives complex under construction in Westlake, La., near Lake Charles (OGJ Online, June 7, 2016).

As of May 31, both portions of the complex’s combined ethylene oxide-ethylene glycol (EO-EG) are in operation, Sasol said.

Start-up of the EO-EG plant follows commissioning of the complex’s first production unit—the linear low-density polyethylene (LLDPE) unit—earlier this year.

Announcement of the newly commissioned EO-EG plant comes in the wake of Sasol’s May 22 update on LCCP to investors, in which the company confirmed a marked increase in projected total cost of the project to $12.6-12.9 billion from a previous $11.6-11.8 billion as of February.

By the end of March, construction progress stood at 89%, with overall project completion at 96% and a capital expenditure amounting to $11.4 billion, the operator said.

Currently, Sasol said it expects the timeline for LCCP’s remaining units to achieve beneficial operation to be as follows: ethane cracker, July; LDPE unit, August; Zeigler alcohols unit, November; Guerbet alcohols unit, February 2020; and ethoxylation unit, December.

Alongside its 1.5 million-tonne/year ethane cracker, LCCP will include six downstream chemical plants, including two large polymers plants capable of produced a combined 900,000 tpy of low-density and LLDPE, a 300,000-tpy EO-EG plant, a 100,000-tpy exthoxylation unit, and a 173,000-tpy Ziegler alcohols plant, which will include a 30,000-tpy Guerbet alcohols unit and 30,000-tpy alumina unit.

TRANSPORTATION Quick Takes

Indian refiners plan long LPG pipeline

Three state-owned refiners in India have agreed to form a joint venture to lay what they say will be the world’s longest LPG pipeline, spanning 2,757 km between Kandla, Gujarat, and Gorakhpur, Uttar Pradesh.

Indian Oil Corp. will hold a 50% share of the venture. Bharat Petroleum Corp. and Hindustan Petroleum Corp. will hold 25% interests each.

The pipeline, estimated to cost $1.46 billion, will have capacity of 8.25 million tonnes/year of LPG, about 25% of India’s LPG demand, according to Indian Oil.

It will receive product from three terminals and two refineries in western India and supply 3 bottling plants in Gujarat, 6 in Madhya Pradesh, and 13 in Uttar Pradesh.

With road links, the pipeline will supply 21 other bottling plants in Rajasthan, Gujarat, Madhya Pradesh, Maharashtra, and Uttar Pradesh.

WAEPA approves Pluto-NWS interconnector gas line

The Western Australian Environmental Protection Authority (WAEPA) has recommended environmental approval for the proposed natural gas pipeline interconnector between the Pluto and North West Shelf LNG plants on the Burrup Peninsula.

The recommendation comes with conditions, including the protection of the internationally significant Aboriginal rock art (petroglyphs) in the area.

The proposal is for a 3.3-km buried steel pipeline within the Dampier to Bunbury gas trunk line corridor to connect the two plants, both of which are operated by Woodside Petroleum Ltd.

WAEPA says its assessment included targeted consultation with key indigenous stakeholders for the Burrup region to avoid potential disturbance to archaeological and ethnographic sites during construction.

WAEPA has recommended the requirement of the implementation of a cultural heritage management plan to ensure the pipeline proposal does not cause long-term impacts on Aboriginal heritage values or on flora and fauna.

Partners reach FID on Whistler gas pipeline

MPLX LP, First Infrastructure Capital-backed WhiteWater Midstream, and a joint venture of Stonepeak Infrastructure Partners and West Texas Gas Inc. have reached a final investment decision on the design and construction of Whistler Pipeline, which will transport gas from the Permian basin to the Texas Gulf Coast.

The proposed project is designed to transport 2 bcfd of gas through 450 miles of 42-in. pipeline from Waha, Tex., to NextEra’s Agua Dulce market hub.

Supply will be sourced from multiple upstream connections in the Midland and Delaware basins, including direct connections to Targa plants through a 27-mile, 30-in. pipeline lateral, as well as a direct connection to the 1.4 bcfd Agua Blanca Pipeline.

Much of the capacity on the Whistler Pipeline has been subscribed and committed by long-term agreements. The line is expected to be in service in third-quarter 2021.