GENERAL INTEREST Quick Takes
UGI to acquire Columbia Midstream for $1.25 billion
UGI Energy Services LLC, a subsidiary of UGI Corp., has agreed to acquire the equity interests of Columbia Midstream Group LLC (CMG) from a subsidiary of TC Energy Corp., formerly TransCanada Corp., for $1.275 billion (OGJ Online, May 6, 2019).
CMG owns four natural gas gathering systems and an interest in a company with gathering, processing, and liquids assets. These assets—with capacity of 2.675 million MMbtu/day and 240 miles of pipeline—connect production to markets throughout western Pennsylvania, eastern Ohio, and northern West Virginia. The sale does not include any interest in Columbia Energy Ventures Co. (CEVCO), which is TC Energy’s minerals business in the Appalachian basin.
The deal expands UGI’s midstream portfolio and provides an opportunity to invest an additional $300-500 million over the next 5 years at attractive returns, the company said in a press statement.
“This transaction expands our midstream capabilities in the prolific gas producing region of the Southwest Appalachian basin and provides an initial investment into both wet gas gathering and processing,” said John L. Walsh, UGI president and chief executive officer.
The transaction is expected to close in this year’s third quarter subject to regulatory and other closing conditions.
Energean to buy Edison’s E&P business
Energean Oil & Gas, London, has agreed to buy 100% of Edison Exploration & Production from the Italian energy conglomerate Edison SPA at a price based on an enterprise value of $750 million.
Additional consideration of $100 million is contingent on commissioning of the Cassiopea natural gas project in Italy (OGJ Online, July 24, 2008). The total value might approach $1 billion with royalties to which Edison will be entitled from developments in Egypt.
Energean will assume all of Edison’s future decommissioning obligations.
Edison has interests in 90 licenses in nine countries in the Mediterranean and Northern Europe with net production of 49,000 boe/d of oil and natural gas.
Rice to head EQT after board shake-up
Toby Z. Rice was expected to be named president and chief executive officer of EQT Corp., Pittsburgh, after results of a proxy contest reshuffled the board of directors.
Former officials of Rice Energy Inc., which EQT acquired for $8.2 billion in 2017, launched the proxy war calling for the shake-up (OGJ Online, Nov. 14, 2017).
Preliminary results of voting at the EQT annual meeting on July 10 indicated more than 80% support for seven directors nominated by the Rice faction and five directors supported by EQT and Rice.
After certification, the reconstituted board was expected to appoint Rice to succeed Robert McNally as president and CEO.
Hindustan Oil acquiring Hardy Exploration
Hindustan Oil Exploration Co. Ltd. has conditionally agreed to acquire all share capital of Hardy Exploration & Production (India) Inc. for $1.5 million cash. Both private-sector companies are based in Chennai, India.
Hardy has an 18% interest in shallow-water PY-3 oil field in the Cauvery basin off eastern India, a 10% interest in the GS-01 exploration license operated by Reliance Industries Ltd. in the offshore Cauvery basin, and a 75% operated interest in the CY-OS/2 exploration license in the Saurashtra basin off western India.
Ireland blocks bid to halt offshore work
The Irish government has stymied legislation calling for a halt to offshore oil and gas exploration and a limit to production licensing.
Energy Minister Richard Bruton said the Climate Emergency Bill required a “money message,” a step that halts progress of a bill determined to have cost ramifications for the government.
Brid Smith, a member of the lower house of the Irish Parliament who proposed the bill, said, “If we can’t stop new exploration for fossil fuels while knowing that 80% of existing reserves need to stay in the ground then we will never limit climate change to 1.5°[C.],” according to the Irish Examiner.
She referred to the limit to Industrial Age planetary warming sought by the 2015 Paris Climate Accord.
Mandy Johnston, CEO of the Irish Offshore Operators’ Association, welcomed the decision as “not only good for energy security but also good for the environment and jobs.”
Noting that gas from Kinsale and Corrib fields offshore Ireland supplies 60% of Irish business and residential gas needs, Johnston said, “Russian gas imported to Ireland creates 34-38% more greenhouse gas emissions than using Irish gas, while liquefied natural gas imported from Qatar creates 22-30% more.”
Total, IFPEN strengthen CCUS research
Total SA and IFP Energies Nouvelles (IFPEN) will collaborate on development of technologies for carbon capture, utilization, and storage (CCUS).
Under a new 5-year, €40-million strategic research and development partnership, they’ll endow a chair at the IFP School on CCUS and strengthen cooperative research on the subject.
“The research will focus on fields related to new materials, process scale-up, underground carbon storage in deep saline aquifers, technical and economic feasibility studies, and the quantification of environmental benefits for the entire CCUS chain,” Total said in a press release.
Equinor finds oil near Oseberg satellite
Equinor and partners plan to place on production a near-field oil discovery made as part of the Oseberg Vestflanken 2 project in the Norwegian North Sea (OGJ Online, Oct. 15, 2018).
The 30/6-H-9-T4 well proved a 112-m oil column in an untested zone of the Lower Jurassic Statfjord formation on the southern Alpha structure. Equinor described reservoir characteristics as “excellent with high oil saturation.” It estimates recoverable resources at 22 million bbl oil.
The well will produce to the remotely operated H platform, center of the Vestflanken 2 project, which came onstream last October. The Askepott jack up rig owned by the Oseberg license drilled the well.
Eni-Vitol combine awarded block off Ghana
A combine of Eni and Vitol has been awarded rights to Block WB03 in the Tano basin offshore Ghana. The block, in medium deep water, was offered in Ghana’s first international competitive bid round covering areas in 100-4,400 m of water.
Eni said it will be operator of Block WB03. It holds a 70% interest in the bidding combine with Vitol. The block joint venture will include Ghana National Petroleum Corp. and a local company to be designated when the contract is signed.
The block is 50 km southeast of the John Agyekum Kufuor floating production, storage, and offloading vessel on Sankofa oil field in Eni’s Offshore Cape Three Points integrated deepwater project (OGJ Online, May 9, 2019).
Ghana hasn’t released other results of the bid round except to say three companies submitted bids for two of three blocks available for competitive bidding. Two other blocks in the round were designated for direct negotiation.
Eni negotiating for area off Kazakhstan
Eni SPA, the Ministry of Energy of Kazakhstan, and state-owned KazMunayGas (KMG) have signed a protocol of direct negotiations for hydrocarbon exploration and production rights in the Abay area of the northern Caspian Sea.
The block is about 50 km from the coast in water less than 10 m deep.
Subject to signing of an exploration and production contract, Eni and KMG will hold 50% interests each in the Abay block, with KMG carried through exploration.
Isatay Operating Co., equally owned by Eni and KMG, will operate the Abay and Isatay blocks. The companies agreed to cooperate on the Isatay block in 2017 (OGJ Online, June 23, 2017).
State companies dominate Indian bidding
State-owned companies dominated the second and third rounds of bidding for oil and gas revenue-sharing contracts under India’s open-acreage licensing policy (OALP).
The only high bid submitted by nonstate companies came from a combine of BP and Reliance Industries Ltd. for a Round 2 block in the Krishna-Godavari basin (OGJ Online, Jan. 7, 2019).
Oil India Ltd. dominated the second round with six high bids. It was followed by Vedanta Ltd. with five high bids, and Oil & Natural Gas Corp. and Indian Oil Corp. Ltd. with one each.
ONGC led Round 3 with seven high bids, followed by OIL with six and Vedanta with five (OGJ Online, Feb. 11, 2019).
Siccar Point abandons Lyon Prospect well
Siccar Point Energy, Aberdeen, has abandoned an exploratory well on its Lyon Prospect in the West of Shetlands area offshore the UK (OGJ Online, Mar. 19, 2019).
It said 44 m of siltstone and claystone in the target Eocene Balder formation had gas shows, but the 208/02-1 well encountered no reservoir-quality sandstone.
The Diamond Ocean GreatWhite semisubmersible rig drilled the well to 4,005 m below sea level in 1,452 m of water.
Siccar Point, the operator, holds a 33.34% interest. Ineos holds 66.66%.
Drilling & Production Quick Takes
Haliba oil production starts in Abu Dhabi
Oil production has begun from Haliba field on Abu Dhabi’s southeast border (OGJ Online, Feb. 12, 2018).
Al Dhafra Petroleum, a joint venture of Abu Dhabi National Oil Co. and a combine of Korea National Oil Corp. and GS Energy, expects first-phase production to reach 40,000 b/d by yearend.
ADNOC said field appraisal and exploration have raised estimated original oil in place at Haliba to 1.1 billion bbl of oil from 180 million bbl and discovered “potential resources” in three fields designated Al Humrah, Bu Tasah, and Bu Nikhelah.
It said Al Dhafra has identified 70 prospects in the area.
Contracts let for Marjan, Berri expansions
Saudi Aramco has awarded 34 contracts worth a total of $18 billion for engineering, procurement, and construction in its expansions of offshore Marjan and Berri oil fields (OGJ Online, Jan. 18, 2019).
It chose 16 engineering, supply, and construction companies for the work. Half the contracts went to Saudi firms.
Production capacity of Marjan field is to be increased by 300,000 b/d of Arabian Medium crude from 500,000 b/d.
The expansion includes a new offshore gas-oil separation plant and 24 oil, gas, and water-injection platforms.
It also includes additions to Tanajib onshore oil facilities and construction of a gas plant to include gas treatment and processing, NGL recovery and fractionation, and gas compression.
Gas processing capacity will increase by 2.5 bscfd, and recovery of ethane and NGLs will increase by 360,000 b/d.
The Marjan project also includes a cogeneration facility, a water-desalination plant, and new transfer pipelines.
Berri expansion will double production capacity to 500,000 b/d of Arabian Light crude.
Aramco plans a new gas-oil separation plant on Abu Ali Island able to process 500,000 b/d of Berri crude and facilities at the Khursaniyah gas plant able to process 40,000 b/d of associated condensate. Also to be added are a water-injection facility, two drilling islands, 11 oil and water offshore platforms, and nine onshore oil production and water-supply drillsites.
Ensco Rowan changing name to Valaris
Ensco Rowan PLC plans to change its name to Valaris PLC, effective July 31, after consulting with employees and customers worldwide. Valaris was inspired by the Latin root meaning strength, courage, and signifying something of value.
Ensco Rowan Pres. and Chief Executive Officer Tom Burke said, “We are excited to create a new identity as Valaris that will help us usher in a new era for our company and the industry. This new identity will help to accelerate cultural alignment as we move forward as a larger, more diverse organization.”
The company provides offshore drilling services, offering a rig fleet of ultradeepwater drillships, semisubmersibles, and shallow-water jack ups.
Scarborough project proposal open for comment
Australia’s National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) has released Woodside Energy Ltd.’s proposed Scarborough field development plan for public comment.
Scarborough gas field lies 375 km off Western Australia’s Burrup Peninsula and forms part of the Greater Scarborough area comprising Scarborough, Scarborough North, Thebe, and Jupiter fields.
Woodside is operator of the development with a 75% interest. The proposal is for development of the remote gas via new offshore facilities with high flow-rate subsea wells and subsea infield infrastructure located in federal waters.
The initial plan involves Scarborough and Scarborough North fields where the subsea wells will be tied back to a semisubmersible floating production unit moored in 900 m of water close to Scarborough field. A 430-km, 32-in. subsea gas pipeline will be constructed from the FPU to Woodside’s onshore Pluto LNG facility where gas from Scarborough and Scarborough North will be processed via a new Train 2 expansion.
The proposed development is an integral part of Woodside’s Burrup Peninsula Hub vision for a regional gas center designed to secure economic growth and local employment opportunities for Western Australia.
In addition, Thebes and Jupiter fields are being considered for future development and tieback to the Scarborough infrastructure. The proposed trunk line also will pass close to other undeveloped fields and Woodside is in talks with the various operators of these fields to sound out the opportunities for future tie-ins.
Woodside is planning for a final investment decision on the Scarborough project in 2020 and an on-stream date of 2023. The first drilling phase will be in 2020 followed by installation of the trunk line in 2022.
The FPU will be installed in 2023 while Phase 2 drilling (including Thebes and Jupiter) is planned for 2025. The project is expected to have a 30-year life. The project area falls within retention leases WA-1-R, WA-62-R, WA-61-R and WA-63-R.
PROCESSING Quick Takes
NARL proposes coker for Come-by-Chance refinery
NARL Refining LP has filed for registration and review of the environmental assessment process for construction of a delayed coker at its 130,000-b/d refinery at Come-by-Chance, Newf.
The July 5 filing comes as the latest step in a series of advancements NARL has made in pursuing construction and operation of a coker to ensure the refinery remains competitive and is able to assist in filling the upcoming need for reduced-sulfur heavy fuel oil, NARL said.
The proposed coker will also allow NARL to increase its processing capacity as well as meet the upcoming global cap of 0.5% sulfur on fuel oil by all ocean-going vessels that the International Maritime Organization is imposing effective Jan. 1, 2020, the operator said.
“This filing is the next step of the process for us. Having successfully completed the feasibility study and the basis of design phase, we’re getting closer to making a final decision about the project,” said Thomas Jenke, NARL’s chief executive officer.
Construction wraps on IL alkylation units
Construction is now completed on two revamps of brownfield units based on composite ionic liquid (IL) alkylation technology at China Petroleum & Chemical Corp. (Sinopec) subsidiaries Sinopec Anqing Co.’s 161,000-b/d refinery in Anqing, Anhui Province, and Wuhan Petrochemical Co. Ltd.’s 161,000-b/d refinery in Wuhan City, Hubei Province (OGJ, Jan. 7, 2019, p. 61).
Each unit is designed to produce 300,000 tonnes/year of high-quality alkylate with research octane numbers ranging from 96-98, said Well Resources Inc., licensor for Beijing-based China University of Petroleum’s (CUP) Ionikylation process.
Commissioning of the Anqing refinery’s Ionikylation unit is scheduled for mid-July, while the Wuhan unit will be commissioned by the end of third-quarter 2019.
The completed unit revamps follow the overhaul and commissioning of a brownfield alkylation unit with Ionikylation technology at Sinopec Jiujiang Co.’s 161,000-b/d refinery in Jiujiang City, Jiangxi Province, China, earlier this year (OGJ Online, Apr. 2, 2019).
Refiners in Asia-Pacific are increasingly turning to Ionikylation alkylation technology—which uses a proprietary composite IL catalyst that eliminates reliance on more dangerous, corrosive, and hazardous chemicals such as hydrogen fluoride and sulfuric acid—as they seek to meet increasingly more stringent clean-fuel standards.
Ineos taps Texas for USGC EO-EOD plant
Ineos AG, Rolle, Switzerland, will site subsidiary Ineos Oxide’s previously announced project for a proposed US Gulf Coast ethylene oxide (EO) and ethylene oxide derivatives (EOD) plant in Texas (OGJ Online, Mar. 25, 2019).
The new 1.2 billion-lb (520,000-tonne/year) EO unit and associated downstream EOD plant will be built at Ineos’s Chocolate Bayou petrochemicals manufacturing site in Alvin, Tex., south of Houston on the Gulf of Mexico coast, Ineos said.
Selection of Chocolate Bayou to host the new EO-EOD plant will reinforce on-site integration to benefit two existing olefins crackers, two polypropylene units, and two cogeneration installations at the site operated by Ineos Olefins & Polymers USA, according to the operator.
Ineos said it also expects availability of additional land close to the new unit will enable interested third parties to colocate and consume EO by pipeline.
Part of Ineos’s plan to address a fast-growing EO merchant market as well as the operator’s own requirements, the new plant is slated to be operational sometime in 2023.
Alongside the site’s proposed EO-EOD plant, Ineos subsidiary Ineos Oligomers also is currently building a new linear alpha olefin (LAO) unit and associated downstream polyalphaolefin (PAO) unit at Chocolate Bayou, both of which are scheduled for startup by yearend 2019 (OGJ Online, Apr. 6, 2018).
TRANSPORTATION Quick Takes
WoodMac: Permian’s growth could spur more spending
The Permian basin will need extra crude oil takeaway capacity of up to 500,000 b/d by the end of the 2020s to accommodate growing production, Wood Mackenzie researchers forecast.
A moderate overbuild of pipeline capacity is expected in the early 2020s when current pipeline investments are completed. Midstream operators appear set to add about 4 million b/d of new US Gulf Coast-bound capacity by Dec. 31, 2022.
Investments include seven proposals for new Permian pipelines, with four ultimately expected to reach a positive final investment decision (FID). More than 2 million b/d of this new capacity will flow into Corpus Christi, Tex., for export.
The rapid addition of pipeline capacity will result in 2-3 years of overbuild before normal long-haul capacity supply and demand conditions begin to re-emerge, WoodMac said.
John Coleman, WoodMac principal analyst, North America crude markets, said, “As production growth expands well into the 2030s, US Gulf Coast-bound pipeline capacity will tighten. By the mid-2030s, Permian-to-Gulf Coast pipeline utilization will surpass 92% in the absence of further investment, necessitating pipeline expansions or greenfield capacity.”
“We are in the midst of one of the largest crude infrastructure investment booms in US history, with much of the investment focused on the Permian basin,” Coleman said. “As massive as this current investment wave is, we don’t think the story is yet finished. Additional capacity adds will be needed again by the end of the next decade.”
Plains Midstream plans Rangeland pipeline expansion
Plains Midstream Canada (PMC) plans to expand its Rangeland crude oil pipeline system for additional delivery capacity both north to Edmonton, Alta., and south to the border at Carway, Alta.
Expansion will provide incremental takeaway capacity for the East Duvernay and other Rangeland-area production, as well as south egress access out of the Edmonton market hub. Combined, the expansion will increase Rangeland’s current light crude oil capacity to 200,000 b/d. Service between Edmonton and Sundre will be expanded to 100,00 b/d from 50,000 b/d and will be capable of bidirectional service. Sundre, south to the border, will be expanded up to 100,000 b/d from 20,000 b/d.
Expected to be staged into service during this year’s second half with full capacity realized in 2021, the expansion is subject to receiving sufficient commitments from shippers and receipt of necessary permits and regulatory approvals.
Cheniere ships first Train 2 cargo from CCL
Cheniere Energy, Houston, completed the first commissioning cargo of LNG from Train 2 at the Corpus Christi Liquefaction (CCL) export terminal in Corpus Christi, Tex., as part of the commissioning and startup process, said construction partner Bechtel Oil, Gas & Chemicals Inc.
Through its partnership with Cheniere, Bechtel has now delivered seven LNG trains at two sites on the US Gulf Coast since 2015. The companies are working completion of Train 2 later this year and Train 3 in 2021, said David Craft, Cheniere’s senior vice-president of engineering and construction.
Each train in the three-train CCL project is expected to have a nominal production capacity, which is prior to adjusting for planned maintenance, production reliability, and potential overdesign of 4.5 million tonnes/year of LNG.
