GENERAL INTEREST Quick Takes

Petrobras advances sale of refining, logistics assets

Petroleo Brasileiro SA (Petrobras) has initiated the nonbinding phase related to the first leg of the operator’s previously announced plan to divest its Brazilian assets in downstream and associated logistics (OGJ Online, June 12, 2019).

As part of the nonbinding phase—which includes Refinaria Abreu e Lima (RNEST) in Pernambuco, Refinaria Landulpho Alves (RLAM) in Bahia, Refinaria Presidente Getulio Vargas (REPAR) in Parana, and Refinaria Alberto Pasqualini (REFAP) in Rio Grande do Sul, as well as their corresponding integrated logistics assets—qualified potential buyers will receive a descriptive memorandum with more detailed information about the assets, as well as instructions on the divestment process, including guidelines for preparing and submitting nonbinding proposals, Petrobras said.

Teasers for the second phase of the downstream divestment plan—which will include Refinaria Gabriel Passos (REGAP), Refinaria Isaac Sabba, Unidade de Industrializacao do Xisto (SIX), and Refinaria Lubrificantes e Derivados do Nordeste (Lubnor), as well as their corresponding logistics assets—will be released later this year, Petrobras said in late June.

The proposed refinery divestments follow Petrobras’s completed sale of its Pasadena Refining System Inc.—including the 110,000-b/d refinery in Pasadena, Tex.—and PRSI Trading LLC businesses to Chevron USA Inc. in May.

Alongside repositioning the company’s portfolio to higher-yielding assets, the refineries’ divestment projects also will allow for the increase in competitiveness and transparency of the downstream business in Brazil in line with the National Petroleum, Natural Gas, and Biofuels Agency of Brazil’s position and recommendations of the country’s Administrative Council for Economic Defense (OGJ Online, May 2, 2019).

Equinor, Lundin in Johan Sverdrup swap

Equinor will increase its interest in Johan Sverdrup oil field in the Norwegian North Sea in a set of transactions that will lower its stake in Lundin Petroleum AB (OGJ Online, May 15, 2019).

Lundin will redeem 16% of its shares divested by Equinor for $1.56 billion, a value Lundin says reflects a discount to the market. Equinor’s remaining interest in Lundin will be 4.9%.

Lundin will receive as much as $962 million for the 2.6% Johan Sverdrup interest acquired by Equinor. The total includes $52 million contingent on future reclassification of field reserves.

Equinor’s interest in the field, which it operates, will rise to 42.6%. Lundin’s interest will drop to 20%.

Chisholm Oil & Gas, Gastar Exploration agree to merge

Chisholm Oil & Gas LLC, Tulsa, and Gastar Exploration LLC, Houston, have agreed to merge.

The resulting company will use Chisolm’s name and be based in Tulsa. Its net production will be 20,000 boe/d of oil and natural gas. It will hold 165,000 net acres, mainly in the STACK play of Kingfisher County, Okla.

Chisholm began operations in 2017 with backing from funds managed by affiliates of Apollo Global Management LLC and company managers. Gastar’s owners are private equity funds affiliated with Ares Management Corp.

Petrogas buying Total properties off UK

Petrogas NEO UK Ltd., a unit of MB Holding of Muscat, has agreed to acquire properties in the eastern UK North Sea from Total SA in a deal valued at $635 million.

Exploration & Development Quick Takes

Aker BP makes oil discovery in Noaka area off Norway

Aker BP reported an oil discovery with the Liatarnet exploration well in license 442 in the North of Alvheim and Krafla-Askja (Noaka) area offshore Norway. The well proved oil with a gross resource estimate of 80-200 million boe.

“The exploration success at Liatarnet is an encouraging result of a long-term strategy to unlock the exploration potential in the Noaka area and provide the basis for an area development,” said Evy Glorstad-Clark, senior vice-president.

Further data acquisition and analysis will be undertaken to determine the drainage strategy and recovery factor for the discovery. Aker BP is operator with 90.26%. Lotos Exploration & Production Norge AS holds 9.74%.

Equinor, OMV plan cooperation off Norway

Equinor and OMV have signed memorandums of understanding to cooperate in development of the Austrian company’s Wisting oil discovery in the Barents Sea off Norway and concept development of its Hades/Iris gas and condensate discovery in the Norwegian Sea.

Subject to government approval, Equinor will become development operator for Wisting field, a 2013 discovery on PL537. Interests are Equinor, 35%; OMV (Norge) AS, 25%; and Petoro and Idemitsu Petroleum Norge AS, 20% each.

OMV will remain operator of the 2018 Hades-Iris discovery on PL 644/B/C near Morvin, Kristin, Heidrun, and Aasgard fields operated by Equinor.

Under the MOU, OMV and Equinor will cooperate on a development scheme based on tie-back to existing facilities.

Solveig development off Norway approved

Lundin Norway AS expects production to begin in the first quarter of 2021 from Solveig oil field in the Norwegian North Sea.

It will be first field tied back to Lundin’s Edvard Grieg platform 15 km north. Gross peak production from the first phase of Solveig development will be 30,000 boe/d of oil and gas.

The Norwegian Petroleum Directorate has approved development with three horizontal oil production wells and two water injection wells. Lundin estimates first-phase capital cost at $810 million, $527 million net to Lundin, with a break-even price below $30/boe (OGJ Online, Mar. 27, 2019).

Lundin, the operator, has a 65% working interest. Other interests are OMV, 20%, and Wintershall DEA, 15%.

Israeli round draws bids for 12 blocks

Five companies submitted proposals to explore for oil and gas on 12 blocks among 19 offered in Israel’s second offshore licensing round (OGJ Online, Nov. 5, 2018). The offered blocks are as large as 400 sq km, grouped in five zones as large as 1,600 sq km.

According to the Jerusalem Post, bids came from a group comprising SOCO International, Cairn Energy, and Ratio Oil Exploration and a combine of Energean Oil & Gas and Israel Opportunity. The main proposal criteria for the royalty-and-tax leases were work programs and signature bonuses.

Ecopetrol reports oil discovery at Santander

Ecopetrol reported that the Boranda-2 ST well discovered the presence of crude in the Middle Magdalena basin, Rionegro, Santander. The well was drilled from the same platform as the Boranda-1 discovery well (finding reported in 2017 on the Playon block, now known as Boranda), some 1,200 m southeast.

Boranda-2 ST reached final depth of 13,932 ft, where the discovery of medium crude (23º API) was confirmed in the Eoceno basal sands. Initial tests produced a total of 2,397 bbl of oil accumulated and average production of 960 b/b, with a water cut of less than 2%.

The production unit at Boranda-2 ST is considered independent from the one found in the Boranda-1 production well and is 1,000 ft deeper. Ecopetrol owns a 50% stake in the block, with the other 50% owned by Parex, who is the operator. Nearby are the Payoa and Provincia crude oil receiving stations and the Barrancabermeja refinery.

Urengoyskoye well flows from lower Achimov

A horizontal well hydraulically fractured in Urengoyskoye gas field in the northern Tyumen region of Russia confirms potential for development of the Cretaceous lower Achimov formation, Novatek reports.

Arcticgas, a joint venture of Novatek and Gazprom-Neft, completed an eight-stage frac program in the U2802 well, drilled to a total length of 5,624 m with a horizontal section of 1,500 m. Proppant volume was a record high 2,187 tons.

Arcticgas applied what Novatek described as “a unique wireless inflow monitoring technology using marketed proppant.”

It installed permanent downhole pressure and temperature gauges to provide real-time production data.

The well flowed more than 1 million cu m/day of natural gas and 500 tonnes/day of condensate.

Other Achimov zones produce gas and condensate in Urengoyskoye field. The geologically complex formation occurs below 4,000 m and has reservoir pressure exceeding 600 atm.

Drilling & Production Quick Takes

Chevron lets subsea contract for Jansz-Io field

Chevron Australia has let a contract to MAN Energy Solutions to support the front-end engineering and design study of a subsea compression solution for Chevron-operated Jansz-Io field off Western Australia. Jansz-Io will be the first gas field outside Norway where the subsea compression technology comes to use.

The award to MAN Energy Solutions is part of an alliance with Aker Solutions, which was let a master contract for the subsea compression system in March (OGJ Online, Mar. 14, 2019). MAN Energy Solutions’ scope of work within the FEED covers the technology of the subsea compressors, which will be used to maintain output as reservoir pressure drops over time. Subsea compression solutions boost gas recovery more cost-effectively and with a smaller environmental footprint than conventional compressor systems typically installed on platforms above sea level, the company said.

Jansz-Io, which lies 200 km off northwestern Western Australia in 1,350 m of water, is part of the Gorgon gas project on Barrow Island that includes an LNG facility designed to produce 15.6 million-tonnes/year of LNG. The subsea infrastructure also will be used to transport the gas from Jansz-Io field to Gorgon’s onshore facilities with its three LNG processing units. The project also includes a domestic gas plant.

MAN Energy Slutions’ subsea compression solution has been utilized on Equinor’s Asgard gas field in Norway where the subsea compressors reached 50,000 hr of operation with practically no stops or interruptions in December 2018.

Frac triples output of old Argentine well

President Energy PLC, Leeds, UK, is considering analogous work in Rio Negro Province, Argentina, after hydraulic fracturing of a tight formation tripled production from an oil well drilled in 2012.

Production from the PFO-16 well in Puesto Flores field jumped to 175 b/d of oil from 50 b/d after fracturing of the Jurassic Precuyo formation.

President said the operation, which included more than 100,000 lb of proppant, might have been the first hydraulic fracturing of the Precuyo in Puesto Flores field.

The PFO-16 was producing solely from the formation before the frac. Flowback and testing are in progress.

The company will monitor the well for a month.

“With these preliminary results, President has now commenced planning for other frac candidates in existing wells across the company’s Rio Negro assets where the Precuyo is either at virgin or at a less depleted pressure than was encountered in PFO-16,” President said. “In such instances, all other things being equal, the production rates post-frac of such candidates would reasonably be expected to be significantly higher than in a depleted reservoir such as at PFO-16.”

President operates Puesto Flores field with a 90% working interest in partnership with the provincial company EDHIPSA.

Production from the field, initially developed by Chevron Corp., peaked in 2011 at 3,856 b/d of oil.

Since taking over the field in September 2017, President has been working over wells and integrating the water-injection system. Also in Rio Negro Province, President holds interests in the Estancia Vieja, Puesto Prado, and Las Bases concessions.

Cuadrilla to resume English gas-shale work

Cuadrilla Resources Ltd. will resume hydraulic fracturing and flow testing at its Lancashire site in Preston New Road near Blackpool, England, and seek relief from low seismicity thresholds.

The company last December suspended operations after a 1.5 magnitude tremor, strong enough to require it to halt work under UK “traffic light” regulations but well below the level that might cause superficial surface damage.

The company is hydraulically fracturing and flow testing two horizontal wells drilled into the Carboniferous Bowland shale (OGJ Online, Dec. 12, 2018).

In a press release, Cuadrilla said the work, expected to resume in the third quarter, will provide the government more data “to justify an expert technical review of the current exceedingly low limit on induced seismicity, allow for this to be brought into line with other UK industries such as quarrying, construction, and geothermal.”

From experience with the first well, PNR-1z, Cuadrilla has developed plans to use a more-viscous frac fluid in the PNR2 well, which it expects “will improve operational performance under the uniquely challenging microseismic regulations.”

Qatar Petroleum lets contract for the North field project

Qatar Petroleum has let a front-end engineering design contract for the North field expansion project’s offshore wellhead platforms, pipelines, and cables to McDermott International Inc.

The scope of the work includes the design of four offshore trunk lines with intrafield pipelines, eight wellhead platforms, and power and fiber optic subsea cable rings. The contract, valued by McDermott between $1-50 million, will be executed from McDermott’s Doha offices, with drafting to be executed in Chennai.

PROCESSING Quick Takes

OMV to add unit at Burghausen refinery

OMV AG, Vienna, is investing €64 million to build a unit that will produce high-purity isobutene at subsidiary OMV Deutschland GMBH’s 76,300-b/d refinery in Burghausen, Germany.

The 60,000-tonne/year ISO C4 unit—which will be integrated into the refinery’s existing metathesis plant responsible for energy-efficient manufacturing of propylene for the plastics industry—will feature the first global application of an OMV-BASF SE jointly developed technology for direct production of high-purity isobutene, OMV said.

The advantage of integrating the ISO C4 and metathesis units supports OMV’s heat-integration strategy, which will allow up to 80% of the heating energy required by the new process to be met by waste heat from existing installations at the site, the operator said.

BASF also will supply a catalyst system that will fulfill all process requirements for the plant that—scheduled for start of construction this summer—is due for commissioning in September 2020.

Isobutene produced by the new unit will complement OMV’s current product portfolio and will be used for manufacturing glues, grease, and other chemicals such as antioxidants, as well as in the production of vitamin C.

While OMV disclosed no further details regarding the new technology, the company said it does plan to license the technology to third parties sometime in the future.

Lucid inks gas processing deal, plans expansion

Lucid Energy Group, Dallas, has executed a new long-term natural gas gathering and processing agreement with ExxonMobil Corp. subsidiary XTO Energy Inc. under which XTO will deliver natural gas production from a portion of its leasehold position in southeastern New Mexico to Lucid’s South Carlsbad gas gathering and processing system.

The agreement provides XTO with firm processing capacity and enables deliveries of gas and natural gas liquids to ExxonMobil’s downstream and chemical manufacturing sites on the US Gulf Coast, Lucid said.

Lucid’s system in the northern Delaware basin currently includes more than 2,000 miles of pipeline spanning five counties in New Mexico and Texas.

Alongside its announcement of the XTO agreement, Lucid also said development of its next large cryogenic processing plant at its flagship Red Hills natural gas processing complex in Lea County, NM, is now under way (OGJ Online, Sept. 6, 2018).

To be known as Red Hills V and scheduled for start-up in second-quarter 2020, the new plant will have the capacity to process 230 MMcfd and will bring the total processing capacity of Lucid’s natural gas processing franchise in the northern Delaware basin to 1.2 bcfd.

The proposed expansion will follow scheduled commissioning of Lucid’s 230-MMcfd Red Hills IV plant in October.

Summit starts up gas processing plant in DJ basin

Summit Midstream Partners LP (SMPL), The Woodlands, Tex., has commissioned a 60-MMcfd cryogenic processing plant in Weld County, Colo., in the DJ basin.

The plant, which substantially increases SMPL’s previous DJ basin processing capacity, delivers residue gas to Colorado Interstate Gas and Trailblazer Pipeline and processed NGLs to the Overland Pass Pipeline, the company said.

SMPL said it also expects the plant to operate more efficiently and to generate substantially higher NGL recoveries compared with the company’s legacy 20-MMcfd processing plant at the site.

Volumes at this new plant are slated to ramp up considerably throughout the balance of this year based on existing production behind the company’s system and new production associated with its customers’ drilling and completion schedules.

SMPL said its capital investment in the new processing plant was underpinned with monthly demand payments from some of its customers, with commissioning of the plant enabling the company to earn those monthly demand fees beginning in this year’s third quarter.

PetroLogistics plans US Gulf Coast PDH plant

PetroLogistics ll LLC, a portfolio company of Quantum Energy Partners, Houston, has let a contract to Dow Chemical Co. to provide technology licensing for a propane dehydrogenation (PDH) unit to be built on the US Gulf Coast.

The 500,000-tonne/year PDH unit will be equipped with Dow’s proprietary fluidized catalytic dehydrogenation (FCDH) technology, which uses a novel reactor design based on fluidized catalytic cracking for on-purpose propylene production, PetroLogistics said.

While it has yet to decide between two alternative USGC sites under evaluation for the project’s location, PetroLogistics did confirm it is currently engaged in the front-end engineering design for the proposed PDH plant.

Announcement of the plant follows PetroLogistics’ construction of the first PDH plant in North America for on-purpose propylene production, which began operations at its Houston Ship Channel site in 2010 (OGJ Online, Sept. 4, 2018).

“Since [start-up of that first PDH plant], developments related to the shale revolution have resulted in a significant decline in coproduct propylene production from the sources that historically supplied the majority of US propylene: petroleum refineries and heavy feed ethylene crackers,” said PetroLogistics Pres. Nathan Ticatch.

“As a result, future growth in propylene demand will need to be supplied largely via on-purpose propane dehydrogenation. However, new PDH projects have been slow in coming to market in the US primarily because of challenges relating to capital costs and efficiency of incumbent PDH technologies. We have been working with Dow for 3 years in evaluating the FCDH technology and we are confident that it addresses those challenges and represents a significant breakthrough in the PDH process,” Ticatch said.

TRANSPORTATION Quick Takes

Total to takeover Toshiba LNG portfolio

Total SA has agreed to take over Toshiba’s portfolio of LNG, including a 20-year tolling agreement for 2.2 million tonnes/year of LNG from Freeport LNG Train 3 in Texas and the corresponding gas transportation agreements on the pipelines feeding the terminal. Train 3 is expected to start commercial operations by second-quarter 2020.

Under the transaction, Total will acquire all shares of Toshiba America LNG for $15 million to be paid by Total to Toshiba and will be assigned all contracts related to the LNG business by Toshiba Energy Systems and Solutions Corp. for a consideration of $815 million to be paid by Toshiba to Total.

Total will therefore receive from Toshiba a net cash consideration of $800 million.

The takeover is in line with Total’s strategy to become a major LNG portfolio player, said Philippe Sauquet, president gas, renewables, and power at Total. “Already an integrated player in the US gas market, Total is set to become one of the leading US LNG exporters by 2020 with a 7 million-tpy portfolio,” he said.

The transaction is expected to close by yearend.

CNOOC subsidiary due 10% interest in Arctic LNG 2

CNOOC Ltd. and its subsidiary CEPR Ltd. have signed an agreement with Novatek and Ekropromstroy LLC, a wholly-owned subsidiary of JSC Novatek, to acquire a 10% equity interest in Arctic LNG 2 LLC.

Novatek plans three liquefaction trains at the 19.8 million-tonne/year Arctic LNG 2 project near Russia’s Gydan Peninsula with capacities of 6.6 million tpy each on gravity-based structure platforms. Gas will come from Utrenneye field.

Closing of the deal, expected “in the near future,” CNOOC said in a press statement, is subject to approval of relevant government authorities of China and Russia and satisfaction of certain other conditions.