GENERAL INTEREST Quick Takes
Range divests assets in deals worth a total $634 million
Range Resources Corp., Fort Worth, reported it has agreed to sell a 2% proportionately reduced overriding royalty interest in 350,000 net surface acres in southwest Appalachia for gross proceeds totaling $600 million. The separate transactions, which are both effective Mar. 1, apply to existing and future Marcellus, Utica, and Upper Devonian development on the subject leases. These deals exclude shallower and deeper horizons.
The properties produced 1.9 bcfd of natural gas equivalent in this year’s first quarter. Annualized cash flow associated with these overriding royalty sales is expected to reach $48 million, based on this year’s first-half pricing.
Separately, Range also completed the sale of certain nonproducing acreage in Pennsylvania for gross proceeds of $34 million. The properties sold included 20,000 acres in northwest Armstrong County. Sale processes to monetize additional noncore assets remain under way, Range said.
The combined gross proceeds of $634 million will reduce total debt by 17%, Range said. Annual interest expense is expected to decline by $30 million and offset a substantial amount of the cash flow reduction associated with the royalty sales.
BHP to make FID on Ruby gas project this year
BHP Petroleum Ltd. expects to make a final investment decision sometime this year on the Ruby natural gas project off Trinidad and Tobago, the company said in its latest earnings statement.
Phase 3 deepwater drilling has been completed for three exploratory wells. The Bele-1, Tuk-1, and Hi-Hat-1 exploratory wells each encountered gas, confirming additional volumes around the Bongos discovery, BHP said.
Technical work is under way to assess additional exploration targets and commercial options for the Northern gas play.
Elsewhere, BHP said it has spudded the deepwater Trion-3DEL appraisal well offshore Mexico.
Brazil authorizes Saturno block stake transfer
Brazil’s Ministry of Mines and Energy has authorized Ecopetrol SA’s transfer of a 10% stake in the Saturno block in the Santos basin to its subsidiary, Ecopetrol Oleo e Gas Brasil. The stake was previously held equally by Shell Brasil Petroleo Ltda. and Chevron Brasil Oleo e Gas Ltda.
As reported in December 2018, Ecopetrol entered into an agreement with both companies to farm in to the block, which consists of 1,100 sq km off Sao Paulo and Rio de Janeiro. Shell Brasil and Chevron Brasil were awarded a 35-year production-sharing contract for the block in Brazil’s 5th presalt bid round conducted by the National Agency of Petroleum, Natural Gas, and Biofuels.
Ecopetrol holds a 10% interest in the block, while Shell, as operator, and Chevron each hold a 45% interest.
This block adds an additional presalt block, as Ecopetrol already holds a 20% stake in presalt block Pau-Brazil in partnership with CNOOC and BP. With these two presalt blocks, Ecopetrol has a presence in five blocks in Brazil in the Santos, Foz de Amazonas, Potiguar, and Ceara basins.
Vanguard emerges from Chapter 11 as Grizzly Energy
Vanguard Natural Resources Inc. has emerged from Chapter 11 as Grizzly Energy LLC.
Through its financial restructuring, the company eliminated more than $500 million of secured debt. It emerges from Chapter 11 with $375 million of funded debt and $47 million of liquidity comprised of more than $7 million in cash and $40 million of unused revolver capacity.
As of midyear, the company’s total estimated proved reserves are 1,044 bcf of gas equivalent—64% natural gas, 20% oil, and 16% natural gas liquids. The company said 91% of its reserves are considered proved developed and with an average 10-year proved developed decline rate of 9%. The company’s assets in the Green River, Piceance, Arkoma, Permian, and Big Horn basins account for 86% of proved reserves.
Also as of midyear, the company’s total capital expenditures were $22 million during this year’s first half. The company expects a total capital expenditures budget of $43-50 million for the full year for ongoing drilling and uplift projects in the Arkoma’s Woodford play, the Permian’s Red Lake area, and Pinedale field in the Green River basin.
BLM to restructure, move headquarters to Colorado
US Bureau of Land Management officials confirmed reports that the agency plans to restructure its operations, move its headquarters to Grand Junction, Colo., and redeploy employees so that more of them work closer to acreage they regulate, and fewer are based in Washington, DC.
“The implementation plan will delegate more authority and responsibility down to the field, optimize services to the American people, is demonstrably cost-effective, and will provide an increased presence closer to the resources the BLM staff manages,” Joseph R. Balash, assistant US Interior secretary for land and minerals management, said in a July 16 letter to Sen. Lisa Murkowski (R-Alas.), chair of the Appropriations Committee’s Interior and Environment Subcommittee.
Balash said that in addition to moving BLM’s headquarters to Grand Junction, this would be accomplished by maintaining the necessary core headquarters in Washington, optimizing the efficiency of positions currently located in Washington by moving them to BLM state offices across the West which their work supports, and allocating positions to those state offices to perform essential functions.
“Most of BLM’s work gets done at the state and local level. What we have begun here in this administration is pushing more of the work down to those levels. The lands that BLM manages are largely in the West,” Balash told reporters.
New technology due in Aerfugl development
Aker BP plans to use two new technologies in development of Aerfugl gas and condensate field in the Norwegian Sea, reports partner PGNiG Upstream Norway.
The Polish Oil & Gas Co. subsidiary says the subsea wells will use the world’s first 7-in. vertical trees in anticipation of high flow rates.
The other innovation will be electrical trace and heating of pipe-in-pipe to prevent gas hydration during transport of produced fluids to the floating production, storage, and offloading vessel on Skarv field as far as 21 km away.
Total recovery from two development phases is estimated at 274.7 million boe of gas and condensate. Total production in the peak year is estimated at 500 million cu m.
Pay is Cretaceous Lysing sandstone encountered at about 2,800 m. Water depths are 350-450 m. BP Amoco Norge drilled the discovery well in 2000.
Production from three wells in the first phase, which is 40% complete, is to start in November 2020. The first of three wells planned for the second phase is to start earlier, in June 2020, through use of existing infrastructure.
The other two wells planned for the second phase are expected to start production in September 2021. PGNiG says the second phase is in a “define phase” aimed at beginning execution in November.
In addition to the six development wells, a test well has been on production since 2013.
Interests are Equinor, 36.165%; Wintershall DEA, 28.0825%; Aker BP, 23.835%; and PGNiG, 11.9175%.
US BOEM to hold Lease Sale 253 next month
The US Bureau of Ocean Energy Management plans to hold a Gulf of Mexico-wide oil and gas lease sale Aug. 21 that will include all available unleased areas in federal waters covering 77.8 million acres.
Lease Sale 253 will include about 14,585 unleased blocks in a range of 3-231 miles offshore across the gulf’s western, central, and eastern planning areas in 9-11,115 ft of water.
Excluded from the lease sale are blocks subject to the congressional moratorium established by the Gulf of Mexico Energy Security Act of 2006; blocks adjacent to or beyond the US Exclusive Economic Zone in the area known as the northern portion of the Eastern Gap; and whole blocks and partial blocks within the current boundaries of the Flower Garden Banks National Marine Sanctuary.
This will be the fifth offshore sale in the Department of Energy’s Outer Continental Shelf 2017-22 program, which plans a total of 10 sales. BOEM estimates the upcoming sale contains 48 billion bbl of undiscovered technically recoverable oil and 141 tcf of undiscovered technically recoverable gas.
UK offers 37 licenses in offshore round
Thirty companies, some of them in groups, have received offers for the award of 37 licenses covering 141 blocks in the UK’s 31st offshore licensing round (OGJ Online, July 10, 2018).
The frontier areas are in the Faroe-Shetland basin, Moray Firth, East Irish Sea, East Shetland Platform, Mid North Sea High, and English Channel.
The Oil and Gas Authority received 36 applications covering 164 blocks.
It offered 15 licenses in the Central North Sea (North), 11 in the Northern North Sea and West of Shetland, 4 each in the Southern North Sea and Irish Sea, and 3 in the Central North Sea (South). Bidding was based on work programs.
License administrators and the number of license offers they received are Ardent Oil (1), BP Exploration (1), Burgate Exploration & Production (2), Chevron North Sea (2), Chrysaor North Sea (3), Corallian Energy (5), Cycle Petroleum (4), Draupner Energy (2), Equinor UK (4), Faroe Petroleum (1), Geoscience Services (1), Jetex Petroleum (2), Nautical Petroleum (1), Petrogas E&P (1), Pharis Energy (1), Shell UK (1), Spirit Energy (2), Stelinmatvic Industries (1), Total E&P (1), and United Oil & Gas (1).
Work programs for two of the licenses go straight to field development planning: Chrysaor’s Block 13/22c in the Central North Sea (North) area, and Shell UK’s Block 211/13c (partial) in the Northern North Sea.
Drilling & Production Quick Takes
Total E&P Congo announces cementless completion
Total E&P Congo used a cementless completion during this year’s second quarter in Moho North Albian field.
Welltec said it was the first deployment of a truly cementless completion using its annular isolation technology and metal expandable annular sealing technology.
Multiple metal expandable packers provided long-length open hole zonal isolation to replace the functions of traditional cement, improving efficiency in the overall well construction process, Welltec said.
The technology reduces the free annulus space between the liner, casing, and the open hole, which can be helpful to engineers working with layered reservoirs of varying permeability where selective production, stimulation, or water shut off is required.
The technology also provides simplified well completions that eliminate multiple operational risks associated with cementing in depleted and overpressured reservoirs.
Surge completes 3.4-mile lateral in Permian basin
Surge Energy US Holdings Co. drilled a 3.4-mile lateral in the Permian basin’s Wolfcamp A, which the operator and contractor Basic Energy Services called the longest known lateral completed to date in the Permian basin.
Basic Energy said Rig No. 1826 along with a bundled high-spec ancillary equipment package drilled out fracturing plugs over a total horizontal of 3.4 miles. The drilling involved the Medusa Unit C 28-09 3AH and was completed in 6 days.
Surge Energy’s owned subsidiary, Moss Creek Resources Holdings Inc., completed the lateral. The completion consisted of 52 frac stages.
Basic Energy of Fort Worth provides wellsite services in onshore oil-producing regions in Texas, New Mexico, Oklahoma, Arkansas, Kansas, Louisiana, Wyoming, North Dakota, California, and Colorado.
PROCESSING Quick Takes
ADNOC lets contracts for Ruwais complex, sulfur plants
Abu Dhabi National Oil Co. (ADNOC) has let contracts to a division of Bilfinger SE, Mannheim, Baden-Wurtemberg, Germany, to deliver front-end engineering design for certain onshore assets, including one at subsidiary ADNOC Refining’s more than 800,000-b/d integrated Ruwais refining and petrochemical hub in the UAE.
As part of the FEED contracts, Bilfinger Tebodin Middle East will provide engineering services for a wastewater treatment plant at one of the refineries in the Ruwais complex, as well as a basic design and detailed engineering package to enhance existing sulfur-dust control systems at two unidentified sulfur-handling installations, Bilfinger said.
Most recently, ADNOC Refining let a contract to John Wood Group PLC to deliver preliminary FEED for a 600,000-b/d refinery to be built in Ruwais, in the western region of Abu Dhabi.
That contract follows ADNOC’s May 2018 announcement that it would expand refining capacity at Ruwais, now a combined 817,000 b/d, with the addition of a 600,000-b/d refinery and to expand petrochemical capacity at the complex as part of its broader $45-billion program to become a global downstream leader under a new combined model of strategic partnerships and investments (OGJ Online, Jan. 28, 2019).
A cornerstone of the downstream investment plan is expansion of the company’s existing refining capacity by more than 65% to 1.5 million b/d by 2025.
Fire hits Malaysian gas plant
Petronas Gas Bhd. (PGB) is investigating the cause of a fire that broke out on July 16 at the operator’s Santong gas processing plant in Paka, Terengganu, Malaysia.
The fire, which was confined to a demethanizer column at one of the plants, was completely extinguished by 4:30 a.m. local time on July 17, with no injuries or fatalities reported following the event, PGB said.
PGB is currently working closely with authorities to investigate the cause of the incident, which posed no health-related risks or immediate threat to the surrounding communities.
Without disclosing further details regarding the current state of the affected plant, PGB did confirm there will be no major impact to overall operations at the site as a result of the incident, noting its other gas processing installations would ensure uninterrupted gas supply to customers.
PGB’s operations at Terengganu include six gas plants divided into two complexes: Gas Processing Kertih (GPK) and Gas Processing Santong (GPS). GPK and GPS have a combined gas processing capacity of more than 2 bcfd for production of sales gas, ethane, propane, and butane, PGB said.
Ecopetrol lets contract for Colombian refineries
Ecopetrol SA has let a long-term contract to a division of Fluor Corp. to provide services for the Barrancabermeja and Cartagena refineries in Colombia.
As part of the 4-year agreement, Stork—part of Fluor’s diversified services segment—together with its consortium of partners including Rampint in Barrancabermeja and Servimant in Cartagena, will deliver turnaround services for the two refineries, Fluor said.
Stork’s local offices in Barrancabermeja and Cartagena will lead the work, which is scheduled to begin in September.
The scope of work includes providing turnaround maintenance services on the plant process units during scheduled plant shutdown periods. The contract also includes delivery of emergency works and other preventive and corrective maintenance services to support Ecopetrol with further refinery performance optimization.
The agreement also provides for two extension options for an additional 2 years each. Both the 250,000-b/d Barrancabermeja and 165,000-b/d Cartagena refineries supply fuel to meet Colombia’s national and export product needs.
Methanex takes FID on third Geismar methanol plant
Methanex Corp., Vancouver, BC, has reached a final investment decision to move forward with its previously announced plan to build a 5,000-tonne/day methanol plant next to the operator’s existing methanol plants in Geismar, La.
Methanex will make a $1.3-1.4-billion capital investment in the G3 project, which will involve construction of the company’s third methanol plant at Geismar that, once completed, will transform the production site into one of the world’s largest methanol complexes, the Louisiana Economic Development (LED) said.
Construction on the plant—which will be equipped with Johnson Matthey PLC’s proprietary autothermal reforming and methanol technology to produce about 1.8 million tpy of methanol—will begin during this year’s second half for targeted start-up in second-half 2022, according to LED.
Methanex currently operates two methanol plants at Geismar, each with a production capacity of 1 million tpy.
Chinese operator lets contract for alkylation unit
Shenghong Petrochemical Group Co. Ltd. has let a contract to a division of E.I. DuPont de Nemours & Co. to provide alkylation technology at its integrated complex in Lianyungang City in China’s province of Jiangsu.
DuPont Clean Technologies will deliver its proprietary STRATCO alkylation technology license, engineering, and proprietary equipment for Shenghong’s project to design and build a new alkylation unit as part of its grassroots 320,000-b/sd petrochemical and refining complex, the service provider said.
The STRATCO alkylation unit will be designed to produce 10,987 b/sd of alkylate product, enabling the complex to generate low-sulfur, high-octane, low-RVP alkylate—with zero olefins—that meets the criteria of upcoming China VI standards which will take effect before start-up of Shenghong’s complex in 2021, according to DuPont.
Hengli commissions unit at Dalian complex
Hengli Petrochemical (Dalian) Co. Ltd. has started up the world’s largest catalytic dehydrogenation plant at its integrated 400,000-b/d crude-to-paraxylene refining and petrochemical project in Hengli Petrochemical Industrial Park (HPIP) on Changxing Island in Dalian, Liaoning Province, China.
The single-train dehydrogenation unit uses proprietary CATOFIN catalyst and heat-generating material from McDermott International Inc. division Lummus Technology’s catalyst partner Clariant International Ltd. to process 500,000 tonnes/year of propane and 800,000 tpy of isobutene for production of propylene and isobutylene, McDermott said.
Nayara Energy lets contract for Vadinar refinery unit
Nayara Energy Ltd. has let a contract to W.R. Grace & Co. to provide technology licensing for a unit at its 400,000-b/d Vadinar refinery in Gujarat, India.
As part of the contract, Grace will license its proprietary Unipol PP process technology as well as its Consista catalyst for the 450,000-tonne/year unit, which will process propylene feedstock to produce phthalate-free homopolymer products for the Indian market, the service provider said.
TRANSPORTATION Quick Takes
YPF lets contract for Vaca Muerta LNG project
YPF SA has let a contract to McDermott International Inc. for pre-front-end engineering design services for a 5 million-tonne/year LNG liquefaction facility—with a potential expansion to 10 million tpy—at Vaca Muerta shale field in Argentina.
The scope of work is a continuation of a previous conceptual study developed for the YPF LNG export facility in Argentina under a contract in 2018.
Freeport LNG commissions Train 1
Freeport LNG has reached final commissioning on Train 1 of its liquefaction plant on Quintana Island, Freeport, Tex. McDermott International Inc., along with partners Chiyoda International Corp. and Zachry Group, have introduced feed gas into Train 1. Once Train 1 is fully operational it will produce more than 5 million tonnes/year of LNG.
The project includes three pretreatment trains, a liquefaction plant with three trains, a second loading berth, and a 165,000-cu m full-containment LNG storage tank.
Zachry Group, as the joint-venture lead, engaged McDermott for the pre-frontend engineering and design in 2011, followed by FEED. Chiyoda joined the partnership later and the joint team provided engineering, procurement, and construction, as well as commissioning and initial operations for the project.
Freeport LNG anticipates adding a fourth train by 2021, bringing total plant capacity to more than 20 million tpy.
LNG Ltd. to move from Australia to the US
Liquefied Natural Gas Ltd. (LNGL), Perth, has announced its decision to relocate to the US. The company will now begin preparations to list on the NASDAQ Stock Exchange, including seeking regulatory and judicial approvals along with an affirmative vote from shareholders.
LNGL Chairman Paul J. Cavicchi said the move comes after detailed evaluation by the board and management team. The company is confident about raising new capital to fund its business and marketing efforts and that a corporate move to the US is in the best interest. The timing of the proposed relocation will depend on the length of the regulatory process in the US and Australia and on the availability of court dates in Australia. However, Greg Vesey, LNGL managing director and CEO, said it was expected that the relocation could be completed later this year or early in 2020.
LNGL’s activities include the proposed 8 million tonne/year Magnolia LNG terminal in Louisiana; the proposed 8-12 million-tpy Bear Head LNG export terminal in Nova Scotia; the proposed 62½-km Bear Paw gas pipeline to connect gas supply to Bear Head LNG; and an optimized single mixed refrigerant liquefaction technology and process. The company already has offices in Houston, Lake Charles, La., and Halifax, NS, as well as the headquarters in Perth.