GENERAL INTEREST Quick Takes
North American E&P bankruptcies on the rise
Bankruptcies filed by North American oil and gas producers are experiencing an uptick this year following a substantial decrease in 2017 and 2018, according to an Aug. 12 report by Haynes and Boone. The firm has monitored the number of North American oil and gas producer bankruptcies since 2015.
The initial wave of bankruptcies in 2015-16 consisted of more than 100 bankruptcy filings. That number decreased during 2017-18 with 24 filings in 2017 and 28 in 2018. So far this year, however, the number has been rising. There have been 26 bankruptcies filed as of Aug. 12, with 20 filings since the beginning of May when Haynes and Boone last reported its findings.
Over the entire period, 192 producers have filed for bankruptcy since the firm began tabulating E&P filings, involving some $106.8 billion in aggregate debt.
During 2015-19, Texas has seen the largest number of filings with 87; followed by Canada, 18; and Colorado, 10.
Gas and NGL prices continue to be cited as a main cause for filings, and since the start of this year, said Haynes and Boone, “Oil has been range-bound in the $50s[/bbl] without any clear indication that prices are heading north anytime soon.”
As for what’s next, the firm said that it’s too early to predict, but “it is clear that for certain financially troubled producers wounded by the crash in 2015, some stakeholders may have given up hope that resurgent commodity prices will bail everyone out.” It added, “For these producers the game clock has run out of time to keep playing ‘kick the can’ with their creditors and other stakeholders.”
Sanchez Energy seeks bankruptcy protection
Sanchez Energy Corp., Houston, and some of its subsidiaries have voluntarily filed for reorganization under Chapter 11 of the US Bankruptcy Code in the US Bankruptcy Court for the Southern District of Texas.
“The company’s decision to make this voluntary filing follows an extensive review of strategic alternatives to align its capital structure with the continued low commodity price environment,” Sanchez said.
Sanchez intends to use the process to reduce its indebtedness and provide the financial flexibility to position the company for future success, the company said.
The company has liquidity comprised of cash-on-hand and $175 million in new committed financing to operate in the normal course and intends to interact with its commercial counterparties as usual.
Senate discussion draft probes US project financing
US Senate Energy and Natural Resources Committee Chair Lisa Murkowski issued a discussion draft of legislation that includes provisions that would direct the US to use its influence to discourage international finance organizations from discriminating against proposed oil and gas and other fossil fuel projects.
“In this era of strategic energy competition, we must strengthen our tools of statecraft through a rational, long-term approach. What I have released today outlines the means to continue growing our nation’s energy dominance,” she said. “American companies and workers participate in highly competitive global energy markets that are often dominated by cartels, state-owned enterprises, and trade finance agencies in other countries, and we cannot unilaterally disarm.”
Congress authorized creation of the US International Development Finance Corp. to replace the Overseas Private Investment Corp., which previously facilitated agreements between US companies and sponsors of overseas development projects. US President Donald Trump signed the bill into law in October 2018. IDFC is authorized to operate for 7 years.
Murkowski said that her discussion draft of the 2019 Strategic Energy for America Act also would enable IFDC to support nuclear energy projects in developing countries and establish a strategic energy portfolio at the US Export-Import Bank while authorizing the Ex-Im Bank through 2031.
API issues bolting materials selection standards
The American Petroleum Institute released a new technical report intended to help oil and gas companies select the right materials for bolting, a key to safe and reliable oil and gas operations. The new standard, “Materials Selection for Bolting,” aims to help companies choose the correct materials in manufacturing low-alloy, stainless steel, and nickel-based fasteners that are resistant to the effects of harsh environmental conditions.
Choosing the correct bolting based on the environment in which a company is working helps assure that these important components are resilient in their operating environment, API said. Its bolting standard refers to manufacturing standards for bolts, screws, nuts, washers, and studs best suited to the conditions where drillers and pipeline operators will be working, it said.
The manufacturing standards that the API publication recommends are Specifications 20E and 20F, pertaining to alloy and carbon-steel bolting and corrosion-resistant bolting, respectively.
API said the guidance also includes bolting recommendations for offshore drilling in both shallow and deep water, addressing saltwater corrosion issues faced by facilities. The guidance also addresses the types of bolts required for onshore operations in desert, tropical, and arctic conditions.
Exploration & Development Quick Takes
BLM to offer 169 parcels at Wyoming lease sale
The US Bureau of Land Management’s Wyoming State Office reported that it will offer 169 parcels totaling 174,148 acres at a quarterly oil and gas lease sale in December.
Three parcels containing 1,457 acres within the Baggs Mule Deer Migration Corridor are being deferred in coordination with the state of Wyoming and its Game and Fish Department, BLM said. This step is consistent with Secretarial Order 3362 on improving habitat quality in western big-game winter range.
Wyoming is one of the country’s top energy producers on public lands, BLM noted. In 2018, BLM’s Wyoming State Office raised nearly $117 million through oil and gas lease sales. Nearly half that revenue goes directly to the state government and, when leasing results in production, royalties from production also are shared with the state, the agency said.
This revenue supports public education, infrastructure improvements, and other state-determined priorities, it noted. The remainder of the revenue from onshore oil and gas production on federal lands goes directly into the US Treasury, BLM said.
Lundin discovers oil targeting Goddo prospect
Lundin Petroleum AB said its oil discovery at exploration well 16/5-8s, targeting the Goddo prospect in PL815 some 14 km south of Edvard Grieg field in the Norwegian North Sea, is promising but does not appear connected to the Rolvsnes discovery reservoir.
Exploration well 16/5-8a encountered weathered and fractured basement having an estimated gross oil column of 20 m. Extensive coring and data acquisition showed the Goddo reservoir displays similar characteristics as Rolvsnes, but Lundin concluded the two discoveries are not connected.
Preliminary gross resources from Well 16/5-8a are estimated at 1-10 million boe, however there is clear upside potential in the larger Goddo area and surrounding prospective basement (OGJ Online, June 20, 2019.)
Lundin’s appraisal and commercialization strategy for the Utsira High basement play will be based on production from a Rolvsnes extended well test. Rolvsner production is scheduled in mid-2021.
In evaluating Utsira High, Lundin executives also will evaluate information from Goddo.
Meanwhile, the Tellus East discovery has similar reservoir characteristics to Rolvsnes and Goddo discoveries. Tellus East will be developed in a future Edvard Grieg field infill program.
Lundin Norway operates PL815 with 60% interest. Partners are Concedo and Petoro with 20% interest each.
BOEM approves Hilcorp’s proposed Cook Inlet survey
The US Bureau of Ocean Energy Management approved a permit from Hilcorp Alaska LLC to conduct a geophysical survey in the federal waters of Cook Inlet, offshore southcentral Alaska. The area to be surveyed is in the lower Cook Inlet, west of Kachemak Bay, BOEM’s Anchorage office said.
It said Hilcorp expects to begin the survey in late summer or early fall. The company will have 60 days to complete the survey, the exact length of which will depend on weather and any schedule adjustments needed to protect marine mammals.
The survey area comprises 42 OCS blocks, including 8 of Hilcorp’s 14 leased blocks, covering 969 sq km.
It said that the producer acquired 14 US Outer Continental Shelf blocks during OCS Lease Sale 244 in June 2017. Hilcorp’s survey would be the first in Cook Inlet since one that Veritas DGC conducted in July 2005. Vessel-based monitoring for marine mammals will be conducted by trained protected species observers deployed on vessels during the survey, the agency said.
India adds third acreage interest ‘window’
Oil and gas operators seeking exploration and development licenses in India will have three opportunities to submit “expressions of interest (EOIs)” per year instead of two under changes to the government’s Open Access Licensing Policy.
Windows for EOI submissions now will be Apr. 1-July 31, Aug. 1-Nov. 30, and Dec. 1-Mar. 31.
The Directorate General of Hydrocarbons auctions revenue-sharing licenses to areas identified by EOIs meeting its criteria.
Under changes adopted last February, bidding for undeveloped and unexplored basins is based on work programs. Bidding includes revenue share for productive basins.
The current window for EOIs, which opened May 16, has been combined with the new Aug. 1-Nov. 30 window.
Europa license off Ireland extended
Europa Oil & Gas (Holdings) PLC has received a 12-month extension for the first phase of frontier exploration license (FEL) 2/13 offshore Ireland to July 4, 2020.
Approval by the Irish government came at the expiration of a 2-year extension of the license (OGJ Online, June 20, 2017).
The license is on the west flank of the South Porcupine basin.
Europa said it plans an FEL 2/13 exploration well on a prospect designated Kiely East. It said its next steps include integration of recently purchased 3D seismic data “with particular focus on mapping the extension of Kiely East into open acreage to the south of the license.”
Europa Oil holds a 100% interest.
Drilling & Production Quick Takes
Hibernia restart halted by drain overflow
The restart of production at Hibernia oil field offshore Newfoundland and Labrador was halted Aug. 17 by a release of oil and water from the platform’s drain system (OGJ Online, Aug. 15, 2019). Production of about 125,000 b/d had been shut in since July 17, when 75 bbl of crude leaked from a storage cell.
According to Hibernia Management & Development Co., the new release of about 14 bbl of fluid occurred when the platform lost power, making the compressed-air system unavailable. In response to a pressure drop, the deluge system designed to extinguish fire released water from the platform’s drains. The drains overflowed onto the gravity base structure, releasing water and oil to the ocean. HMDC deployed three response vessels for mechanical dispersion and one vessel for retrieval.
Husky Energy to finish White Rose restart
Husky Energy Inc., Calgary, will restore full production from White Rose oil and gas field offshore Newfoundland and Labrador by restarting the final two of five drill centers taken offline after a November 2018 leak (OGJ Online, Feb. 1, 2019).
Oil escaped through a subsea flowline connection during restart of production shut in during heavy weather.
The Canada-Newfoundland Offshore Petroleum Board approved the last restarts, which are from the North Amethyst and South White Rose Extension drill centers.
Field output before the mishap was 23,640 b/d of oil and 122.5 MMcfd of natural gas.
“Key mitigations implemented by Husky as part of their case towards resumption of full production operations include installation of a replacement flowline connector with higher load capacity, installation of strengthening clamps on similar connectors in other production flowlines, and third-party flow assurance work to help mitigate against future hydrate development,” the C-NOPB said in a news release. “Husky has also implemented new procedures for abnormal and nonstandard conditions along with the cultural measures required to be a high reliability organization.”
Equinor brings Mariner field on stream in UK North Sea
Equinor brought Mariner oil field on stream in the UK North Sea Aug. 15, saying it expects the field will produce more than 300 million bbl of oil over 30 years.
Mariner is Equinor’s first operated oil field on the UK Continental Shelf. Its reservoirs have an estimated 3 billion bbl of oil in place, a 50% increase over the original estimate.
Equinor expects Mariner will produce at average plateau rates of 55,000 b/d and up to 70,000 b/d at peak production.
Production drilling begins in Dvalin field off Norway
Wintershall Dea GMBH started drilling four production wells in Dvalin natural gas field in the Norwegian Sea. The wells—each targeting a depth of 4,500 m—are being drilled using the Transocean Arctic harsh-environment semisubmersible drilling rig. Work is expected to last for a year.
The start of gas production is slated for 2020, said field operator Wintershall Dea.
Since April there have been several work projects performed in the field, which lies 259 km north of Kristiansund in mid-Norway. These projects include the installation of pipelines and the manifold in 400 m of water and the lifting in August of a 3,500-tonne processing module onto nearby Heidrun platform, operated by Equinor, in preparation for receiving gas from Dvalin (OGJ Online, Aug. 8, 2019).
Dvalin is being developed as a subsea field tied back to Heidrun, which lies 15 km northwest.
Reserves in the field are estimated at 113.3 million boe.
Dvalin module lifted onto Heidrun platform
The Saipem 7000 vessel has lifted the 3,500-tonne Dvalin gas-treatment module aboard the Heidrun platform in the Norwegian Sea in what Wintershall Dea GMBH calls one of the heaviest lifts onto an existing platform ever offshore Norway.
Wintershall Dea operates high-pressure, high-temperature Dvalin gas field, which is being developed with four subsea wells in 400 m of water tied back to the Heidrun platform operated by Equinor (OGJ Online, Oct. 4, 2016).
Aibel built the gas-treatment module for Equinor at its yard in Haugesund. The lift onto the Heidrun platform took 3 hr. A 400-tonne Dvalin utility module was installed earlier.
A 15-km pipeline will connect Dvalin’s 300-tonne subsea template with the platform, where produced fluids will be partially processed. From Heidrun, Dvalin gas will move through a 7½-km pipeline to the Polarled gas transportation system, which will carry it to the Nyhamna onshore gas treatment for further processing.
Production will be from Middle Jurassic Ile and Garn sandstones encountered at about 4,250 m. Wintershall Dea estimates reserves of the field, which is northwest of Heidrun, at 113.3 million boe. Production is to start next year.
PROCESSING Quick Takes
BPCL lets contract for petchem project near Kochi
India’s state-owned Bharat Petroleum Corp. Ltd. (BPCL) has let a contract to Sumitomo Chemical Co. Ltd. to provide technology licensing for a large-scale petrochemical project to be built adjacent to its refinery complex near Kochi, at Ambalamugal, Ernakulam district, in the Indian state of Kerala.
Sumitomo Chemical will license its proprietary technology for production of propylene oxide (PO) for a PO plant at the site that will have a 300,000-tonne/year production capacity at its targeted completion in 2022, the service provider said.
BPCL currently is conducting front-end engineering design and detailed engineering on the proposed petrochemical project, which alongside the PO plant, also will include a polyols plant, Sumitomo Chemical said.
Sumitomo Chemical’s PO technology is based on a PO-only process in which, with cumene recycling, PO alone is manufactured without accompanying coproducts.
Sumitomo Chemical said it also has licensed the PO technology to a subsidiary of PTT Global Chemical Public Co. Ltd. (PTTGC) of Thailand for a 200,000-tpy PO plant that, currently under construction, is scheduled to be completed in 2020.
The PO project comes as part of an investment under GC Oxirane Co. Ltd., a PTTGC wholly owned subsidiary.
The PO project comes alongside a polyols project currently under execution by GC Polyols Co. Ltd. (GPC), a joint venture of PTTGC and Japanese partners Sanyo Chemical Industries and Toyota Tsusho Corp., according to a Mar. 23, 2018, release from PTTGC. GPC’s polyols project also is due for start-up in 2020, PTTGC said.
Chinese operator lets contract for polypropylene unit
Datong Coal Mine Group Co. Ltd. has let a contract to W.R. Grace & Co. to provide technology licensing for a grassroots polypropylene (PP) unit at its complex in Datong, China.
As part of the contract, Grace will license its proprietary UNIPOL PP process technology as well as its CONSISTA catalyst for the 430,000-tonne/year unit, which will enable the operator to produce more than 200 resin grades to provide more PP options to its customers, the service provider said.
The PP unit is scheduled to be completed in 2022.
PetroLogistics lets contract for proposed USGC PDH unit
PetroLogistics ll LLC, a portfolio company of Quantum Energy Partners, Houston, has let a contract to McDermott International Inc. to perform front-end engineering design services for a recently proposed 500,000-tonne/year propane dehydrogenation (PDH) unit to be built at the US Gulf Coast.
This latest contract follows PetroLogistics II’s previous award to Dow Chemical Co. to provide technology licensing for the new PDH unit, which will be equipped with Dow’s proprietary fluidized catalytic dehydrogenation technology that uses a novel reactor design based on fluidized catalytic cracking for on-purpose propylene production (OGJ Online, July 15, 2019).
PetroLogistics II has yet to decide between two alternative USGC sites under evaluation for the project’s location.
TRANSPORTATION Quick Takes
Shell Australia lets contract for Prelude FLNG
Shell Australia has let a 5-year contract to Flowserve Corp. for general maintenance services for the Prelude floating LNG (FLNG) facility, which is producing natural gas from Prelude field offshore Western Australia (OGJ Online, Jan. 7, 2019).
Flowserve will support Prelude from its recently refurbished Quick Response Center (QRC) in Darwin. Since opening in 2003, the Darwin QRC in Yarrawonga has primarily serviced flow control valves and seals. As part of this agreement, Flowserve will expand its capabilities to include maintenance and repair services for centrifugal pumps, positive displacement pumps, heat exchangers, fans and blowers, hydraulic power units, and other related equipment.
The Prelude FLNG facility is an offshore development, producing natural gas from a remote field 475 km north-northeast of Broome in 820 ft of water. It is scheduled to produce 3.6 million tonnes/year of LNG, 1.3 million tpy of condensate, and 400,000 tpy of LPG.
Freeport LNG begins Train 1 production
Freeport LNG Development LP (FLNG), Houston, has begun producing LNG from Train 1 at its plant on Quintana Island in Freeport, Tex. McDermott International Inc. along with its engineering and construction partners, Chiyoda International Corp. and Zachry Group, said loading of FLNG’s first cargo is expected later this month.
Trains 2 and 3 remain on track to meet previously announced schedules, the partners said, with Train 2 initial production scheduled for this year’s fourth quarter and Train 3 initial production for first-quarter 2020. Total planned capacity is 15 million tonnes/year.
Zachry Group, as the joint venture lead, partnered with McDermott for pre-front-end engineering and design work in 2011, followed by FEED works to support early development of Trains 1 and 2. Later Chiyoda joined the JV and the joint team provided engineering, procurement, and facility construction as well as commissioning and initial operations for Train 3. Project scope 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.
FLNG is developing a fourth train, which would bring the plant’s total capacity to 20 million tpy. Train 4 is awaiting regulatory approval, but FLNG hopes to have it in service by 2021.
Epik LNG terminal receives critical project status
The New South Wales government has granted Critical State Significant Infrastructure (CSSI) status to South Korean developer Epik’s proposed Newcastle LNG import terminal 160 km north of Sydney. The status will streamline approval processes for the $590-million (Aus.) project, which could be operational by 2022-23 to provide gas supply to electric power stations and bolster energy security in New South Wales.
Epik says the terminal could provide up to 80% of demand for the state. Currently New South Wales imports 95% of its gas supply. The company’s proposal includes a floating storage and regasification unit (FSRU) in the Port of Newcastle tied to a jetty on Kooragang Island and connecting gas supply to Australia’s east coast gas network. The FSRU will be supplied by Norwegian shipping company Hoegh.
If built, the terminal could increase the local availability of gas in the state by 110 petajoules. Epik now will prepare an environmental impact statement for the project that will be open to submissions from the public.
