GENERAL INTEREST Quick Takes
Alberta starts promised review of AER
The Alberta government has begun a review of the Alberta Energy Regulator, a campaign promise of Premier Jason Kenney.
It also has replaced AER board members with interim directors with oil and gas expertise.
Kenney, who became premier on Apr. 30, said he would begin a review of the AER within 180 days of taking office.
“We’ve seen the performance of the AER decline over the past few years despite hiring more staff,” said Energy Minister Sonya Savage. “It now takes four times longer than other jurisdictions like Texas to get a project approved in Alberta.”
The review, according to a press release, “will identify changes and enhancements to the AER’s mandate, governance, and system operations to ensure that Alberta remains a predictable place to invest and a world leader in responsible resource development.”
The review will include workshops with industry, municipal and professional associations, government departments, and indigenous groups; collaboration with governance and regulatory experts; and a dedicated web site.
The AER began life in 2013, consolidating energy regulatory functions of the former Energy Resources Conservation Board and environmental agencies.
New board members are Beverly Yee, currently deputy minister of environment and parks, chair; Grant Sprague, deputy minister of energy; David Goldie, who has oil and gas industry experience, including 7 years with Cenovus Energy; Georgette Habib, former member of the National Energy Board, Canada’s energy regulator; and Sherri Brillon, who worked for Encana for more than 30 years.
They will serve 9-month terms.
Alberta files Bill C-69 court challenge
The government of Alberta has filed a legal challenge to a federal law enacted earlier this year that opponents say impedes permitting of oil and gas pipelines and other major projects.
At an oil and gas conference in Fort McMurray, Premier Jason Kenney announced the action against Bill C-69 in Alberta’s Court of Appeal.
His government asked the court to review constitutionality of the law and implementing regulations.
Bill C-69 overhauls federal environmental review (OGJ Online, June 13, 2019).
Kenney, who took office in April, had promised to challenge the legislation if it passed.
Share sales to end GE’s control of Baker Hughes
General Electric Co. and affiliates plan share sales that will end their control of Baker Hughes, a GE Company.
They will sell 105 million shares of BHGE Class A shares in a secondary offering under which underwriters will have the option to buy an additional 15.75 million Class A shares.
And in a privately negotiated transaction, BHGE will repurchase from GE and affiliates $250 million of BHGE Class B common shares and membership interests at the price per share at which underwriters buy Class A shares in the secondary offering.
After the transactions, GE and affiliates no longer will hold more than 50% of the voting power of all classes of BHGE’s voting stock. GE’s board representation will decline from five directors to one.
GE merged its oil and gas business with Baker Hughes Inc. in 2017, retaining 62.5% of the combined company (OGJ Online, Oct. 31, 2016).
New EQT leaders cutting staff by 23%
New managers of EQT Corp., Pittsburgh, have announced a 23% staff reduction. In a press statement, the company said the 196 jobs to be cut account for about $50 million/year of general and administrative costs.
After a proxy contest this year, EQT shareholders reshuffled the board and replaced top executives, making Toby Rice chief executive officer (OGJ Online, July 10, 2019).
Rice was among former officials of Rice Energy Inc. who launched the proxy war. EQT acquired Rice Energy in 2017 for $8.2 billion.
Exploration & Development Quick Takes
APA 2019 draws applications from 33 operators
Thirty-three operators submitted applications to the National Petroleum Directorate (NPD) for petroleum production licenses offshore Norway. The application deadline was Aug. 27. The Ministry of Petroleum and Energy opened the Awards in Predefined Areas (APA) 2019 round on May 29 (OGJ Online, May 29, 2019). Since APA 2018, the APA acreage has been expanded by 5 blocks in the North Sea, 37 blocks in the Norwegian Sea, and 48 blocks in the Barents Sea.
Most of the companies that are active on the Norwegian shelf submitted applications in this year’s APA round. Interest in the Norwegian Sea and the Barents Sea is comparable to APA 2018, while there is a small decline in the North Sea.
“A great deal of acreage has been awarded over the last 2 years, particularly in the North Sea. That makes it particularly gratifying to see the continued strong interest in new exploration acreage,” said Torgeir Stordal, NPD exploration director.
NPD will evaluate the applications with focus on geological understanding and plans for exploration of the areas. Emphasis also is placed on the companies’ technical expertise and experience, as well as financial strength.
The authorities will announce which companies will be offered ownership interests in APA 2019 early in 2020.
Strike Energy completes gas find ‘trifecta’
A 50-50 joint venture led by Strike Energy Ltd. with Warrego Energy Ltd. has confirmed a natural gas discovery in a third reservoir in its West Erregulla-2 well in the onshore North Perth basin of Western Australia.
Strike said gas was encountered in the High Cliff sandstone reservoir at a depth of 4,918 m with a gross column of at least 22 m thickness. The entire 22-m section was found to be gas saturated with a net pay of 10 m and an average porosity of 10.3%. Some sections had a porosity up to 16%.
The well did not encounter a gas-water contact in the High Cliff formation, a finding that Strike said is consistent with the seismic amplitude model that supports the interpreted field boundaries.
Stuart Nicholls, Strike managing director, said the High Cliff reservoir quality at West Erregulla is comparable to the same reservoir in the nearby Waitsia-1 well, which flowed 25 MMcfd of gas when tested.
Nicholls said West Erregulla-2 reached a total depth of 5,100 m making it the deepest onshore well drilled in Australia and one that has discovered the deepest ever hydrocarbons.
“The presence of both gas and porosity at such depths add further significance to the evolving Kingia-High Cliff gas fairway within the Perth basin,” Nicholls said. The High Cliff find completes a trifecta following discovery of gas columns in the Wagina and Kingia sands higher in the well.
Strike is now running an additional advanced logging program. This will be followed by the setting of production casing in preparation for flow testing of both the Kingia and High Cliff zones in the coming weeks.
Cooper Energy awarded Bass Strait permit
Cooper Energy Ltd., Adelaide, has been awarded an offshore exploration permit in a central part of the Victorian Gippsland basin surrounded by major producing oil and gas fields.
The new permit, Vic/P75, is in addition to the company’s six other wholly owned exploration permits, production and retention licences in the basin surrounding the major Bass Strait fields held by the ExxonMobil Corp.-BHP joint venture.
Cooper says that previous exploration in Vic/P75 has been impaired by depth conversion issues related to velocity complexities above the main Latrobe formation reservoir targets. The company, however, believes that recent advances in 3D seismic reprocessing will provide greater clarity for mapping subsurface structures.
Cooper has already seen the benefits of the new technology in its Vic/P72 permit to the north.
Managing Director David Maxwell said the new permit strengthened the company’s Gippsland basin portfolio.
“The basin is the major gas-producing region in southeast Australia and presents as a competitive supply source for new developments,” he said. “Vic/P75 fits well within the portfolio we have built for the region which includes the recently developed Sole gas field (in Vic/L32), the Manta gas and liquids resource (Vic/RL13, Vic/RL13, and Vic/RL15) we are working to mature as the next Gippsland basin development, and our other exploration permit Vic/P72.”
The new Vic/P75 permit has been awarded for a 6-year term, the first 3 years of which will be taken with seismic reprocessing and geological and geophysical studies.
Cooper will consider farming down from its current 100% interest depending on the results of the initial programs and company’s value and risk management considerations.
CGG starts 3D deepwater survey offshore Brazil
Integrated geoscience company CGG has started acquisition of a Nebula 3D seismic survey in the Campos and Santos basins offshore Brazil.
With an initial focus on the blocks offered in Brazil’s 15th license round, the data are being acquired by the Geo Caribbean and a portion of the survey will provide 3D data coverage where no other 3D data currently exists, CGG said.
The Nebula 3D survey is supported by industry funding.
BHP lets seismic contract for off eastern Canada
BHP Petroleum Corp. has let a large-scale seismic imaging project in the offshore Orphan basin in eastern Canada to Subsurface Imaging, part of CGG’s Geoscience division.
CGG will employ its FWI and least-squares migration algorithms over the entire survey area of more than 10,000 sq km.
BHP has said previously it plans a drilling program in the Orphan basin where it holds 100% interest in two exploration licenses, EL1157 and EL1158 (OGJ Online, May 22, 2019).
In November 2018, BHP was successful in its bids to acquire a 100% participating interest in, and operatorship of, the two licenses for Blocks 8 and 12 in the basin. At the time, Steve Pastor, BHP president operations petroleum, said the bids were an opportunity for the company to explore for world-class conventional oil assets as an early mover in the prospective region.
BHP’s aggregate bid amount of $625 million covers the drilling and seismic work required by the exploration work programs under the license agreements over the 6-year term. BHP’s minimum commitment under the license agreements is for $157 million. Should BHP decide to progress the exploration program beyond the initial phase, a decision in relation to further capital expenditure to drill the first appraisal well is expected to be made in fiscal year 2022.
BHP’s initial planned capital expenditure on the exploration work programs for the blocks is $140 million up to fiscal year 2021.
The Orphan basin, off the coast of Newfoundland, is estimated to comprise an area of over 150,000 sq km. Water depths in the basin range from 200 m on the western side to 3,000 m on the eastern side. Previous wells drilled by various operators did not result in petroleum discoveries, but did confirm the presence of Tertiary, Upper Cretaceous, Lower Cretaceous and, likely, Jurassic sediments in the basin.
Drilling & Production Quick Takes
Operator plans October start-up for Johan Sverdrup
Equinor, as operator, and its partners—Lundin Norway, Petoro, Aker BP, and Total SA—have accelerated the planned start-up schedule for Phase 1 production of Johan Sverdrup oil field to October from November.
“As we enter the final stretch of the project, we believe it is possible to start production up to a month earlier” than previously planned, said Anders Opedal, Equinor executive vice-president for technology, projects, and drilling.
Equinor is completing equipment and systems tests for a full-field center to operate as one installation. The schedule revision was announced shortly after the Norwegian Petroleum Directorate approved the start-up of the field (OGJ Online, Sept. 3, 2019).
During Phase 1, Johan Sverdrup will produce 440 million b/d when plateau production is reached by mid-2020, increasing to 660 million b/d after Phase 2 is scheduled to start in the fourth quarter 2022. The field is expected to produce oil for 40 years.
ExxonMobil, SBM sign long-term FPSO supply deal
ExxonMobil Corp. and SBM Offshore NV, Amsterdam, have signed a long-term agreement covering potential future orders for floating production, storage, and offloading vessels.
The agreement—which is nonexclusive and establishes the general legal framework and terms relating to the engineering, procurement, construction, and installation of potential future contracts of leased FPSOs—includes build, operate, and transfer projects.
Over the last 40 years, SBM Offshore has supplied more than 10 floating systems to ExxonMobil in five countries, including five FPSOs, deepwater offloading systems, and a floating storage and offloading vessel. Also, multiple major projects are currently in various stages of progress, SBM Offshore said.
PROCESSING Quick Takes
Cogeneration due at Suncor oil sands plant
Suncor Energy Inc. will invest $1.4 billion to replace two coke-fired boilers with gas-fired cogeneration units in a project that will cut greenhouse-gas emissions from steam production at its Oil Sands Base Plant by 25%.
The cogeneration units will supply steam to the 350,000-b/d upgrader north of Fort McMurray and generate 800 Mw of electric power for the Alberta grid.
The company said it expects “a high-teens return” from the project and a boost to free cash flow by 2023. Returns will come from lower operating costs and sustaining capital requirements and from margin improvements.
In addition to lowering GHG emissions by an estimated 2.5 million tonnes/year, the project will reduce emissions of sulfur dioxide by 45% and of nitrogen oxides by 15%.
Decommissioning of a flue gas desulfurization unit now supporting the coke-fired boilers will lower Suncor’s water withdrawals from the Athabasca River by about 20%.
Suncor aims to lower the “carbon intensity” of its work by 30% during 2014-30.
Renewable diesel JV studies second plant
Valero Energy Corp. and Darling Ingredients Inc. have begun advanced engineering and development cost review for what the refining company says would be the first renewable diesel facility in Texas. The plant, in Port Arthur, Tex., would have design capacity to produce 400 million gal/year of renewable diesel and 40 million gal/year of renewable naphtha from recycled animal fats, used cooking oil, and inedible corn oil.
It would be operated by the companies’ 50-50 joint venture Diamond Green Diesel Holdings LLC.
Green Diesel operates a renewable diesel plant at Norco, La., where capacity is being expanded to about 675 million gal/year from 275 million gal/year (OGJ Online, May 6, 2019).
The proposed plant would be near Valero’s 395,000-b/d Port Arthur refinery. A final investment decision is expected in 2021.
Russian operator lets contract for methanol plant
AEON Infrastructure Corp. subsidiary GTM One has let a contract to Haldor Topsoe AS to provide technology licensing, basic engineering, catalysts, and proprietary hardware for a grassroots methanol unit to be built at the Khimprom site in Volgograd, Russia. Haldor Topsoe will provide basic engineering as well as its proprietary SynCOR Methanol technology for the 3,000-tonne/day process unit, the service provider said.
Additionally, Mitsubishi Heavy Industries (MHI) Engineering will develop the front-end engineering design package for the project, Haldor Topsoe said.
At an unidentified later stage, Haldor Topsoe said it expects the parties will sign an additional contract for engineering, procurement, and construction of the project.
GTM One selected SynCOR methanol-conversion technology for its high performance, low environmental impacts, high energy efficiency, and low capex, said Osipov Alexander, GTM One’s technical director.
Construction on the proposed new plant is slated to begin in second-half 2020.
Haldor Topsoe previously was awarded a contract by IGP Methanol LLC (IGPM) to deliver engineering and SynCOR methanol-conversion technology for new units at IGPM’s proposed project to build a 7.2 million-tonne/year Gulf Coast Methanol Complex on a 140-acre parcel adjacent to the Mississippi River near Myrtle Grove in Plaquemines Parish, La. (OGJ Online, Feb. 2, 2018).
TRANSPORTATION Quick Takes
Freeport LNG ships first commissioning cargo
Freeport LNG Development LP (FLNG), Houston, has shipped the first LNG commissioning cargo for Train 1 from its liquefaction facility on Quintana Island in Freeport, Tex. (OGJ Online, Aug. 20, 2019).
Some 150,000 cu m of LNG was loaded aboard the LNG Jurojin, which departed from the Freeport LNG terminal on Sept. 3. The first cargo loading is a step towards the start of commercial operations expected later this month.
FLNG’s Train 2 is advancing the precommissioning phase to support an in-service date of January 2020. Train 3 is nearing completion to support an in-service date of May 2020.
Freeport LNG raises $1.025 billion for Train 4 expansion
Freeport LNG Development LP expects to take final investment decision in the “next several months” as the company and Westbourne Capital have executed definitive agreements to help finance the natural gas liquefaction train, which will be integrated into its existing gas liquefaction and LNG export facility on Quintana Island near Freeport, Tex.
Westbourne and its coinvestors will exclusively provide a mezzanine loan of as much as $1.025 billion to a Freeport LNG subsidiary in support of the train, which is expected to add more than 5 million tonnes/year of LNG production to its existing project, increasing the total export capability of the four-train facility to more than 20 million tpy.
Cheniere takes delivery of Corpus Christi Train 2
Cheniere Energy reported the substantial completion of Train 2 at the Corpus Christi Liquefaction (CCL) project in Corpus Christi, Tex., was achieved. Commissioning is complete and Cheniere’s partner, Bechtel Oil, Gas & Chemicals Inc., turned over care, custody, and control of Train 2 to Cheniere.
Under sale and purchase agreements with Electricite de France, SA, Iberdrola SA, Naturgy Energy Group SA, PT Pertamina (Persero), and Woodside Energy Trading Singapore Pte. Ltd., first commercial delivery is expected in May 2020, upon which the term of each of these SPAs commences.
Each train in the three-train CCL project is expected to have a nominal production capacity of 4.5 million tonnes/year of LNG.
Through its partnership with Cheniere, Bechtel has delivered seven LNG trains at two sites on the US Gulf Coast since 2015.
FERC accepts Commonwealth LNG’s permit application
Commonwealth Projects LLC is progressing its Commonwealth LNG project and moving closer to a final investment decision following the US Federal Energy Regulatory Commission’s formal acceptance of Commonwealth LNG LLC’s filing application.
Commonwealth LNG is an 8.4 million-tonnes/year export terminal project on the US Gulf Coast near Cameron, La. The project involves construction of an LNG plant that will include six gas liquefaction trains and appurtenant facilities. Each train will have a design capacity of 1.4 million tpy.
The project, on the west side of the Calcasieu Ship Channel near the entrance to the Gulf of Mexico, will include six LNG storage tanks (each with a capacity of 40,000 cu m), one marine loading berth (capable of loading LNG carriers up to a capacity of 216,000 cu m), and a 3.04-mile, 30-in. pipeline connecting the LNG facility with existing intrastate and interstate pipelines to supply gas to the project.
The company expects to take FID on the project in fourth-quarter 2020 and begin operations in first-quarter 2024.
India-Nepal oil pipeline inaugurated
Indian Oil Corp. Ltd. and Nepal Oil Corp. have inaugurated the first pipeline to carry Indian oil products across an international border. IOCL built the 69-km, 10.75-in. pipeline between Motihari, near its 125,000-b/d Barauni refinery, and NOC’s depot at Amlekhgunj.
The pipeline replaces often-disrupted truck transport of gasoline, diesel, LPG, and aviation fuel. It is expected to ease road congestion at the border and at IOCL’s Raxaul depot in Bihar. Design throughput of the pipeline is 2 million tonnes/year of product. Of the total length, 32.7 km is in India, and 36.2 km is in Nepal.
The project included a revamp of the Aklekhganj depot.
KazMunayGaz: Saryarka gas line 75% complete
Construction is 75% complete on a 1,081-km natural gas pipeline between western Kazakhstan and central and northern regions of the country currently without gas, reports state-owned KazMunayGaz.
The 820-mm OD Saryarka pipeline will have initial capacity of about 1 billion cu m/year of gas.
It extends northward from the Karaozek gas compression station on the existing Beineu-Bozoi-Shymkent transmission line in the Kyzylorda oblast and transits the Kyzylorda, Karaganda, and Akmola oblasts.
Distribution networks not part of the main project are planned for those areas.
KazMunayGaz on Aug. 8 said 796.6 km of the trunk line, for which it is responsible, had been completed. It expects the linear line to be complete by yearend.
