GENERAL INTEREST Quick Takes
Alberta, Saskatchewan link on environment
The governments of Alberta and Saskatchewan, both of which oppose the Canadian government’s assertive policies on climate change, have formed a bilateral agreement to collaborate on environmental issues.
“The subjects being discussed range from fish and wildlife management to ways in which the two provinces can work together to negotiate a fairer deal with Ottawa on environmental issues,” they said in a press release.
The statement noted that both provinces have challenged the federal government’s carbon tax in court (OGJ Online, Oct. 5, 2016).
Petrobras selling onshore fields in Tucano Sul Cluster
Petroleo Brazileiro SA (Petrobras) said it is proceeding with the sale of four onshore exploration and production concessions, jointly called Tucano Sul Cluster, in Bahia state. The sale initially was announced in July.
During the binding phase, qualified parties will receive a process letter with detailed instructions on the divestment process, including guidelines for due diligence and submission of binding proposals.
The Tucano Sul Cluster covers four onshore concessions: Fazenda Matinha, Conceicao, Querera, and Fazenda Santa Rosa fields in the Tucano basin between the Jatoba and Reconcavo basins. Petrobras operates these fields with 100% interest. The cluster averaged 29,200 cu m/day of gas in 2018.
Since May 2016, Petrobras has pursued asset sales in efforts to reduce its debt.
Group to study LNG for Austrian transport
OMV AG, Snam SPA, and Snam affiliate Trans Austria Gasleitung GMBH have signed a memorandum of understanding to seek opportunities in Austria for LNG use in transportation.
Activities might include construction of a small gas liquefaction plant, a framework for a later LNG supply agreement, and LNG market development.
OMV Chief Executive Officer Rainer Steele cited studies projecting the number of LNG trucks in Europe at 280,000 by 2030.
Lower emissions of carbon dioxide and particulates and less noise from LNG combustion “add up to environmentally sound goods transport,” he said. “This is why we should get on with expanding the requisite infrastructure and supply.”
Snam CEO Marco Alvera said Italy has Europe’s largest numbers of CNG distributors, at more than 1,300, and LNG distributors, more than 50.
“Snam is investing to further strengthen the network for both cars and trucks,” he said.
Obsidian studying strategic alternatives
Obsidian Energy Ltd., Calgary, has begun a formal study of strategic alternatives.
Options might be a sale, merger, or other business combination; disposition of all or some assets; refinancing of the capital structure; or a combination.
Tudor, Pickering, Holt & Co. is advising.
Known as Penn West Petroleum Ltd. until June 2017, the company produces about 28,000 boe/d of mostly light oil in the Viking, Cardium, and Deep Basin areas of Alberta and cold-flow heavy oil in the Peace River area.
For the quarter ended June 30, it reported a $162 million loss, compared with a $96 million loss in the same quarter a year earlier.
Alta Mesa Resources files for bankruptcy
Alta Mesa Resources Inc., Houston, has filed for voluntary financial restructuring under bankruptcy. The action does not affect its midstream affiliate, Kingfisher Midstream LLC.
Alta Mesa holds 140,400 net acres in the STACK play of eastern Oklahoma. Its net production in the fourth quarter last year was 37,600 boe/d, of which 50% was oil and 73% liquids.
A company statement cited “a historically challenging commodity price environment and a capital market that is highly constrained for energy companies.”
In conjunction with the bankruptcy filing, the company named Mark Castiglione chief executive officer. He previously was interim executive vice-president, strategy and corporate development.
Randy Limbacher, formerly interim president, has been named executive vice-president of strategy.
John Campbell, formerly interim chief operating officer, has become president and chief operating officer.
Jim Hackett, recently interim chief executive officer, has resumed his former role as executive chairman.
Hackett was CEO of Silver Run II when the firm, created by Riverstone Holdings for acquisitions, merged with Alta Mesa and Kingfisher Midstream in 2017 (OGJ Online, Aug. 17, 2017).
Catiglione, Limbacher, and Campbell joined Alta Mesa from Riverstone in a management change last year.
EXPLORATION & DEVELOPMENT Quick Takes
Talos makes gulf deals with ExxonMobil, BP
Talos Energy Inc. has negotiated two separate agreements with BP PLC and ExxonMobil Corp. regarding prospects in the US Gulf of Mexico.
Talos acquired from ExxonMobil the Hershey prospect on Green Canyon Blocks 326, 327, 370, and 371.
BP acquired from Talos its interest in the Puma West prospect on Green Canyon Block 821. BP and Talos expect to drill an exploration well there during the fourth quarter.
In the ExxonMobil agreement, Talos acquired 100% working interest in the Hershey prospect and will become operator of four Green Canyon blocks covering 23,000 gross acres.
Hershey is a large, subsalt Miocene prospect with potential for several stacked horizons. Based on preliminary estimates, Talos executives believe the prospect may contain oil-weighted, gross unrisked resources of 100-300 million boe.
Hershey could be developed as a subsea tie-back to multiple Talos-controlled Green Canyon facilities or with new, dedicated infrastructure.
Separately on Puma West, Talos will retain 25% working interest with BP, the operator, holding the rest. An initial well is expected to be spudded before Oct. 31 using the Seadrill West Auriga ultradeepwater drillship.
The prospect involves subsalt Miocene target zones believed to be like Mad Dog field, which is 15 miles from the proposed Puma West wellsite. Talos identified the Puma West prospect following seismic reprocessing in its core Green Canyon area.
Contract let for Sarta processing facility
A unit of Chevron Corp. has let a contract to Oilserv, Dubai, for supply of a 20,000-b/d central processing facility for Sarta oil field in the Kurdistan region of Iraq, reports Genel Energy PLC.
Oilserv will build, install, operate, and maintain the facility under a lease. Commissioning of the plant and the start of production are due in mid-2020.
In addition to the processing facility, the first development phase, which Genel describes as a pilot, involves recompletion of the Sarta-2 well and placement of the Sarta-3 well on production.
The wells both tested about 7,500 b/d of oil (OGJ Online, Feb. 28, 2019). The pilot development phase targets the Lower Jurassic Mus-Adayah reservoir with proved and provable reserves estimated at 34 million bbl.
Four exploration wells have found oil in multiple strata with ages from Tertiary to Triassic.
Genel, which holds a 30% working interest, said further investment will depend on pilot production and results of the drilling of two or three more wells.
Other interests are Chevron, the operator, 50%, and Sonatrach, 20%.
Multiclient wide-azimuth survey begins in Mexico
A wide-azimuth (WAZ) survey covering 5,080 sq km started in the Salina del Istmo basin in Mexico’s Bay of Campeche, which contractor Schlumberger Ltd. said provides the first 3D coverage over this shallow-water target area, including the Zama-1 discovery.
The multicient project, WAZ-6, hired WesternGeco, the geophysical services and subsurface data division of Schlumberger. The survey will complement existing WesternGeco WAZ coverage, merging with other WesternGeco Campeche WAZ programs.
WesternGeco will use cloud computing power to accelerate processing with expected delivery to clients in late 2020.
The Bay of Campeche is a geologically complex area, said WesternGeco Pres. Maurice Nessim. “We have acquired and processed more than 72,000 sq km of new WAZ data and reimaged around 95,000 sq km in the Campeche basin alone,” Nessim said.
A range of advanced imaging technologies will be applied to improve reservoir continuity and ensure reliable amplitude and quantitative interpretation analysis, which reduces predrill risk and increases exploration success.
ANPG discusses frontier offshore blocks
Representatives of the National Agency of Petroleum, Gas, and Biofuels of Angola (ANPG) discussed details of ANPG’s latest exploration and production bid round covering 10 frontier offshore blocks during a road show stop in Houston on Sept. 10.
The latest bid round involves blocks in the following areas:
• Namibe basin—Blocks 11, 12, 13, 27, 28, 29, 41, 42, and 43.
• Benguela subbasin—Block 10.
The blocks currently have no oil and natural gas production. ANGP representatives said seismic data interpretation has helped petroleum engineers identify horsts and grabens associated with Barremian rifting as well as Albian salt tectonics. Tertiary depocenters and turbiditic channels also have been identified, ANPG representatives said.
Contracts cover 5 years for exploration periods and 25 years for production periods.
IHS Markit assisted ANPG in the bid round after having last hosted round promotions for Angola in 2005, and 2007-08, which led to the largest signing bonuses on record for individual blocks.
Gas field off Senegal extended southward
The BP PLC Yakaar-2 appraisal well offshore Senegal has proved southward extension of the gas field discovered in 2017 at Yakaar-1, reports Kosmos Energy, a partner (OGJ Online, May 15, 2017). The appraisal well encountered 30 m of net gas pay in high-quality Cenomanian reservoir rock similar to pay in the Yakaar-1 discovery well.
The Valaris DS-12 drillship drilled the Yakaar-2 well to 4,800 m TMD in 2,500 m of water 9 km south of Yakaar-1.
Kosmos said appraisal results boost its expectation that the Yakaar and nearby Teranga discoveries can support an LNG project. State-owned Petrosen is another partner.
The drillship next will drill the BP Orca-1 exploration well offshore Mauritania.
DRILLING & PRODUCTION Quick Takes
Chevron sanctions waterflood for St. Malo field
Chevron Corp. sanctioned a waterflood project to extend the life of St. Malo field, which lies 280 miles south of New Orleans in the Gulf of Mexico. The project is Chevron’s first waterflood in the deepwater Wilcox trend.
The waterflood project is expected to contribute an estimated ultimate recovery of more than 175 million boe. Plans include two new production wells, three new injector wells, and topsides injection equipment for the Jack-St. Malo floating production unit.
Jack and St. Malo fields started oil and gas production in 2014 (OGJ Online, Dec. 2, 2014).
Chevron subsidiaries Chevron USA Inc. and Union Oil Co. of California jointly hold 51% working interest in St. Malo field. Partners are MP Gulf of Mexico 25%, Equinor Gulf of Mexico 21.5%, ExxonMobil Corp. 1.25%, and Eni Petroleum US 1.25%.
Gas production starts from field off Egypt
Eni SPA and 50-50 partner BP PLC have started production from Baltim South West natural gas field in the Great Nooros area offshore Egypt and plan more drilling.
Eni, the operator, said the BSW1 well is producing at an initial rate of 100 MMscfd from a new offshore platform. Production flows through a new 44-km, 26-in. pipeline to the Abu Madi gas plant onshore.
Discovered in 2016, the field is in 25 m of water, 10 km from producing Nooros field (OGJ Online, June 9, 2016).
The partners will drill five more wells, hoping to raise production to 500 MMscfd by the second quarter of 2020.
Inpex submits Ichthys Phase 2 drilling plan
Inpex Corp. of Japan has submitted its environmental plan for the Ichthys gas field Phase 2 drilling campaign offshore Australia to the National Offshore Petroleum Safety and Environmental Management Authority.
The program, in Browse basin production licence WA-50-L, will comprise the drilling, completion, and flow back of 12-15 development wells in Ichthys field.
Inpex said the campaign includes the potential for workovers and well intervention of existing and planned development wells.
Drilling will be done using a semisubmersible mobile offshore rig, which will be anchored to the seabed and use dynamic positioning equipment.
Other vessels may be used to undertake additional well-related activities during the program.
Drilling is scheduled to begin during the first half of 2020 and continue for up to 5 years.
The wells will be drilled in 235-275 m of water. The closest major town is Derby on the Kimberley coast about 390 km south of the permit’s southern boundary.
Inpex has approval granted for as many as 50 wells across 12-15 drill centers.
The initial development wells were drilled during 2014-18 and the field first came on stream in July 2018 sending gas via subsea pipeline to an LNG plant in Darwin and condensate direct to market from a floating production, storage, and offloading vessel moored near the field.
PROCESSING Quick Takes
Hanwha Total commissions Daesan ethylene expansion
Hanwha Total Petrochemicals Co. Ltd. (HTPCL), a 50-50 joint venture of Hanwha Group, Seoul, and Total SA, Paris, has completed a $450-million investment project to expand ethylene capacity of its Daesan refining and petrochemicals integrated complex in Chungnam Province, South Korea, about 145 km from Seoul (OGJ Online, Apr. 12, 2017).
The complex has increased ethylene production capacity at the site by 30% to 1.4 million tonnes/year, Total said.
Launched in April 2017, the now-completed ethylene expansion is the first of three projects under way at the complex, the other two of which include a $300-million project to expand polyethylene production by 50% to 1.1 million tpy by yearend, as well as a $500-million project to increase polypropylene production capacity by nearly 60% to 1.1 million tpy by 2021 (OGJ Online, Jan. 8, 2019; Dec. 3, 2018).
Designed to take advantage of abundant, cost-advantaged propane feedstock from the US shale gas revolution, the three projects will equip HTPCL’s Daesan complex to capture margins across the ethylene-polyethylene and propylene-polypropylene value chains, with the additional production capacity helping to meet rapidly growing demand in Asia-Pacific, Total said.
“These investments and today’s successful start-up of the first project reflect our strategy of meeting growing global demand for petrochemicals by channeling our investments into our world-class complexes and leveraging cost-advantaged feedstock,” Bernard Pinatel, Total’s president of refining and chemicals, said.
BPCL lets contract for Mumbai refinery
India’s state-owned Bharat Petroleum Corp. Ltd. (BPCL) has let a contract to Chevron Lummus Global (CLG)—a partnership of Chevron USA and McDermott International—to provide process technology and design for a hydrocracker and lubricant oil base stock unit at its 241,000-b/d refinery in Mumbai, Maharastra, India.
As part of the contract, CLG will provide its proprietary Isocracking, Isodewaxing, and Isofinishing technologies for the unit, which will produce high-quality clean fuels, premium grades of lubricating base oils, and white oils, the service provider said.
CLG said its scope of work on the BPCL project also will include supply of catalysts as well as its proprietary Isomix-e reactor internals.
Operator lets contract for methanol plant in Russia
Nakhodka Mineral Fertilizer Plant CJSC (NZMU) has let a contract to Haldor Topsoe AS to provide technology licensing for a 5,400-tonne/day methanol plant near Vladivostok in eastern Russia. As part of the contract, Topsoe will provide technology licensing, basic engineering, catalysts, and proprietary hardware for the methanol plant, which will be based on Topsoe’s two-step reforming technology, the service provider said.
China Chengda Engineering Co. Ltd. will provide engineering, procurement, and construction on the project, Topsoe said.
Due for start-up in 2023 with a planned total capacity of as much as 1.8 million tonnes/year of methanol and up to 1.8 million tpy of ammonia, the plant—which will be located near the major Russian seaport Nakhodka in the Primorsky region—aims to export products to destinations in Southeast Asia, according to NZMU’s web site.
NZMU said it entered an agreement in 2015 with Gazprom Group to secure 3.15 billion cu m of natural gas feedstock for the methanol and fertilizer project from Gazprom’s Sakhalin field under a 20-year contract.
Sibur lets contract for revamp of benzene complex
JSC Sibur-Neftekhim, a subsidiary of PJSC Sibur Holding, Moscow, has let a contract to Sulzer Chemtech Ltd.’s Sulzer GTC technology to license technology for modernization of a benzene production complex at Sibur Kstovo LLC’s olefins production plant near Nizhniy Novgorod, Russia.
As part of the contract, Sulzer will deliver licensing of its proprietary pyrolysis gasoline (pygas) processing technologies for the proposed revamp, the service provider said.
Specifically, Sulzer GTC will design a GT-BTX extractive distillation unit as well as revamp the existing pygas fractionation, first and second-stage hydrotreating, and the thermal hydrodealkylation unit to process additional feed.
Scope of supply includes the basic engineering package, technical services, proprietary catalyst, solvent, and equipment.
Once completed, the modernized unit will serve as a hub for processing full-range pygas from several Sibur facilities, allow production of high-purity benzene with the lowest cash cost, and recover nonaromatics to be used as cracker feed, Sulzer said.
The service provider disclosed neither a value of the contract nor a timeframe for the project’s completion.
As of yearend 2018, Sibur Kstovo’s Nizhniy Novgorod site had a nameplate benzene production capacity of 96,000 tonnes/year, Sibur said in its 2018 annual report.
TRANSPORTATION Quick Takes
QP-Shell venture forming LNG bunker firm
Citing sulfur limits tightening in 2020, representatives of Shell Gas & Power Developments BV and Qatar Petroleum’s Wave LNG Solutions have signed a shareholder agreement to form a company providing global LNG bunkering services.
Subject to regulatory approvals, the 50-50 company will procure LNG, set up storage and bunker vessels in key locations, and facilitate sales of LNG as a marine fuel.
Saad Sherida Al-Kaabi, minister of state for energy affairs and president and chief executive officer of Qatar Petroleum, said demand for LNG as a bunker fuel might reach 35 million tonnes/year by 2035. That’s about 11% of Shell’s estimate of worldwide LNG deliveries last year.
Shell CEO Ben van Beurden noted the International Maritime Organization’s 0.5% cap effective in 2020 on sulfur in bunker fuel. “An increasing number of ship owners and operators are turning to LNG over traditional marine fuels in response to tighter sulfur and nitrogen oxide emissions regulations,” he said.
Woodside signs LNG supply agreement with Uniper
Woodside Energy Trading Singapore Pte. Ltd. has signed a heads of agreement with Uniper Global Commodities for the supply of LNG from Wooodside’s portfolio for 13 years starting in 2021. The volume will initially be up to 500,000 tonnes/year, increasing to 1 million tpy from 2025.
Woodside CEO Peter Coleman said the agreement is another strong signal of market support for the company’s plans to expand the Pluto LNG facility of the Burrup peninsula, Western Australia. The addition of a second LNG train at Pluto will be supplied by gas from the proposed Scarborough field development on the Exmouth Plateau.
The agreement is conditional upon the negotiation and execution of a fully termed LNG sale and purchase agreement as well as obtaining all necessary approvals. With respect to the additional supply from 2025, the agreement depends on a final investment decision on the Scarborough development.
SCOOP-to-North Texas gas system comes online
Candor Midstream LLC’s SCOOP-to-North Texas rich gas gathering pipeline system is now online.
The 100-mile, 20-in. pipeline originates in northern Carter County, Okla., and terminates near processing facilities in Bridgeport, Tex. It has an initial operational capacity of as much as 200 MMcfd and provides regional producers with an immediate outlet to processing markets in North Texas.
Candor purchased the system in January. Candor constructed multiple risers for commercial-rich gas receipts, upgraded equipment, and added pipeline monitoring capabilities that exceed industry standards. Hydrostatic testing was completed to certify the pipeline’s safe return to commercial service.