OGJ Newsletter

GENERAL INTEREST Quick Takes

Senate confirms Brouillette as Energy Secretary  

The US Senate confirmed Dan. R. Brouillette’s nomination to be US Energy Secretary on Dec. 2 by 70 to 15 votes, with 15 members not voting.

Republicans and several Democrats supported the nomination. Democrats Tammy Baldwin (Wis.), Richard Blumenthal (Conn.), Sherrod Brown (Ohio), Catherine Cortez-Masto (Nev.), Maisie K. Hirono (Hawaii), Patrick Leahy (Vt.), Edward J. Markey (Mass.), Jeff Merkley (Ore.), Robert Menendez (N.J.), Jack Reed (R.I.), Jacky Rosen (Nev.), Brian Schatz (Hawaii), Charles E. Schumer (New York), Chris Van Hollen (Md.), and Ronald A. Wyden (Ore.) voted no.

BOEM awards 147 GOM leases 

The US Bureau of Ocean Energy Management completed its required evaluation to assure that the public received fair market share for federal offshore tracts the US Department of the Interior agency offered in an Aug. 21 oil and gas lease sale.

BOEM said on Nov. 25 that it awarded 147 leases on tracts covering 811,966.715 acres to high bidders who participated in Gulf of Mexico Regionwide Lease Sale No. 253 following extensive geological, geophysical, engineering, and economic analysis. Accepted high bids were valued at $155 million, it noted.

Jennings to succeed Damiris as HollyFrontier CEO  

Michael Jennings has been appointed chief executive officer and president of petroleum refiner and marketer HollyFrontier Corp., Dallas, succeeding George Damiris, who will retire as chief executive officer, president, and director on Dec. 31.

Damiris joined Holly Corp. in 2007. He was appointed chief executive officer and president of HollyFrontier in January 2016 and has served on the board of HollyFrontier since December 2015.

Jennings will serve as executive vice president until Jan. 1, 2020, at which time he will become chief executive officer and president. Jennings has served as a director of HollyFrontier since July 2011 and served as chairman of the board of HollyFrontier from January 2013 to January 2016 and from January 2017 to February 2019. He previously served as executive chairman from January 2016 to January 2017, as the chief executive officer and president of HollyFrontier from the merger of Holly Corp. and Frontier Oil Corp. in July 2011 until January 2016.

Jennings also was appointed as chief executive officer of Holly Logistic Services LLC (HLS), the ultimate general partner of Holly Energy Partners LP, effective Jan. 1, 2020. He currently serves as chairman of the board of HLS, having served as a director since October 2011.

BLM opens comment period for Montana well 

The US Bureau of Land Management opened a 30-day public comment period on Dec. 2 on an environmental assessment for a proposed oil well in southwestern Montana near Lima. Comments will be accepted until Dec. 30.

The oil and gas division in BLM’s Great Falls North Central District Office said it is seeking comments on behalf of the US Department of the Interior agency’s Dillion field office and the US Forest Service’s Beaverhead-Deerlodge National Forest on an Environmental Assessment for the Tendoy drilling permit application.

The site-specific EA analyzes potential impacts from a Lima Exploration Co. proposal to drill an exploratory oil well on public lands about 16 miles southwest of Lima, Mont., BLM indicated.

It said that the assessment was prepared jointly by BLM and the USFS, since one potential location is on the BLM and the other is on Forest Service lands. The application is available online for public review.

CNOOC appoints chief executive  

Xu Keqiang, an executive director and president of CNOOC Ltd., has been appointed chief executive officer, effective Nov. 19.

Prior to his appointment as executive director and president in April 2017, Xu, a professor-level senior engineer, served as general manager of CNOOC China Ltd. In March 2017, Xu was appointed as a vice president of CNOOC. From April 2017 to June 2018, he served as chairman of Nexen Energy ULC, a subsidiary of the company. Between May 2017 and June 2018, Xu served as chairman of CNOOC International Ltd. In May 2017, Xu was appointed as a director of CNOOC China Ltd.

Exploration & Development Quick Takes

Petrobras completes Buzios seismic survey 

Petrobras has completed what it describes as the largest seismic survey in the world, in the Onerous Cession area of Búzios field, Santos basin, about 200 km offshore Rio de Janeiro. The project, named 3D Búzios Nodes began in November 2018 and used ocean bottom nodes (OBM) technology, setting receivers in the bottom of the ocean in 6,600 positions across 1,620 sq km at depths of 1,600-2,200 m.

The work was done by a partnership Compagine Générale de Géophysique (CGG) and Seabed Geosolutions, using a Manta-model seismic receiver. This model is capable of registering data continuously for 75 days in up to 3.000 m of water.

OBN receivers registered seismic reflections generated by acoustic waves transmitted by a source boat. Processing of the acquired data is now underway.

Petrobras won rights to Búzios, which began production in April 2018, in a Nov. 6 mega-auction of production sharing contracts in the Brazilian presalt. It will operate the field with a 90% stake in a consortium with CNODC Brasil Petroleo e Gas Ltda. (5%) and CNOOC Petroleum Brasil Ltda (5%). Buzios produces 600,000 boe/d through four platforms, with a fifth scheduled to start second-half 2022.

88 Energy to drill step-out from old BP oil discovery  

Perth-based 88 Energy Ltd. plans to drill a step-out well to a former BP oil discovery well onshore Alaska early in 2020 with Premier Oil PLC, London, farming in to take a 60% interest.

Charlie-1 is designed to intersect seven stacked reservoirs, four of which have been found to contain oil saturated sandstone. The well is a one-mile step-out to BP’s 1991 Malguk-1 that found oil in multiple horizons but was never tested because of mechanical problems.

No additional work was done until 88 Energy acquired the surrounding leases in mid-2016.

Subsequently, 88 Energy fast-tracked a 3D seismic program and completed petrophysical analysis of a number of nearby wells, including the original discovery.

Premier farmed into the prospect in August this year and will fund the Charlie-1 well up to $23 million to earn 60% of the western portion of 88 Energy’s leasehold.

88 Energy will retain 30% and operatorship.

The company estimates the stacked horizons could contain 1.6 billion bbl of oil.

A rig has been contracted and the main drilling permits are in place. Charlie-1 is scheduled to spud in February 2020.

Total lets contract for South Namibia campaign 

Total E&P Namibia has let an integrated logistics contract to Bourbon Marine & Logistics to support a deep offshore exploration campaign in South Namibia in 2020.

The project scope covers provision of logistics base, freight forwarding, custom clearance, material storage and warehousing, handling and lifting, marine port visits support along with tank cleanings and logistics operations planning and conduct (material and personnel).

Bourbon will provide logistics services through a local branch with local partner Logistics Support Services.

The project in south Namibia started in early August and is expected to last one year with drilling activities expected in early 2020. The operations will be managed out of Lüderitz, a port in the south of Namibia.

Hess to tie back Esox discovery  

Hess Corp. said an oil discovery at the Esox-1 exploration well on Mississippi Canyon Block 726 in the deepwater Gulf of Mexico will tie back to its Tubular Bells production facilities (OGJ Online, Nov. 17, 2014).

Drilled in 1,405 m of water 10 km east of the Tubular Bells facilities, Esox-1 encountered 58 m of high-quality oil-bearing Miocene reservoirs.

Production is expected in first-quarter 2020, said John Hess, chief executive officer.

Hess is operator with 57.14% interest. Chevron USA Inc. holds 42.86% interest.

Drilling & Production Quick Takes 

Premier starts gas production from BIG-P 

Premier Oil PLC reported the start of natural gas production from its operated Bison, Iguana, and Gajah Puteri (BIG-P) project on Natuna Sea Block A offshore Indonesia. The 2-year project was delivered on schedule and under budget.

Premier expects BIG-P’s recoverable reserves to be over the 93 bcf (gross) estimated at sanction in 2017 as a result of the successful 3-well drilling campaign which encountered additional productive sands.

BIG-P production ties into the existing Natuna Sea Block A infrastructure, also operated by Premier, and supports the company’s two long-term gas sales contracts into Singapore.

Natuna Sea Block A’s producing fields have been developed via a combination of platforms and subsea tiebacks to the Anoa facility and the Gajah Baru WHP and CPP. Pelikan gas field, also on Natuna Sea Block A, came on-stream in 2015 (OGJ Online, Mar. 11, 2015).

During the year’s first half, production from Natuna Sea Block A averaged 11,000 boe/d (net). Natuna Sea serves as operator of Block A with 28.67%. Partners are Petronas, PTT, Pertamina, and Kufpec.

Qatar Petroleum reports load out for NFE  

Fabrication of the first two jackets required for offshore facilities as part of the North Field Expansion (NFE) project is complete, Qatar Petroleum reported. The project aims to to increase Qatar’s LNG production capacity to 110 million tonnes/year by 2024 from the current 77 million tpy.

The NFE project’s engineering, procurement, construction, and installation contract for the jackets was awarded to McDermott International in April (OGJ Online, Apr. 12, 2019). The contract for new facilities, valued at $50-250 million by McDermott, includes the full suite of EPCI services for eight offshore jackets.

The company also was awarded the front end engineering and design contract for the associated topsides and pipelines in May.

Qatar boosts planned LNG production by 64% 

Qatar Petroleum (QP) will raise Qatar’s LNG production to 126 million tons/year (tpy) by 2027, an increase of 64% from the current 77 million tpy. The company also announced that North field’s productive layers extend well into Qatari land in Ras Laffan, paving the way for a new LNG production project in the north of Qatar.

QP drilled the most recent North field appraisal well (NF-12) about 12 km inland in Ras Laffan Industrial City over the past few months.

Minister of State for Energy Affairs and president and chief executive officer of QP Saad Sherida Al-Kaabi confirmed gas reserves of the North field as exceeding 1,760 tcf, as well as more than 70 billion bbl of condensates, and “massive quantities” of LPG, ethane, and helium.

“These results will also enable us to immediately commence the necessary engineering work for two additional LNG mega trains with a combined annual capacity of 16 million tpy,” Al-Kaabi said. “It will also raise Qatar’s overall hydrocarbon production to about 6.7 million boe/d.”

PROCESSING Quick Takes 

PKN Orlen’s Plock refinery due new unit 

Polski Koncern Naftowy SA (PKN Orlen) is planning to add a new visbreaking unit at its 327,300-b/d integrated refining and petrochemical complex in Plock, Poland.

Implementation of the new unit aims to improve crude oil production efficiency by increasing the yield of high-margin products as a result of in-depth conversion of vacuum residue from the refinery’s crude distillation unit, PKN Orlen said.

Still awaiting final approval from the company’s supervisory board, the proposed project would require an investment of about 1 billion zloty.

​Intended to boost the operator’s profit margins, the visbreaking unit to be installed at Plock would require the lowest capital cost of any other available vacuum residue conversion technology, PKN Orlen said.

The operator disclosed no additional details regarding a timeframe for the project or the unit’s proposed capacity.

HPCL lets contract for Visakh refinery 

Hindustan Petroleum Corp. Ltd. (HPCL) has let a contract to L&T Hydrocarbon Engineering Ltd. (LTHE) to provide engineering, procurement, construction, and commissioning (EPCC) for a new plant to be added as part of HPCL’s previously announced program to expand and modernize its 166,700-b/d Vishakhapatnam (Visakh) refinery in Andhra Pradesh on India’s southeastern coast (OGJ Online, Mar. 21, 2017).

As part of the contract, LTHE will deliver EPCC services for a new residue upgrading facility (RUF) under EPCC Package 3 of the Visakh refinery modernization project (VRMP), Larsen & Tourbo said.

To be equipped with technology licensed by Chevron Lummus Global, the 70,300-b/d plant—to be the first of its kind in India—will enable HPCL to convert the heaviest oils into high-quality Euro 6 diesel while simultaneously eliminating fuel oil production, as well as increasing feedstock and product flexibility, according to the service provider.

Awarded on a lump-sum turnkey basis, this latest contract follows previous contract awards to LTHE to deliver EPCC services for a crude distillation unit (CDU) and vacuum distillation unit (VDU) that will have a combined nameplate capacity of 180,700 b/d, as well as EPCC services on a 61,300-b/d full-conversion hydrocracker to be added as part of the VRMP (OGJ Online, Mar. 29, 2019; Mar. 21, 2018).

Since project approval in January 2016, HPCL has let multiple contracts for the brownfield VRMP, which proposes to expand refining capacity of the site to more than 300,000 b/d as well as boost production of low-sulfur fuels conforming to Euro 5 and Euro 6-quality standards (OGJ Online, Sept. 27, 2018; July 20, 2018; Jun. 11, 2018; Mar. 7, 2018; Jan. 5, 2018; Jan. 19, 2016).

The 209.28-billion VRMP remains on schedule for mechanical completion in July 2020, according to HPCL’s web site.

According to India’s Ministry of Environment, Forest, and Climate Change, HPCL’s originally proposed 208 billion-rupee VRMP was to add the following units at the refinery:

• A 180,700-b/d CDU-VDU, which will replace one of Visakh’s three existing CDUs.
• A 66,300-b/d full-conversion, vacuum gas oil hydrocracker.
• A 5,860-b/d naphtha isomerization unit.
• A 62,250 solvent deasphalting unit.
• A 50,200-b/d slurry hydrocracker.
• A 96-tonne/day propylene recovery unit (PRU), which will replace an existing 216-tonne/day PRU.
• Two 113,000-tpy hydrogen generation units (226,000 tpy total).
• Two 360-tonne/day sulfur recovery units (720 tonnes/day total, including tail gas treatment).
• A 36,000-tpy fuel gas pressure-swing adsorption unit.
• A 300-tonne/hr nonhydroprocessing sour-water stripper.
• A 185-tonne/hr hydroprocessing sour-water stripper.
• Two 540-tonne/hr amine regeneration units (1,080 tonnes/hr total).
• A 112,000-tpy sulfur recovery LPG treating unit.
• A 1,000-cu m/hr integrated effluent treatment plant (EFP), which will replace all existing EFPs at the site.

According to the latest project information available from HPCL and general contractor Engineers India Ltd., major processing units at the refinery are scheduled for revamp as follows: 

• A 30% capacity expansion of the naphtha hydrotreater in the refinery’s Motor Spirit (MS) block to 30,120 b/d.
• A 35% capacity expansion of the continuous catalytic reforming unit in the MS block to 20, 890 b/d.
• A 30% capacity expansion of the diesel hydrotreating unit to 57,430 b/d.
• An upgrade of the naphtha hydrotreater downstream of the refinery’s fluid catalytic cracker to enable output of BS V and BS VI-grade (equivalent to Euro 5 and Euro 6-quality) fuels.

TRANSPORTATION Quick Takes 

Cameron LNG starts Train 2

Cameron LNG has introduced feed gas to its 4-million tonne/year (tpy) Train 2 in Hackberry, La. McDermott International Inc. and its joint venture partner, Chiyoda International Corp., a U.S.-based subsidiary of Chiyoda Corp., Japan, announced the unit’s final commissioning.

McDermott announced introduction of feed gas to Train 1 on Apr. 15, 2019, followed by loading of its first commissioning cargo May 31. On Aug. 19, Cameron LNG announced that Train 1 had begun commercial operation.

McDermott and Chiyoda have provided engineering, procurement, and construction for the Cameron LNG project since its initial award in 2014. The project includes three liquefaction trains with a total projected export of 12 million tpy.

Cameron LNG is jointly owned by affiliates of Sempra LNG LLC, Total, Mitsui & Co. Ltd., and Japan LNG Investment LLC, a company jointly owned by Mitsubishi Corp. and Nippon Yusen Kabushiki Kaisha (NYK).

In October 2019, Sempra and Mitsui signed a memorandum of understanding for development of Cameron LNG Phase 2, including Mitsui’s purchase of up to one-third of the project’s available capacity. Phase 2 has been fully permitted by the US FERC and includes up to two more liquefaction trains and up to two additional LNG storage tanks (OGJ Online, Oct. 28, 2019).

Commonwealth LNG, Gunvor reach offtake agreement 

Commonwealth LNG signed an offtake agreement with Gunvor committing the latter to take up to 3 million tonnes/year (tpy) of production from Commonwealth’s plant, to be sited on the Calcasieu River near Cameron Parish, La., plant. Gunvor will also market the plant’s remaining 5.4-million tpy output.

Commonwealth expects to make a final investment decision on the plant first-quarter 2021 and deliver its first shipments of LNG second-quarter 2024. Both dates are one quarter later than was the case when the US Federal Energy Regulatory Commission accepted Commonwealth’s permit application in September 2019.

Commonwealth’s planned liquefaction plant would include six 1.4-million tpy trains, six 40,000-cu m storage tanks, one marine loading berth (capable of loading LNG carriers up to 216,000 cu m), and a 3.04-mile, 30-in. OD natural gas supply pipeline.

Pony Express crude oil system launches open season  

Tallgrass Pony Express Pipeline LLC, a Tallgrass Energy LP affiliate, will solicit shipper commitments for crude oil transportation service from a new origin near Carpenter, Wyo., to Pony Express destinations in Colorado.

Based on commitments received, Pony Express plans to build some 25 miles of new 12-in. pipeline from the Hereford origin to the new origin point in Wyoming, expanding capacity from Wyoming to Sterling, Colo., on the Pony Express system. Pony Express expects the new pipeline to be in-service in the second quarter of 2020.

The open season will run from until Jan. 20, 2020.

Whistler Pipeline partners launch open season 

Whistler Pipeline LLC, a consortium of MPLX LP, WhiteWater Midstream, and a joint venture between Stonepeak Infrastructure Partners and West Texas Gas Inc., has launched a binding open season to solicit commitments for remaining capacity on the Whistler Pipeline which will transport natural gas from the Permian basin to the Texas Gulf Coast. The partners reached final investment decision on the pipeline in June (OGJ Online, June 10, 2019).

The project is designed to transport 2 bcfd of gas through 450 miles of 42-in. pipeline from Waha, Tex., to NextEra’s Agua Dulce market hub. A 50-mi, 36-in. lateral will provide connectivity for gas processors in the Midland basin.

Whistler Pipeline has contracted for the supply of the entirety of 42-in./36-in. steel pipeline needed to complete the project and is on schedule in its completion of survey along the planned route and acquisition of permits for a summer 2021 in-service date. Construction will begin in 2020.

The open season runs through Dec. 16.

MoGas launches open season for natural gas line  

MoGas Pipeline LLC, a wholly owned subsidiary of CorEnergy Infrastructure Trust Inc., has launched a non-binding open season to solicit interest in firm transportation capacity on its interstate natural gas pipeline in Missouri and Illinois.

Depending on interest, MoGas may install a parallel pipeline in the northwestern part of the system to provide up to 75,000 dekatherms/day of additional capacity from the REX and PEPL interconnections. Further expansions are open for discussion.

Current capacity on the system is 125,000 dekatherms/day. An expansion could be operational in fourth-quarter 2020.

MoGas owns a 263-mi interstate pipeline system serving the St. Louis area and central Missouri, delivering natural gas to investor-owned and municipal local distribution systems. It has pipeline receipt and delivery interconnects with Rockies Express Pipeline LLC, Panhandle Eastern Pipe Line Co. LP, and Enable Mississippi River Transmission LLC.

The non-binding open season runs through Dec. 13.