OGJ Newsletter

GENERAL INTEREST Quick Takes

Oehler named INGAA interim president; Santa to retire 

Don Santa plans to retire from the Interstate Natural Gas Association of America (INGAA) after 17 years with the organization, effective Feb. 15 (OGJ Online, Oct. 15, 2002). Alex Oehler, who leads TC Energy’s US federal government relations team, has been appointed as interim president while the board conducts a search to fill the position on a permanent basis. Oehler has served in a variety of government and policy roles for over 20 years.

ANPG awards three blocks in 2019 bid round 

Angola’s licensing agency awarded three deepwater oil and gas blocks in its 2019 bid round (OGJ Online, June 5, 2019). Of the 10 blocks made available by the National Agency of Petroleum, Gas, and Biofuels (ANPG), the awards comprise Namibe basin Blocks 27, 28, and 29. Other blocks offered were 11, 12, 13, 41, 42, and 43 in the Namibe basin, and Block 10 in the Benguela basin.

The awards give state-owned Sonangol EP working interest in all three blocks, joined by Eni, Total, Equinor, and BP as operators or shareholders. Sonagol holds a 35% interest in Block 27. The remaining 65% is open and available to interested companies. Eni was awarded operator of Block 28 with 60% interest and Sonagol was awarded 20% interest. The remaining 20% is available to interested parties. Total was awarded operator of Block 29 with 46% interest. Awarded partners are Equinor with 24.5%, Sonangol with 20%, and BP with a 9.5% concession share.

The awarded blocks, which are all considered frontier, currently have no hydrocarbon production.

Dates, venues, and terms of negotiation sessions for available interest in Blocks 27 or 28 have not been set. 

Shell to farm in to two UK offshore licenses  

Shell UK Ltd. and Egdon Resources PLC will work on a program and timeline for two UK offshore licenses to secure extensions from the Oil & Gas Authority (OGA) following Shell’s agreement to farm-in and assume operatorship.

Shell UK Ltd. has signed a farm-in agreement with Egdon for interest in P1929 and P2304, which contain the Resolution and Endeavour gas discoveries respectively.

Egdon subsidiary Egdon Resources UK Ltd. currently holds a 100% interest in both licenses. Under terms of the agreement, Shell would acquire a 70% working interest in and become operator of both licenses. In return, Shell will pay 85% of the costs of the acquisition and processing of a 3D seismic survey covering both gas discoveries with the carry on the acquisition costs capped at $5 million gross, beyond which it would pay 70%. Shell also will pay 100% of all studies and manpower costs up to a well investment decision.

The farm-in is conditional upon approval from the Oil & Gas Authority and agreement of a forward work program and timeline with the OGA.

OGA granted extensions to Egdon in 2019 to May 31 subject to securing a farm-in agreement by Jan. 31 and by demonstrating by March 31 that the licenses are on track to deliver a future program of 3D seismic data acquisition.

Schlumberger Oilfield UK PLC in April 2019 reported Mean Contingent Gas Resources of 231 bcf, with a P90 to P10 range of 100-389 bcf, attributable to the Resolution gas discovery (P1929). The discovery was made by Total in 1966 when well 41/18-2 flow tested gas from the Permian aged Zechstein carbonate (limestone) reservoir. Egdon estimates the Endeavour gas discovery (P2304) contains Mean Contingent Resources of 18 bcf, with a P90 to P10 range of 10-28 bcf.

Hutchings appointed Enerplus COO  

Wade Hutchings has been appointed senior vice-president and chief operating officer of Enerplus Corp., Calgary, effective Feb. 11. The appointment is in conjunction with the retirement of Ray Daniels as senior vice-president, operations, people, and culture after more than 35 years in the industry, including 12 years with Enerplus. Daniels will remain in his current position until April.

Hutchings has 20 years of upstream oil and gas business experience. He recently was senior vice-president, exploration and production at Devon Energy Corp. from 2017-2019. Prior, he spent 17 years at Marathon Oil Co.

Exploration & Development Quick Takes 

ExxonMobil reports 16th discovery offshore Guyana  

ExxonMobil Corp. has increased its estimated recoverable resource base in Guyana to 8 billion boe—an increase of 2 billion boe—noting a new oil discovery, Uaru, will be incremental to the new resource estimate. The new estimate includes 15 discoveries offshore Guyana through year-end 2019 (OGJ Online, Dec. 23, 2019). The Uaru discovery, the 16th on the Stabroek Block, is the first of 2020 and will be added to the resource estimate at a later date, the company said.

Uaru encountered 94 ft of high-quality oil-bearing sandstone reservoir. It was drilled in 6,342 ft of water, 10 miles northeast of Liza field, which began producing oil in December 2019.

Four drillships in Guyana continue to explore and appraise new resources as well as develop the resources within approved projects. A fifth drillship is expected to be deployed later this year.

Production from the Liza Phase 1 development is ramping up and will produce up to 120,000 b/d in the coming months, utilizing the Liza Destiny floating production storage and offloading vessel (FPSO), the company said.

The Liza Unity FPSO, which will be employed for the second phase of Liza development and will have a production capacity of 220,000 b/d, is under construction and expected to start production by mid-2022.

Pending government approvals and project sanctioning of a third development, production from Payara field north of the Liza discoveries could start as early as 2023, reaching an estimated 220,000 b/d.

Empire confirms Beetaloo play 

Empire Energy Group Ltd., Perth, has completed processing and interpretation of its 231 km 2D seismic survey in its Northern Territory onshore permit EP187 (100%) and has confirmed the presence of prospective target shale sequences associated with the Beetaloo subbasin.

The company said that open file data from the Northern Territory Geological Survey has been combined with the newly interpreted data to confirm an easterly extension of the subbasin into EP187 containing the Velkerri and Kyalla shales that are on-trend and continuous with those being flow tested in neighboring permits operated by Santos and Origin Energy.

In particular, Empire has correlated public data from Santos’ seismic survey and that company’s Tanumbirini-1 well in neighboring permit EP161. Tanumbirini-1 lies 76 km northwest of Empire’s proposed SL-4 well.

Tanumbirini-1 has a TD of 3,945 m in the deepest part of the basin and is currently being production tested following a four-stage fracture stimulation. It has flowed gas at rates in excess of 1.2 MMcfd.

The new seismic identified two areas that are relatively undisturbed by faulting, Empire said. One, the Phase 1 Work Program Area on the western edge of the company’s permit, will contain the company’s planned first well.

The proposed SL-4 has equivalent thicknesses of Velkerri and Kyalla shales at depths of about 1,000 m shallower than the Santos well and has potential to contain hydrocarbon liquids as well as gas. Planned TD is 2,500 m.

Planning and approvals for the 2020 exploration drilling program are well advanced and fully funded, the company said.

IEC details 2020 development plans  

Indonesia Energy Corp. Ltd. (IEC), Jakarta, plans to progress development and exploration of its two Indonesian oil and gas assets in Sumatra and West Java, after having completed its Dec. 19, 2019, initial public offering on the New York Stock Exchange, the company said Jan. 22.

Over the next 12 months, IEC expects to drill 6-9 new wells at a depth of some 4,500 ft on the Kruh Block in Sumatra with estimated production of 190 b/d each. Production decline rates of 20%/year are expected as it intends to drill conventional vertical wells without fracing or horizontal drilling. Total completion costs are expected at $1.5 million for each well. Future exploration of upside potential is expected, as reserves come from only 3 of 8 proved and potentially oil-bearing structures, the company said on its web site.

In 2019, the 258-sq-km Kruh Block produced 91,000 bbl of oil with an average of 250 b/d. Pursuant to contracts IEC sells all of its oil to the Indonesian government. ICE operates the block until 2030.

IEC’s second asset is the 1,000,000-acre onshore Citarum Block on the island of Java. This year, IEC plans to begin appraisal and development operations, including seismic, to determine the location of the first well to be drilled. The initial expectation is that the well will be parallel to one of the 4 gas discoveries made by the block’s prior operator.

The block covers an area of 3,925 sq km and lies within the Northwest Java basin, which currently produces 45,000 b/d of oil and 450 million scfd of gas. Citarum Block is operated under a production sharing contract with the Indonesian government based on a “gross split” regime until July 2048.

Drilling & Production Quick Takes 

Karoon spuds Marina-1 offshore Peru 

Karoon Energy Ltd., Melbourne, has spudded its Marina-1 wildcat in Block Z-38 in the Tumbes subbasin offshore Peru.

The Stena Forth drillship is estimated to take about a month for the program, drilling to a total depth of 3000 m subsea.

Karoon said the Marina prospect has a gross prospective resource estimate of 256 million bbl of oil. The prospect is a large fault-bounded structure with multiple targets likely in the Tertiary-age La Cruz to Cardalitos formations 900-3,000 m subsea.

Karoon defined the structures with 3D data. Nearby hydrocarbon seeps indicate that migration of hydrocarbons has occurred.

Karoon is operator with 40% interest. Partners are Tullow Oil Ltd. 35% and Pitkin Petroleum 25%.

Jadestone Energy plans infill drilling at Montara  

Jadestone Energy Inc., Singapore, plans infill drilling at its Montara oil fields project in the Timor Sea about 690 km east of Darwin in 80 m of water.

The Montara development project comprises development of Montara, Swift, Skua, and Swallow fields via the Montara wellhead platform.

Work includes drilling of one development well (H6) from the platform in production licence AC/L7 with contingencies for a second development well (Skua-12) in adjoining production licence AC/L8.

Jadestone also will perform workovers of the H3 and Skua-10 wells in AC/L7 and AC/L8, respectively.

Skua 12 is a new location about 20 km from the Montara platform while Skua-10 is an existing well. The H6 and H3 well operations will be undertaken with a jack-up rig positioned beside the platform and cantilevered over it.

The new work, scheduled to begin in this year’s second quarter and last about 150 days, is targeting an estimated 5-5.5 million bbl of untapped oil. Montara is currently producing 10,300 b/d. Montara fields are estimated to hold a total 2P resource of 28.2 million bbl, of which Montara holds 14.9 million bbl, Skua 6.9 million bbl, and Swift/Swallow 6.4 million bbl.

Jadestone’s drilling plans are being assessed by the Australian regulator, the National Offshore Petroleum Safety and Environmental Management Authority.

Brazil oil production surpasses 1 billion bbl in 2019  

Total oil production in Brazil in 2019 was 1.018 billion bbl, an increase of 7.78% compared to 2018 levels when 944.117 million bbl were produced, the Brazilian National Agency of Petroleum, Natural Gas and Biofuels said Jan. 22. Total natural gas production in 2019 was 44.724 billion cu m, an increase of 9.46% over the 40.857 billion cu m recorded in 2018.

In 2019, the presalt produced 633.980 million bbl of oil and 25.906 billion cu m of natural gas, increases of 21.56% and 23.27%, respectively, compared to 2018 production, when 521.543 million bbl of oil and 21.016 billion cu m of natural gas were produced.

In December 2019, oil production was 3.106 million b/d, exceeding the record recorded in the previous month by 0.52% and that of Dec. 2018 production by 15.44%. Natural gas production also surpassed the previous month’s record, registering an increase of 0.87% and reaching an average of 137.8 million cu m/day. The number was up 21.19% year-over-year.

Pre-salt production in December represented 66.82% of national production, totaling 2.655 MMboe/d, of which 2,118 million b/d of oil and 85.4 million cu m/day of natural gas. Compared to November, total production increased 2.58% and 40.62% year-over-year. Lula field, in the Santos basin, was the largest producer of oil and natural gas, registering 1.074 million b/d of oil and 45 million cu m/day of natural gas.

PROCESSING Quick Takes 

Enterprise starts up East Texas gas plant 

Enterprise Products Partners LP has commissioned its Bulldog cryogenic natural gas processing plant in Panola County, Tex.

Previously named Panola 3, the Bulldog plant has the capability to process 200 MMcfd of natural gas and extract up to 12,000 b/d of NGLs, Enterprise said on Jan. 23.

The Bulldog plant is currently running near 100% capacity and is integral to helping facilitate continued growth of natural gas production from the Cotton Valley and Haynesville formations in East Texas and Louisiana, the operator said.

Combined with Enterprise’s existing 130-MMcfd Panola cryogenic plant, the new Bulldog plant equips the operator with a capacity to process a total of 320 MMcfd of gas and produce more than 18,000 b/d of NGLs within the region (OGJ Online, May 1, 2013).

NGLs produced at the Bulldog plant will be transported via the Panola pipeline to Mont Belvieu, Tex., for fractionation services, while residue gas from the tailgate of the plant will have connectivity with Enterprise’s North Texas Intrastate pipeline system, along with other major pipelines and markets in the East Texas—Carthage area.

“The Bulldog facility, along with other growth projects under construction in the region, aggregates natural gas on our system and creates an opportunity for future expansion of our natural gas value chain from East Texas to the [US] Gulf Coast,” said Jim Teague, chief executive officer of Enterprise’s general partner.

The Bulldog plant fully integrates Enterprise’s existing Fairplay gathering system with BTA LLC’s gathering system, which BTA acquired from Azure Midstream Partners LP in 2017 (OGJ Online, June 14, 2017).

BPCL lets contract for Kochi refinery 

Bharat Petroleum Corp. Ltd. (BPCL) has let a contract to Fluor Corp. to provide project management consultancy (PMC) services for a polyols petrochemicals project at its integrated 340,845-b/d refining and petrochemical complex in Kochi, Kerala, India.

Fluor’s scope of work includes front-end engineering and design of both the inside and outside battery limits as well as detailed design, engineering, procurement, and construction management services for the project’s utilities and off sites, the service provider said on Jan. 28.

Six new process units will be built and integrated into the existing refinery as part of this project. New process units to be built include a propylene oxide unit, propylene glycol unit, polyols unit, ethylene oxide-monoethylene glycol unit, ethylene recovery unit, and cumene unit, according to Fluor.

Once completed, the Kochi complex will produce propylene glycol, ethylene glycol, and various grades of polyols based on a feedstock of 250,000 tonnes/year of polymer-grade propylene.

The project comes as part of BPCL’s program to help meet growing domestic demand for polyols and reduce India’s dependence on petrochemical imports.

“BPCL is making major advancements at its Kochi refinery to produce niche petrochemicals that are extensively imported into India to manufacture polyurethanes used in footwear, foam, and other items,” said Murali Madhavan, executive director of BPCL’s Kochi refinery.

Fluor—which will lead project execution out of its New Delhi office with support from its global experts—disclosed neither a value of the PMC contract nor a timeframe for its work on the project. The service provider, however, did confirm it booked its portion of the order in fourth-quarter 2019.

BPCL is investing 111.3 billion rupees to set up the Kochi specialty polyols petrochemical plant, which will be fed by propylene produced at the refinery. The project is scheduled to be completed sometime during 2023-24, according to BPCL’s website.

Contract let for Louisiana methanol complex 

YCl Methanol One LLC, a joint venture of Koch Methanol Investments LLC and Shandong Yuhuang Chemical Co. subsidiary Yuhuang Chemical Industries Inc., has let a contract to WorleyParsons Ltd. to provide commissioning and startup services for YCI Methanol’s $1.85 billion grassroots methanol plant now under construction on the Mississippi River in St. James Parish, La. (OGJ Online, July 18, 2014).

The first phase of the greenfield complex, which will produce 1.7 million tonnes/year of methanol using Air Liquide SA’s proprietary MegaMethanol technology, is scheduled to be fully operational and ready for production late this year, Worley said.

Alongside commissioning and startup services, the service provider said it also will deliver digital solutions for asset information consolidation, plant installation verification, and equipment testing to ensure a seamless transition to plant operation and maintenance.

While it did not disclose a value of the latest order, Worley said the contract follows its December 2014 contract award to provide integrated project management team services for the project’s first-phase development, which entailed working with YCI in project and engineering management, project controls and planning, cost estimation, quality and HSE management, procurement, and construction management, as well as accompanying YCI during front-end phases of the project, including planning, funding security, and capital diligence.

Koch Methanol acquired a majority ownership stake in the YCI Methanol One JV in August 2019, at which time it said the JV was evaluating an expansion that would more than double production of methanol at the site, according to an Aug. 23, 2019, release from Koch Methanol.

YCI previously let a series of contracts for the methanol complex, on which construction began in January 2017 (OGJ Online, Feb. 6, 2017; Sept. 16, 2015; Feb. 11, 2015).

TRANSPORTATION Quick Takes 

Petronas signs 12-year LNG supply deal  

Petroliam Nasional Bhd. (Petronas) subsidiary Petronas LNG Ltd. has signed a heads of agreement with Shenergy Group Co. Ltd. for the supply of 1.5 million tonnes/year of LNG to Shenergy’s Wuhaogou receiving terminal in China, the company said Jan. 20.

The 12-year agreement, scheduled to begin in 2022, also involves a shipping collaboration to construct and charter new mid-sized LNG vessels for the cargo delivery.

Williams completes Gateway Expansion project  

Williams Cos., Tulsa, reported Dec. 30 the completion of its Gateway Expansion project—an expansion of the Transco natural gas pipeline to serve the US Northeast. Placed into full service 11 months ahead of schedule, the project will serve New Jersey tri-state area consumers in time for the 2019-2020 winter heating season.

The project provides 65,000 dekatherms/day of incremental firm transportation capacity to serve PSEG Power LLC and UGI Energy Services LLC.

Construction on the project began in early 2019, with an original in-service projection of November 2020. The project minimized community and environmental impacts by maximizing the utilization of existing pipeline infrastructure, with virtually all project activities confined to Transco’s existing footprint in New Jersey.

With the expansion, the Transco pipeline’s system-design capacity is increased to 17.3 million dekatherms/day. The system includes 10,000 miles of pipeline between South Texas and New York City.

Sentinel, Freeport Commodities link to support  crude oil export terminal  

Texas GulfLink LLC, a subsidiary of Sentinel Midstream LLC, has joined with Freepoint Commodities LLC in furtherance of the construction, operation, and utilization of Texas GulfLink, a proposed deepwater crude oil export terminal near Freeport, Tex., capable of fully loading very large crude carrier vessels (OGJ Online, Feb. 12, 2019).

Texas GulfLink will include an onshore terminal with as much as 18 million bbl of storage, an offshore 42-in. pipeline, and a manned offshore platform 30 miles off the Gulf Coast to facilitate port operations with two catenary anchor leg mooring single-point mooring buoys.

Projected export loading rates will be as much as 85,000 bbl/hr, with a nominal capacity of 1.2 million b/d over the course of a year. The offshore platform will have around-the-clock monitoring.

The project is moving forward with the deepwater crude oil license application process, said Sentinel Midstream President and Chief Executive Officer Jeff Ballard (OGJ Online, June 13, 2019). “Through their Asian market focus, Freepoint will lead efforts to meet the growing demand from Asian refineries for US produced crude oil,” he said.

Freepoint Commodities is a global commodities merchant with presence in North America, Europe, and Asia. The company provides trading, financing, and logistics solutions and services across a range of commodity markets.