OGJ Newsletter
GENERAL INTEREST Quick Takes
Lawler to become BP’s chief US representative
BP has appointed David C. Lawler, chief executive officer of BPX Energy, as chairman and president of BP America Inc., succeeding Susan Dio, effective July 1. He remains chief executive of BPX Energy.
Lawler has served as chief executive of BPX Energy since 2014 (OGJ Online, Aug. 20, 2014). In 2018, he led the $10.5 billion acquisition and integration of BHP’s American shale assets, BP’s largest acquisition since ARCO in 1999. Prior to joining BP, he served as executive vice-president and chief operating officer of SandRidge Energy.
Dio, a 36-year veteran of BP who has served as BP America chairman and president since 2018, will retire later this year (OGJ Online, Mar. 21, 2018).
NEO Energy revises UK North Sea deal with Total
NEO Energy revised terms of a deal to acquire operated and non-operated assets in the UK North Sea from Total Oil UK Ltd. and Total E&P North Sea UK Ltd.
Citing market volatility, the parties renegotiated the financial terms of the deal first reported in July 2019 (OGJ Online, July 10, 2019). Previous deal partner Petrogas is no longer part of the transaction.
The structure of the consideration and phasing of payments has been modified, including vendor financing and earnout arrangements.
Total and NEO Energy have developed transition plans for NEO Energy to take over operations upon completion and “to allow NEO to focus on embedding planned operating efficiencies and growth plans as rapidly as possible,” NEO said in a press statement. Subject to regulatory approvals, the parties expect to complete the transaction by this year’s third quarter.
The assets in four producing areas produced an average of 23,000 boe/d in 2019. The portfolio adds reserves of 51 MMboe to NEO Energy.
The transaction includes operatorship of two asset clusters, the Quad 15 and Flyndre areas, and an operator organization of more than 80 employees and contractors.
NEO is backed by private equity investor HitecVision.
LNGL sale gains new buyer
PricewaterhouseCoopers, the appointed administrators for Liquefied Natural Gas Ltd. (LNGL), Sydney, has terminated the sale of the proposed Magnolia LNG project to Global Energy Megatrend Ltd. (GEM), London, and entered into a new deal (OGJ Online, May 12, 2020).
Magnolia LNG Holdings LLC (MLH) signed and closed a $2 million cash deal May 26. The GEM deal, terminated for not closing within the required timeframe (May 15), was for $2.25 million.
As was the deal agreed with GEM, the new transaction is for the sale of LNG Ltd.’s subsidiaries that own and operate the Magnolia project, an LNG export terminal at Port of Lake Charles, La. These include Pecan Inc., LNG Management Services LLC, and LNG Technology LLC.
As before, the transaction does not include LNGL’s interest in the business and assets of the proposed 8 million tonnes/year Bear Head LNG project in Nova Scotia. LNGL’s patented optimized single mixed refrigerant liquefaction process technology is part of the deal, but the Bear Head project will retain a perpetual license to use the technology.
In addition to the cash purchase price paid by MLH, LNGL will receive an unsecured, non-interest-bearing promissory note issued by MLH worth $2 million (Aus.). This note is payable if the Magnolia LNG project reaches financial close and a notice to proceed has been issued for the start of construction.
LNGL and MLH also have agreed to work together on a non-exclusive basis towards a potential recapitalization proposal for LNGL. If MLH and the administrator enter into a Deed of Company Arrangement in respect of this recapitalization, but the terms of the proposal are not consummated by Nov. 30, MLH will pay LNGL a break fee of $300,000. If the recapitalization proceeds, MLH can pay out the note by issuing existing shareholders in LNGL with additional shares in the recapitalized company to the value of the note.
The Magnolia LNG proposal is for a plant with up to 4 LNG trains, each with a production capacity of 2.2 million tpy.
Exploration & Development Quick Takes
ANPG provides onshore Angola data package
The Angola National Agency of Oil, Gas, and Biofuels (ANPG) has provided more onshore data for oil exploration in the Lower Congo and Kwanza onshore basins to national and international companies ahead of an official announcement to begin new bidding rounds.
The data package refers to Conglo Blocks CON1, CON5, CON6, and Kwanza Blocks KON5, KON6, KON8, KON9, KON17, and KON20.
Parties can express interest via the ANPG website.
The licensing agency said it was prepared to announce its intent of a public tender for the 2020 bidding process and that the objectives related to the bidding schedules remain unchanged, but adjustments are needed due to constraints caused by the COVID-19 pandemic.
The national concessionaire said it will report relevant developments through its website and in national and international media.
Energean seeks purchase amendment from Edison as Neptune exits deal
Energean Oil and Gas PLC is in discussions with Edison SPA to amend the 2019 purchase agreement to exclude Edison E&P’s Norwegian subsidiary from the deal following the decision by Neptune Energy to terminate its agreement with Energean to acquire Edison E&P’s UK and Norwegian subsidiaries.
In July 2019, Energean reported a conditional acquisition of Edison E&P for $750 million plus $100 million of contingent consideration) (OGJ Online, July 8, 2019). Subsequently, Neptune agreed to buy Edison E&P’s upstream assets offshore the UK and Norway from for $250 million. For the termination, Neptune will pay a $5 million fee to Energean.
If an amendment agreement is reached between Energean and Edison, Energean would retain the UK subsidiaries which include a 25% working and economic interest in the 250 MMboe (gross) Glengorm gas and condensate discovery in the central North Sea, and a 10% interest in the Total SA-operated Isabella discovery announced in March (OGJ Online, Mar. 17, 2020). Algerian assets remain excluded from any amended agreement, as reported in in April (OGJ Online, Apr. 3, 2020).
APT identifies lower Jurassic source rocks, offshore Canada
Applied Petroleum Technology (APT), Oslo, has identified lower Jurassic source rocks and a genetically related set of oil shows in the Southern Grand Banks petroleum system, offshore Canada.
APT sampled and analyzed drill cuttings from 13 key wells from Southern Grand Banks to assess source potential, possible oil staining, and thermal history to provide new insight into lower Jurassic petroleum systems in the Northern Atlantic Canada region.
The study has generated new lower Jurassic source rock screening data, vitrinite and spore color maturity data, and apatite thermochronology data, which recovers time-temperature history of source rock and calibrates burial histories across the study area of interest. The study also conducted Lower Jurassic oil stain screening and characterization.
The oil stain data has been compared with stain data of both Jeanne d’Arc and lower Jurassic oils from the European conjugate (UK, Ireland, Spain, and Portugal), providing a unique data set to understand lower Jurassic source in the North Atlantic domain.
“Some of our geochemical analyses were conducted on drill cuttings that are almost 50 years old, which confirms that a lot of new information can be found in old materials,” said Martin Fowler, head of APT’s Canadian operation.
“In Europe, intra-continental basins hosting Lower Jurassic source rocks are well known, sourcing commercial oil deposits in Germany, the Netherlands, France, Spain, and the UK. However, to the South and West their occurrence is much less well understood. This study has for the first time demonstrated their continuation across the North Atlantic conjugate,” he said, adding that the analyses could be of interest to energy companies investigating opportunities offshore Canada.
CNOOC grants Empyrean 12-month extension
China National Offshore Oil Corp. (CNOOC) has granted a 12-month extension to Empyrean Energy for the first phase of exploration drilling in Block 29/11, offshore China, due to the COVID-19 pandemic and the resultant global control policies.
While the first phase of the exploration period has been extended to June 12, 2022, Empyrean remains committed to safely drilling its first well as soon as practicable, it said in a release June 3.
Block 29/11 lies in the Pearl River Mouth basin, some 200 km southeast of Hong Kong. Empyrean is operator with 100% of the exploration rights during the exploration phase (OGJ Online, Oct. 2, 2018). In the event of a commercial discovery, CNOOC has a back in right to 51%.
Drilling & Production Quick Takes
Columbus starts CO2 injection in Trinidad field
Columbus Energy Resources PLC has begun Phase 2 of a CO2 pilot project in Trinity Inniss field, Trinidad, following approval from the Ministry on Energy and Energy Industry for continuous injection in the field.
Phase 1 began in January when Columbus injected a tank of CO2 into well AT5X to determine production impact in offset wells. Phase 2 is to maintain CO2 injection at optimum 9 metric tonnes/day peak rate. Impact of continuous CO2 injection on offset wells production will be monitored.
Innis-Trinity is a mature field producing from Herrera turbidite sands. The field has produced 23 million bbl to date with 4.0 million bbl estimated recoverable reserves.
Predator Oil and Gas PLC will help plan and fund the CO2 EOR pilot project. After Predator recovers project-related costs, Columbus and Predator will have 50% interest in any incremental oil production.
Norway production decreased in April, NPD says
Norway’s daily production averaged 2.117 million b/d in April, a decrease of 60,000 b/d compared to March, the Norwegian Petroleum Directorate reported.
The preliminary average daily liquids production included 1.783 b/o, 308,000 bbl of NGL, and 26,000 bbl of condensate.
Total gas sales in April were 9.0 billion standard cu m.
The update takes the authorities’ oil production regulation into account, as well as delayed start-up of fields under development and oil production in the first quarter.
Oil production in April is 1.9% higher than the NPD’s forecast, and 0.5% below the forecast so far this year.
IOC lets UK SNS Phase 1 contract to Petrofac
Independent Oil and Gas PLC, as operator of a joint venture with CalEnergy Resources (UK) Ltd., let a well management contract to Petrofac for Phase 1 of its core UK Southern North Sea (SNS) gas development.
Phase 1 comprises the development and production of Southwark, Blythe, and Elgood fields through five wells, with gas transported onshore via the Thames pipeline. Approval for Phase 1 Field Development Plan (FDP) was granted by the UK Oil and Gas Authority (OGA) in May. The drilling campaign is expected to begin in the first half of 2021.
The contract scope covers the planning, execution, and close-out phases of the Phase 1 drilling program, with Petrofac as well operator on behalf of IOG. The planning phase includes detailed well design, risk assessment, and management of well-related regulatory requirements. During the execution phase Petrofac will manage well engineering, procurement and logistics, assure well construction and integrity, and provide onshore and offshore personnel to support the drilling campaign.
Extensive work by the companies has been undertaken this year under a letter of limited commitment to ensure preparations for the 2021-22 Phase 1 drilling campaign proceed to plan, IOC said.
PROCESSING Quick Takes
Irving Oil inks deal to buy NARL’s Come-by-Chance refinery, other assets
Privately owned Irving Oil Ltd., Saint John, NB, has signed an agreement with Silverpeak, a New York-based investment management firm, to acquire the Silverpeak-North Atlantic partnership’s North Atlantic Refining Corp., which includes NARL Refining LP’s 130,000-b/d refinery at Come-by-Chance, Newf., as well as a network of retail sites and other marketing assets.
Signed on May 28, the purchase agreement remains subject to regulatory review and the meeting of unidentified conditions of sale, Irving Oil said.
Further details regarding the proposed transaction—including a timeline for the acquisition—were not disclosed.
NARL Refining—which paused production activities at Come-by-Chance refinery in late March to ensure safety of its employees, their families, and operations amid the coronavirus (COVID-19) pandemic—previously announced it is in the process of undertaking projects aimed at increasing crude flexibility and efficiency at the refinery as part of the operator’s strategy to support the site’s long-term viability and competitive advantage (OGJ Online, Apr. 1, 2020; Aug. 1, 2019; July 8, 2019).
Irving Oil currently owns and operates its 320,000-b/d St. John refinery in the eastern Canadian province of New Brunswick, as well as the 75,000-b/d Whitegate refinery in County Cork, Ireland.
Gazprom, RusGasDobycha advance Ust-Luga LNG-chemical project
PJSC Gazprom and RusGasDobycha are moving forward with plans for construction of their previously announced natural gas liquefaction and processing complex on the Gulf of Finland near the seaport of Ust-Luga, Leningrad Oblast, Russia (OGJ Online, Apr. 2, 2019).
As of mid-May, the partners have completed agreements for basic design of the project, as well as specifications for feedstock and commercial products to be produced at the proposed complex, Gazprom said.
With RusKhimAlyans—a 50-50 special-purpose venture of Gazprom and RusGazDobycha that will act as project operator—now issued technical specifications for connecting the complex to Gazprom’s gas transmission system, the partners also have started drafting design documentation, as well as fully completed engineering surveys at the construction site, which is currently being cleared and prepared for construction works.
While efforts remain under way to attract financing from Russian and international credit institutions for the more than 700 billion-rubles project, Gazprom said the partnership, by yearend 2020, will still proceed with submitting project design documentation for regulatory approval, place orders for long-lead equipment, and select an engineering, procurement, and construction (EPC) contractor for the complex’s gas processing units and off-site installations.
The partnership also plans to award a contract for project management consultancy (PMC) by yearend, Gazprom said.
Using a feedstock of wet natural gas produced from Gazprom’s Achimov and Valanginian deposits in the Nadym-Pur-Taz region of the Yamal Peninsula, the proposed RusKhimAlyans complex will process 45 billion cu m/year of gas to yield 13 million tonnes/year of LNG, as much as 4 million tpy of ethane, and more than 2.2 million tpy of LPG.
While LNG and LPG produced at the complex will be exported, ethane from the site will feed nearby RusGazDobycha subsidiary Baltic Chemical Complex LLC’s (BCC) proposed $13-billion ethane cracking project, which—once in operation—will produce more than 3 million tpy of polymers (OGJ Online, Nov. 18, 2019).
About 20 billion cu m/year of residual gas from the RusKhimAlyans complex will flow into Gazprom’s gas transmission system.
Gazprom said commissioning of the RusKhimAlyans and BCC complexes will be synchronized, with the first trains scheduled for startup during fourth-quarter 2023 and the second trains to follow in fourth-quarter 2024.
Former Bakersfield refinery to become renewable fuels plant
Global Clean Energy Holdings Inc. (GCEH) has acquired and plans the immediate conversion of Delek US Holdings Inc. subsidiary Alon Bakersfield Property Inc.’s idled 70,000-b/d Bakersfield, Calif., refinery into a renewable diesel production plant (OGJ Online, Jan. 9, 2018).
GCEH, which closed the deal on May 7 at a purchase price of $40 million, will immediately begin retooling the former crude oil refinery to produce renewable diesel from organic feedstocks such as vegetable oil, GCEH and Delek said in separate releases.
Scheduled to take 18-20 to complete, the revamp and conversion project will be executed primarily by local trade unions through Primoris Services Corp. subsidiary ARB Inc., which will act as engineering, procurement, and construction contractor, GCEH said.
With the former oil refinery already equipped with a large portion of necessary equipment in place for production of renewable diesel, the conversion project will involve about 100 union tradesmen to execute a full turnaround and refurbishment of existing equipment to enable production from renewable feedstocks.
Following its conversion into a renewable fuels refinery, GCEH said it will vertically integrate the plant to produce renewable diesel from multiple feedstocks, including GCEH’s patented proprietary fallow-land crop varieties of camelina, which—traditionally grown in rotation with wheat—is cultivated as an alternative to fallow so as not to displace or compete with food crops.
GCEH will source the balance of feedstock from various nonpetroleum renewable feedstocks, such as used cooking oil, soybean oil, distillers’ corn oil, among others.
No petroleum processing of any kind will occur at the Bakersfield refinery, either during or following the retooling effort, according to the new owner.
Due for startup in late 2021, the refinery will produce low-carbon renewable fuels that comply with the California Low-Carbon Fuels Standard, as well as supply “a meaningful portion” of California’s demand for clean-burning alternative diesel fuels, GCEH said.
Alongside making renewable fuels production from the plant available for blending into California’s transportation fuel mix in the Los Angeles metropolitan and San Francisco Bay areas, GCEH said it also plans to sell, market, and distribute its production through various partnerships, including one with an unidentified multinational oil major.
The completed transaction for divestment of the Bakersfield refinery completes Delek’s sale of the last remaining US West Coast assets the operator acquired through its 2017 purchase of Alon USA Energy Inc. and Alon USA Partners LP (OGJ Online, Mar. 20, 2018; July 3, 2017).
TRANSPORTATION Quick Takes
Turkmenistan completes TAPI pipeline welding
Turkmenistan has completed welding its 214-km portion of the 1,814-km Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline. Pipelay, compressor station construction, and valve installation is ongoing, according to Turkmen state media.
Turkmengaz State Concern, the national gas company of Turkmenistan has entered into an agreement with a Hong Kong company to oversee the construction of the pipeline and its two compressor stations. Turkmen state media did not identify the company.
Pipe has been welded from 16-tcf Galkynysh gas field to the Turkmen-Afghan border. TAPI is designed to move 33-million tonnes/year (tpy) to Fazilka in northern Punjab province, India.
Land acquisition issues have so far delayed construction in Afghanistan.
Calcasieu Pass LNG construction progresses
Venture Global LNG Inc. has elevated the second roof of the LNG storage tank at the Calcasieu Pass LNG plant in Cameron Parish, La. (OGJ Online, Aug. 21, 2019).
The 816,000-kg dome and tank assembly was airlifted on May 19, less than a month after the first roof of the LNG storage tank was raised on Apr. 24. CB&I Storage Tank Solutions, a division of McDermott International Inc., is constructing the project’s 200,000 m 3 double tanks.
The first modules for the power plant equipped with 720 MW combined cycle gas turbines from the export facility have arrived on site. The key components of the Gas Insulated Switchgear (GIS) have been installed, and the site has started to receive and configure the Air Condenser (ACC) modules.
Site construction has been under way since February 2019 and the project is expected to begin commercial operations in 2022.
Cameron LNG Train 3 begins production
Sempra LNG, a subsidiary of Sempra Energy, has begun producing from the third and final Phase 1 liquefaction train at Cameron LNG’s 12-million tonne/year plant in Hackberry, La. Commercial operations for Train 3 under Cameron LNG’s tolling agreements remain on track to begin third-quarter 2020. Cameron LNG achieved commercial operations of Train 1 and Train 2 in August 2019 and February 2020, respectively.
Cameron LNG is jointly owned by affiliates of Sempra LNG, Total SA, Mitsui & Co. Ltd., and Japan LNG Investment LLC, a company jointly owned by Mitsubishi Corp. and Nippon Yusen Kabushiki Kaisha. Sempra Energy indirectly owns 50.2% of Cameron LNG.