OGJ Newsletter

GENERAL INTEREST Quick Takes

BP, Equinor enter $1.1 billion offshore wind partnership  

BP has agreed to acquire a 50% non-operated interest in the Empire Wind and Beacon Wind projects on the US east coast from Equinor for $1.1 billion.

Equinor, which currently holds 100% interest in both projects, will remain operator through the development, construction, and operations phases. It is anticipated that the wind farms will be equally staffed after a period of time.

Empire Wind, 15-30 miles southeast of Long Island, NY, spans 80,000 acres with water depths of 65-131 ft. The lease was acquired in 2017 and is being developed in two phases with a potential total installed capacity of more than 2 Gw.

Beacon Wind, 60 miles east of Montauk Point and 20 miles south of Nantucket, Mass., covers 128,000 acres. The lease was acquired in 2019 and has the potential to be developed with a total capacity of more than 2.4 Gw.

The turbines used at each site are each expected to have an installed capacity of more than 10 Mw.

Power generation from each site will be enough to power more than 1 million homes.

The companies will consider future joint opportunities in the US for both bottom-fixed and floating offshore wind—a market that is forecast to grow to 600-800 Gw globally by 2050.

The deal, subject to customary conditions including purchase price adjustments and authority approval, is expected to close in early 2021 with an effective date of Jan. 1, 2020.

Kenya JV receives license extension 

Kenya joint venture partners Tullow Oil, Africa Oil, and Total will submit an updated field development plan by yearend 2021 following an extension granted by the government of Kenya for Blocks 10BB and 13T in South Lokichar basin, near Lake Turkanaby.

Under terms of the extension, the partners have the right to extend the second exploration period for the license blocks until Dec. 31, 2020, with a further extension until Dec. 31, 2021, contingent upon an agreed work program and budgets.

The extension was granted after partners lifted a notice of force majeure on the blocks Aug 21 (OGJ Online, Aug. 21, 2020). The declaration was made May 15 due to the COVID-19 pandemic impact on operations, including Kenyan government’s restrictions on domestic and international travel, and tax changes that adversely impacted the project economics. These were exacerbated by the unprecedented crash in global crude oil prices.

Tullow Oil is operator of the blocks with 50% interest. Africa Oil and Total each hold 25%.

Tag Oil names Gupta VP, COO  

Tag Oil Ltd., Vancouver, has appointed Suneel Gupta as vice-president and chief operating officer of the company.

Gupta is a senior executive in the international petroleum oil and gas industry with over 30 years of experience. He joined Bankers Petroleum Ltd. in July 2004 as a founder and held several roles with the company including president and chief executive officer, executive vice-president, and chief operating officer.

Exploration & Development Quick Takes 

NOPSEMA greenlights Esso Tarwhine, Seahorse abandonment plan  

Esso Australia plans to permanently plug and abandon its Seahorse and Tarwhine field subsea wells in Bass Strait in September with completion expected no later than September 2021. The work is programmed to take about 30 days per well.

The National Offshore Petroleum Safety and Environmental Management Authority approved the company’s P&A campaign proposal in production licenses Vic/L1 and Vic/L18 that includes use of the Noble Tom Prosser jack up rig.

The wells lie 15 km and 23 km off the Gippsland coast of eastern Victoria in water depths of 43 m.

Esso also is formulating plans to undertake well plug and abandonment works at other Bass Strait fields, including the Whiting platform, Mulloway-Whiptail, and Perch-Dolphin.

Vintage completes Vali development concept 

The Vintage Energy Ltd.-led joint venture in southwest Queensland Cooper basin permit ATP 2021 completed the development concept for Vali gas field.

Vintage estimated field life of 20 years with first production and cash flow expected during the third quarter of the 2021 financial year.

The JV plans nine fracture stimulated vertical wells targeting the Patchawarra formation and Tirrawarra Sandstone reservoirs—both of Permian age. The first two will be drilled during first-half 2021, subject to regulatory and joint venture approval and rig availability.

Upside potential in sands within the Toolachee formation and Nappamerri Group will be appraised.

All wells in the development connect to a central manifold, with gas transported via multiple composite pipelines to Santos-operated Beckler field and on into the Moomba gathering system for processing at the Moomba plant.

Vintage is initially targeting production of 4 petajoules/year.

Development is based on recent well tests at the Vali-1 ST1 sidetrack (OGJ Online, Aug. 6, 2020). The base case is for production of 5 million cu ft of gas per well.

Surface facilities at Vali will be kept to a minimum.

A new field reserve assessment is under way. The current independently certified 2C contingent resources are estimated at 37.7 bcf (OGJ Online, Mar. 3, 2020).

Vintage is operator with 50%. Metgasco Ltd. and Bridgeport (Cooper Basin) Pty Ltd. each hold 25%.

Gazprom JV completes first Semakovskoye field well construction  

RusGazAlyans, a joint venture of Gazprom and RusGazDobycha, completed construction of the first production well at Semakovskoye gas field in the Yamal-Nenets Autonomous Area of Russia (OGJ Online, June 4, 2020). Commercial gas inflow was obtained, and studies will be performed to determine the reservoir properties and confirm flow rates indicated in the production forecast. The well is 2,637 m long.

Two additional wells are built and awaiting completion through a series of tests and other process operations, Gazprom said Sept. 18. As part of the first phase of field predevelopment, 19 wells with horizonal lengths up to 4,200 m are expected to be brought onstream before 2023, allowing producers to begin developing the gas reserves contained in the offshore segment of the deposit, the company said.

RusGazAlyans was established in April 2017 to develop Parusovoye, Severo-Parusovoye, and Semakovskoye fields in the Yamal-Nenets Autonomous Area.

The aggregate amount of these fields’ recoverable gas reserves exceeds 420 billion cu m, with over 7 million tons of liquid hydrocarbons (oil and condensate). Semakovskoye field contains the largest amount of recoverable gas reserves with more than 320 billion cu m. These reserves are concentrated, inter alia, in the waters of Taz Bay of the Kara Sea.

Commercial production at Semakovskoye field is expected to begin in 2022.

Drilling & Production Quick Takes 

Ironbark wildcat to spud in October  

BP has received regulatory approvals for the Ironbark-1 wildcat in offshore Carnarvon basin permit WA-359-P in Western Australia (OGJ Online, July 167, 2020).

Mobilization of the Ocean Apex drilling rig is expected to begin mid-October. Spudding of the well is expected by end-October. The well has an anticipated total depth of 5,500 m.

The Ironbark gas prospect lies about 50 km from existing North West Shelf LNG infrastructure.

BP is operator with 42.5%. Partners are Cue Energy Ltd. 21.5%, Beach Energy Ltd. 21%, and New Zealand Oil and Gas Ltd. 15%.

EOG Resources to drill two exploration wells in Oman 

EOG Resources plans to drill at least two exploration wells by mid-2022 in Oman’s Block 36 as part of an exploration and production sharing agreement (EPSA) it signed with the government of the Sultanate of Oman.

The block covers an area of 18,556 sq km extending across Rub Al Khali basin in the far southwest of the Sultanate. The wells are part of the initial 3-year phase of the license commitment to explore for hydrocarbons in the block.

Block 36 was awarded to APEX in 2011 (operator, 100%) and is highly underexplored with only one shallow and two deep wells (Al Hashman, Burkanah) prior to APEX’s acquisition. Each deep well had hydrocarbon shows with over 40 m of Silurian source rock. The Silurian is one of the main source rocks that generated oil for giant fields in Saudi Arabia, such as Ghawar. In addition to the Silurian, a Mesozoic petroleum system is present over much of the block, as evidenced by a surface oil seep in the form of a conical sand mound, which was found by an APEX seismic crew near the center of the block.

Block 36 is being acquired by EOG in a transaction with Apex Oman.

CNOOC begins production at Liuhua 16-2/20-2 development 

CNOOC Ltd. commenced production at the Liuhua 16-2/20-2 oilfield joint development project in the Eastern South China Sea in water depths averaging 410 m.

The project is one of 10 expected to come on stream this year, the company said in January (OGJ Online, Jan. 13, 2020).

One 150,000 deadweight tonnage (DWT) FPSO and three underwater production systems were built for the project. A total of 26 development wells are planned for development and production. The project is expected to reach peak production of 72,800 bo/d in 2022.

Crude oil produced in the Eastern South China Sea is mostly of light to medium gravity. At yearend 2019, reserves and production in the region reached 633.9 MMboe and 242,026 boe/d, respectively, representing about 12.2% of the company’s total reserves and about 17.4% of its production.

CNOOC Ltd. holds 100% interest in the Liuhua 16-2 oilfield/20-2 oilfield joint development project.

Equinor lets contract for Valemon drilling in North Sea 

Equinor let a contract to Noble Drilling Norway AS to drill three wells at Valemon gas and condensate field in the northern part of the North Sea utilizing the Noble Lloyd Noble drilling rig beginning in summer 2021. The drilling campaign is estimated to take 230 days.

The contract includes an option to drill one extra well at the field and 11 wells not included in license. The rig contractor also received a master frame agreement, the operator said.

The total value of the day rates for the fixed part of the contract is estimated at $51 million. Additional cost includes integrated services such as managed pressure drilling, treatment of cuttings and wastewater as well as running casing and tubing, further, rig modifications, mobilization and demobilization.

“We are very pleased with the job this rig has done for us at the Mariner field off the coast of Scotland,” said Erik G. Kirkemo, senior vice-president of drilling and well operations.

The world’s tallest jackup rig, Noble Lloyd Noble can stand on the seabed in up to 150 m of water under tough weather conditions.

Valemon field—between Kvitebjørn and Gullfaks Sør about 160 km west of Bergen—is a standalone development project containing about 192 million boe. It produces gas and condensate from Lower Jurassic sandstone in the Cook formation and Middle Jurassic sandstone in the Brent group. The deposit has a complex structure with many fault blocks. The reservoirs lie at a depth of 3,900-4,200 m and have high temperature and high pressure.

Gas from Valemon is sent through the existing pipeline between Huldra and Heimdal, which is a hub for further transportation to the European gas markets.

Condensate is transported to Kvitebjørn for stabilization and from there to the Mongstad refinery near Bergen.

Equinor is operator of the Valemon license with 66.78%. Partners are Petoro (30%) and Shell (3.22%).

PROCESSING Quick Takes 

RusGazDobycha lets contract for Ust-Luga chemical complex 

JSC RusGazDobycha subsidiary Baltic Chemical Complex LLC (BCC) has let a contract to Axens Group of France to provide licensing of its proprietary alpha-olefins production technology for BCC’s $13-billion ethane cracking project under construction on the Gulf of Finland near Ust-Luga, in Russia’s Leningrad region (OGJ Online, June 10, 2020; Nov. 18, 2019; Apr. 2, 2019).

As part of the agreement, Axens will license its AlphaButol technology for production of high-purity 1-butene by ethylene dimerization as well as its AlphaHexol technology for production of high-purity 1-hexene through ethylene trimerization, the service provider said.

Alongside licensing of its technologies, Axens’ scope of work under the agreement also includes delivery of the process book, catalysts, adsorbents, proprietary equipment, training, and technical support.

The project includes two 60,000-tonnes/year unit for production of 1-butene and one 50,000-tpy unit for production of 1-hexene, Axens said. The complex will use 1-butene and 1-hexene as comonomers for production of various types of polyethylene (PE), including linear low-density PE (LLDPE) and high-density PE (HDPE).

Axens did not reveal a value of the contract or a timeline for its work on the project.

First announced in 2019 and slated to become the largest ethylene integration project in the world once completed, the natural gas processing chemical plant will include two ethylene cracking sites—each with a capacity of 1.4 million tpy—six polyethylene trains with a combined processing capacity of 480,000 tpy, and two linear alpha olefin plants with a combined capacity of 137,000 tpy.

Construction work on the integrated complex—which will process ethane-containing gas from PJSC Gazprom’s production fields—currently is proceeding according to schedule, said Konstantin Makhov, BCC’s general director, on Sept. 15.

The complex is scheduled to be completed in two phases, with Phase 1 commissioning planned for fourth-quarter 2023 and Phase 2 startup to follow in fourth-quarter 2024, according to RusGazDobycha.

Tatneft enters Nizhnekamsk refinery into planned maintenance 

PJSC Tatneft, Almetyevsk, Russia, is undertaking a 4-week turnaround of certain units at the more than 10-million tonnes/year refinery of subsidiary JSC Taneco’s multiphase integrated refining and petrochemical complex in Nizhnekamsk, 250 km from Tatarstan’s capital city of Kazan.

The scheduled maintenance overhaul—which began on Sept. 17 and will run to Oct. 15—will include works to ensure the safe, reliable operation of process equipment at the refinery’s hydrocracking, hydrogen production, base oil production, and elemental sulfur production units, Tatneft said on Sept. 17.

Planned work activities during the turnaround include the following:

• Clean and inspect 235 unidentified vessels and apparatuses.
• Replace catalyst at four reactors and reforming furnaces.
• Inspect and test 179 pipelines.
• Repair and inspect more than 180 valves and control valves.
• Conduct unidentified maintenance at two compressor units, which form the heart of the hydrocracking plant.

Scheduled downtime for refinery maintenance activities, however, will not impact fuel supplies to Tatneft customers, the company said.

Tatneft completed a previous 3-week round of planned maintenance at the Nizhnekamsk refinery in early July (OGJ Online, July 9, 2020; June 11, 2020).

IOC advances projects at Paradip refinery 

Indian Oil Corp. Ltd. (IOC) has granted preliminary approval for construction of a grassroots needle coker unit at its 15-million tonnes/year Paradip refinery in Odisha, on India’s northeastern coast.

The company’s board of directors has cleared stage-1 approval for installation of the proposed unit that—to be equipped with IOC research and development group’s in-house technology—will have a calcined needle coke (CNC) production capacity of 56,000 tpy, IOC said.

At an estimated cost of 12.680 billion rupees, the planned project will be IOC’s first foray into the niche CNC product segment to help India meet its 80,000-100,000-tpy demand, which is currently met via CNC imports, according to the operator.

Preliminary approval of the CNC project follows a final greenlight from the company’s board in late July for IOC to proceed with its proposed 138.050-billion rupee investment for implementation of an integrated paraxylene-purified terephthalic acid (PX-PTA) complex at the Paradip refinery (OGJ Online, Apr. 23, 2020).

To be completed by early 2024, the PX-PTA complex will have a PX production capacity of 800,000 tpy, which would be the feedstock for production of 1.2 million tpy of PTA, IOC said in a July 31 release.

IOC also confirmed a 56.54-billion rupee ethylene glycol project, also at the Paradip refinery, that involves the addition of a new 357,000-tpy monoethylene glycol (MEG) plant as well as a 180,000-tpy ethylene recovery unit (ERU) at the manufacturing site, also currently is under implementation, with the MEG plant due for startup by yearend 2021 (OGJ Online, Jan. 31, 2019).

IOC’s petrochemical-related projects at Paradip come as part of the government of Odisha’s plan to establish the Paradip Petroleum, Chemicals, & Petrochemical Investment Region (PCPIR) (OGJ Online, July 10, 2020).

TRANSPORTATION Quick Takes 

Genesis shuts CHOPS offshore crude line for inspection 

Genesis Energy LP suffered no apparent damage as a result of Hurricane Laura to its 100%-owned and operated 374-mile Cameron Highway Oil Pipeline System (CHOPS) but has shut the system down until at least Oct. 1 for further inspection.

CHOPS surfaces at a junction platform in Garden Banks Block 72, where it can receive and launch pigs for maintenance on its two 30-in. OD pipeline segments. The platform, in 520 ft of water, recorded waves in the 70-80 ft range and sustained winds in excess of 130 mph as the eye of Laura passed some 17 miles to the southwest. The platform experienced what the company described as “usual and customary” damage to its topside from such weather conditions.

Below the waterline, however, Genesis identified several areas of structural stress that will require further investigation and analysis. As a result, no oil is flowing through CHOPS, which has design capacity of 500,000 b/d.

The company is “aggressively working to collect data and conduct a rigorous structural analysis for review by the Bureau of Safety and Environmental Enforcement to hopefully be able to reoccupy the platform, conduct the cleanup tasks required, and return CHOPS pipeline to normal operations,” it said.

In the meantime, Genesis is working with shippers to divert affected CHOPS barrels into its 64%-owned and operated Poseidon oil pipeline for delivery to Shell Pipeline Co. LP tankage at Houma, La., or to Shell Midstream Partners LP’s Auger pipeline for further transportation to shore.

CHOPS delivers crude from Holstein, Mad Dog, Atlantis, K2, Constitution, and Ticonderoga fields—all in the deepwater Green Canyon area offshore Louisiana—to refineries in Texas City and Port Arthur, Tex. The 30-in. line out of GB 72 splits into two 24-in. OD lines at High Island A5-C platform for shipment to the refineries.

Byron Energy completes SM58-59 pipelay 

Byron Energy Ltd.’s South Marsh Island Block 58 and 59 oil and natural gas pipeline installation has been completed offshore Louisiana by Chet Morrison Contractors LLC.

Morrison installed 11.5 miles of 3-, 4-, 6- and 8-in. OD pipeline in water depths of 140 ft. Installation included burial, risers, tie-ins, mitigation of crossings, pigging, hydrostatic testing, and commissioning. Morrison’s CM-15 lay barge completed installation.

The company coordinated with export pipeline operators to install hot tap tie-ins to their transmission lines. This was performed using diving support vessel (DSV) Kelly Morrison, while DSV Joanne Morrison provided both saturation and surface diving support for riser clamp, pipeline tie-in, and various dive operations.

Byron Energy earlier this year installed its nine-slot South Marsh Island 58 G (SM58 G) production platform. SM58 G has a designed production capacity of 8,000 b/d of oil and 80 MMcfd of gas (OGJ Online, June 11, 2020).

Enbridge to restart Line 5’s East Segment 

Enbridge Inc. will restart the east segment of its Line 5 liquids pipeline in the Straits of Mackinac after receiving authorization from the US Pipeline and Hazardous Materials Safety Administration (PHMSA) and approval from the Michigan Circuit Court. Following a review of data from an in-line inspection of the east segment in the area around the damaged screw anchor, PHMSA told Enbridge in a letter that “the review by PHMSA and its independent third-party expert did not identify any integrity issues.”

The pipeline runs 645 miles through Michigan’s Upper and Lower Peninsulas, starting in Superior, Wisc., and ending in Sarnia, Ont. As it travels the 4.5 miles under the Straits of Mackinac, the 30-in. OD Line 5 splits into two 20-in. OD parallel pipelines.

Line 5 has served Michiganders without incident at the Straits crossing for more than 65 years, the company said. The west segment returned to operation in July (OGJ Online, July 1, 2020).

The pipeline moves as much as 540,000 b/d of light crude oil and NGL.