GENERAL INTEREST Quick Takes
ADNOC sells 20% pipeline share to Abu Dhabi Pension Fund
Abu Dhabi National Oil Co. (ADNOC) will receive a $2.1-billion investment from Abu Dhabi Pension Fund (ADPF) and ADQ, one of the region’s largest holding companies, for a 20% share of ADNOC gas pipeline infrastructure.
Under terms of the agreement, ADNOC will divest 20% in ADNOC Gas Pipelines HoldCo LLC, a wholly owned ADNOC entity that holds 100% of ADNOC’s interest in ADNOC Gas Pipeline Assets LLC (ADNOC Gas Pipelines), to ADPF and ADQ.
ADNOC Gas Pipelines is a subsidiary of ADNOC with lease rights to 38 gas pipelines running a total 982 km. Earlier in 2020, a consortium of global investors, comprising Global Infrastructure Partners, Brookfield Asset Management, Singapore’s sovereign wealth fund GIC, Ontario Teachers’ Pension Plan Board, NH Investment & Securities, and Snam, invested $10.1 billion for a collective 49% stake in the same select ADNOC gas pipeline infrastructure assets.
ADNOC announced the overall value of the deal at the time as $20.7 billion (OGJ Online, June 23, 2020), resulting in “upfront proceeds” of more than $10 billion.
PGNiG, ERU move toward Ukraine production
Polskie Górnictwo Naftowe i Gazownictwo (PGNiG) signed an investment agreement with Energy Resources of Ukraine (ERU) on a joint exploration and production project in Ukraine.
The agreement sets a general framework for cooperation and provides a schedule of further work on a project near the Polish border in Ukraine. The production potential of the license is supported by findings of geological surveys conducted by PGNiG, which show a correlation of its geological structures with Przemy´sl, Poland’s largest natural gas field, PGNiG said in an Oct. 12 release.
To provide financial protection for the joint project, talks have been initiated with the US International Development Finance Corp. and Poland’s Export Credit Insurance Corp. (KUKE).
“The license is our first exploration prospect in Ukraine, located in a very promising geological zone, encompassing also the Przemy´sl field. We have all required technology and equipment resources, and our employees have knowledge and expertise gained over 60 years of exploration and production operations in the Rzeszów region,” said Jerzy Kwieci´nski, president of the PGNiG management board.
Work is scheduled to begin in first-half 2021 after all necessary consents and permits have been secured.
Premier, Chrysaor agree to reverse takeover
Premier Oil and Harbour have reached agreement with Harbour’s UK operating company Chrysaor Holdings Ltd., regarding a proposed all share merger between Premier and Chrysaor and the reorganization of Premier’s existing debt and cross-currency swaps.
The reverse takeover would create the largest independent oil and gas company listed on the London Stock Exchange with combined production of over 250,000 boe/d as of June 30 and combined 2P reserves of 717 MMboe as of December 2019, the companies said in an Oct. 6 release.
At close, Premier stakeholders would own up to 23% of the combined group and Harbour and other Chrysaor shareholders would own at least 77%. Premier’s shareholders are expected to own up to 5.45% of the combined group. Chrysaor’s largest shareholder, Harbour, is expected to own up to 39.02% of the combined group.
Premier’s $2.7 billion of total gross debt and certain hedging liabilities will be repaid and cancelled on completion. A cash payment of $1.23 billion will be made to financial creditors of Premier and its subsidiaries and Premier group’s cross-currency hedge counterparties; Premier’s $400 million of letters of credit will be refinanced, and existing creditors will also receive shares in the combined group.
The combine’s board of directors will comprise 11 directors including six independent non-executive directors and three executive directors including Linda Z. Cook (chief executive officer of Harbour), who will be chief executive officer of the combine; and Phil Kirk (chief executive officer of Chrysaor), who will be president of the combine and chief executive officer Europe. The two other non-executive directors will be appointed by Harbour.
The deal is subject, amongst other things, to regulatory, shareholder, and existing creditors’ approval.
Exploration & Development Quick Takes
LLOG finalizes Spruance development plans
LLOG Exploration Co. LLC finalized plans to develop the Spruance discovery in the deepwater Gulf of Mexico following drilling results delineating the prospect. Spruance was discovered in mid-2019 via a subsalt exploratory well in 1,600 ft of water in Ewing Bank (EW) 877/921. EW 877 #1 was drilled to a total depth of 17,000 ft and logged about 150 net ft oil pay in multiple high-quality Miocene sands.
A second well, EW 921 #1, was drilled from the same surface location to a total depth of 16,600 ft in early October. It successfully delineated the main field pays and logged additional oil pay in the exploratory portion of the well, finding a total of over 200 net ft of oil. Both wells are scheduled for completion in 2021, with first oil sales scheduled for early 2022.
In July, LLOG and partners signed a production handling agreement for processing of Spruance reserves via a 14-mile subsea tieback to EnVen-operated Lobster platform in EW 873 some 130 miles south of New Orleans in 775 ft of water.
LLOG is operator at Spruance (22.64%) with partners Ridgewood Energy (23.89%), Houston Energy (11.2%), Red Willow (11.15%), EnVen (13.5%), CL&F (6%), and Beacon Asset Holdings (11.61%).
Gazprom discovers Yamal shelf gas deposit
Gazprom has discovered a new gas deposit at Leningradskoye field off the northwest coast of the Yamal peninsula, marking its fourth major discovery on the Yamal shelf in the Kara Sea over the last 2 years, the operator said Oct. 8.
Drilling and testing of an exploratory well showed commercial gas inflow with a flow rate of 600,000 cu m/d, proving substantial gas and increasing the field’s commercial value, Gazprom said.
Leningradskoye gas and condensate field lies within the Leningradsky licensed block. The field’s current recoverable gas reserves are estimated at 1.9 trillion cu m.
In 2019, Gazprom discovered Dinkov and Nyarmeyskoye fields on the Yamal peninsula shelf (OGJ Online, May 20, 2019). This year, the company discovered 75 Years of Victory field on the shelf.
Dinkov, within the Rusanovsky licensed block, holds recoverable reserves in the C1+C2 (explored and estimated) categories of 390.7 billion cu m.
Nyarmeyskoye field, within the Nyarmeysky licensed block, holds recoverable gas reserves of 120.8 billion cu m in the C1+C2 categories.
Within the Skuratovskaya prospect, 75 Years of Victory field holds recoverable gas reserves in the C1+C2 categories of 202.4 billion cu m.
Zennor completes Finlaggan subsea installation
Zennor Petroleum Ltd. has progressed development of Finlaggan natural gas and condensate field in the central UK North Sea with the completion of the 2020 subsea installation campaign (OGJ Online, Aug. 2, 2018). Using three separate vessels mobilizations, the campaign was completed over the summer.
The Finlaggan manifold was installed adjacent to the two Finlaggan production wells (F1 and F2). The 145-tonne structure will allow well stream level metering to be conducted and provides potential tie-in points for additional wells and fields.
The 15 pipeline spools to provide final connections required at either end of the pipeline were all installed on the seabed and the 20 km pipe-in-pipe flowline from Finlaggan to the subsea isolation valve (SSIV) skid within the Britannia 500 m zone was dewatered.
At yearend, the development project will be over 90% complete and on target for first production in fourth-quarter 2021 following the rescheduled Forties Pipeline System shutdown in second-quarter 2021.
In this year’s third quarter, the company’s lenders agreed to upsize the existing senior secured term loan facility to fund the project to £185 million, and extend it by 1 year in line with the development schedule which had been revised as a result of COVID-19.
Senex gives green light to Roma North expansion
Senex Energy Ltd., Brisbane, has taken final investment decision for a 50% expansion of natural gas production from its Roma North development in southeast Queensland.
The increase will take production capacity to 24 terajoules/day (9 petajoules/year).
Senex will spend $20 million (Aus.) from existing cash reserves on gas wells, gas gathering infrastructure, and water management infrastructure.
Infrastructure group Jemena intends to construct and fund the Roma North compression facility expansion with commissioning expected during the first-quarter 2022.
A 15-year sales agreement with Gladstone LNG is in place for additional volumes of gas at oil-linked gas prices—a deal that Senex says has significant downside protection.
Under terms of the Roma North agreement, Jemena will procure and install two additional compression units, having already placed orders for all long-lead items.
Senex plans to drill up to 15 additional wells beginning late in 2021 as well as install gas and water gathering systems and expand the existing Senex-owned Roma North water infrastructure.
As at end-June, Toma North holds 2P gas reserves of 283 petajoules. An additional 222 petajoules of 2P gas reserves is booked in Senex’s broader western Surat basin acreage.
Drilling & Production Quick Takes
Talos delivers first oil from Bulleit field
Talos Energy produced first oil from the Gulf of Mexico Green Canyon 21 (GC 21) Bulleit field on Oct. 15, partner Otto Energy said in a release Oct. 19. Production ramp up will occur in 1,000 bo/d increments until the well rate reaches a steady state.
The deepwater well intersected the DTR-10 reservoir, encountering net 140 ft TVD oil pay, and the MP reservoir, encountering 110 net ft oil pay. The latter is expected to perform consistent with analogue wells in GC18 field.
The project has been developed via a 10-mile subsea tieback to the GC18 Whistler platform where production is processed and delivered into regional oil and gas sales pipelines.
In an early October update, the operator noted finalizing completion and hook-up operations of the subsea well following numerous weather-related delays, including Hurricane Delta.
Talos holds a 50% working interest and is operator in Green Canyon 21. EnVen and Otto Energy hold 33.3% and 16.7% working interests, respectively.
BP starts Qattameya gas field
BP started production in Qattameya gas field in Egypt’s North Damietta offshore concession about 45 km west of the Ha’py platform in 108 m of water. Field discovery was announced in 2017.
BP’s joint venture with Pharaonic Petroleum Co. (PhPC) developed the field as a one-well subsea tieback to Ha’py and Tuart field through a new 50-km pipeline. It also connects to existing subsea utilities via a 50-km umbilical. The field is expected to produce up to 50 MMcfd and will be directed to Egypt’s national grid.
BP holds 100% equity in the North Damietta offshore concession in the East Nile Delta. PhPC is a British Petroleum and Egyptian Natural Gas Holding Co. (EGAS) joint venture operating the West Harbour gas processing facility.
Total lets rig contract for work offshore Angola
Total E&P Angola has awarded Maersk Drilling a three-well contract for seventh generation drillship Maersk Voyager to drill development wells in Block 17 offshore Angola.
The block, 150 km off the Angolan coast in water depths of 600-1,400 m, has produced almost 3 billion bbl of oil since 2001 by four floating production, storage, and offloading (FPSO) units: Girassol (2001), Dalia (2006), Pazflor (2011), and CLOV (2014).
In December 2019, the operator signed an agreement with national oil, gas, and biofuels agency ANPG and state-owned Sonangol of Angola to extend the consortium’s production licenses to 2045 (OGJ Online, Dec. 16, 2019).
The rig contract has an estimated duration of 140 days, contracting Maersk Voyager until second-quarter 2021. The value of the contract is about $30 million, including provided integrated drilling services.
Two one-well options included in Maersk Voyager’s previously agreed work scope for Total remain.
Maersk Voyager is a high-spec ultra-deepwater drillship delivered in 2014 and operating offshore Africa since 2015. It commenced operations for Total E&P Angola in January.
Total is operator of Block 17 (40%) with partners Equinor (23.33%), ExxonMobil (20%), and BP (16.67%).
PROCESSING Quick Takes
HollyFrontier lets contract for Wyoming refinery conversion
HollyFrontier Corp.’s Cheyenne Renewable Diesel Co. LLC has let a contract to Triten Corp. subsidiary IAG to provide project management on the operator’s plan to permanently cease processing of crude oil at its 52,000-b/d refinery in Cheyenne, Wyo., and convert the plant into a renewable diesel refinery by 2022 as part of the operator’s increased focus on expanding and integrating its renewables business (OGJ Online, June 2, 2020).
Alongside project management, IAG also will deliver project controls and construction management for the proposed refinery conversion, the service provider said.
IAG, however, did not disclose a value of the Oct. 5 contract.
Approved by HollyFrontier’s board of directors on May 29, the proposed Cheyenne conversion project will involve repurposing the refinery’s current footprint and a portion of its existing assets to enable production of 90 million gal/year (6,000 b/d) of renewable diesel.
HollyFrontier, which began winding down Cheyenne’s traditional petroleum refining operations on Aug. 3 to begin work on converting certain unidentified units and hardware of the refinery for renewable diesel production, plans to complete renewable diesel units (RDU) at the site during first-quarter 2022 at an estimated cost of $125-$175 million, the operator said in its second-quarter 2020 earnings report to investors.
Hengyi lets contract for Brunei polypropylene unit
Hengyi Industries Sdn. Bhd. has let a contract to Lummus Novolen Technology GmbH for a large-scale polypropylene unit at its 8-million tonnes/year integrated refining and petrochemical complex on Pulau Muara Besar island in Brunei.
Lummus’ scope includes the technology license for 1,000 kton per year (kta) polypropylene unit as well as basic design engineering, training, and technical services.
The unit is Lummus’ largest polypropylene license to date and will be one of the largest polypropylene units in the world, the service provider said.
The award follows Hengyi’s contract to a division of E.I. DuPont de Nemours & Co. to license technology for an alkylation unit at the refining and petrochemical complex in August (OGJ Online, Aug. 25, 2020).
Brooge begins oil storage facility preconstruction
Brooge Energy Ltd. has begun preconstruction work for its Phase 3 refinery and storage expansion at its existing terminal operations in Fujairah, UAE, outside the Strait of Hormuz, adjacent to the East coast port of Fujairah on the Gulf of Oman (OGJ Online, Apr. 23, 2020).
Work includes commencement of the Soil Investigation and the Environmental Impact Assessment (EIA) report. The facility is expected to be operational in late 2022.
Brooge Energy will construct and operate its planned Phase 3 facility through its newly formed and wholly owned subsidiary, Brooge Petroleum and Gas Investment Company Phase III FZE (BPGIC III).
Preconstruction work follows an April contract let to MUC Oil & Gas Engineering Consultancy LLC (MUC) to complete technical studies for the proposed Phase 3 expansion.
As part of the contract, MUC will complete basic design for a potential 180,000-b/d refinery as well as front-end engineering design (FEED) studies for the Phase 3 oil storage terminals, which could add up to three and a half times more storage capacity—or between 2.1-3.5 million cu m—for crude oil, fuel oil, and clean products than the projected 1.0 million-cu m storage capacity to be added following completion of the Phase 2 expansion currently under way, Brooge Energy said Apr. 22. Hydrotesting of the eight-tank Phase 2 storage expansion began in August (OGJ Online, Aug. 6, 2020).
The company believes completion of the expansion would make it the largest independent oil storage and service provider in Fujairah.
TRANSPORTATION Quick Takes
TC Energy gets NGTL 2021 expansion approval
TC Energy Corp. received approval from the Government of Canada for its Nova Gas Transmission Ltd. (NGTL) 2021 System Expansion Project. NGTL expects that this approval will allow it to immediately progress construction activities in accordance with regulatory requirements, with compressor station field work expected to begin December 2020 and pipeline construction expected to start January 2021.
Once placed in service, which will occur through 2021 and into 2022, the 2021 NGTL expansion project will provide 500 MMcfd of incremental capacity to local distribution companies, power producers, petrochemical companies, and natural gas producers. It will add 344 km of new pipeline to the existing Nova transmission system from Red Deer to Grand Prairie, Alta., increasing capacity to 2.5 bcfd.
The $2.3-billion project is part of a $9.9-billion NGTL program to add 3.5 bcfd of incremental delivery capacity between 2020 and 2024.
Enbridge Line 3 project gets favorable Minnesota ruling
Enbridge Inc.’s Line 3 340-mile crude pipeline replacement project has received a favorable ruling from the Minnesota courts. Administrative Judge James LaFave ruled that the joint petitioners against the line had failed to meet their burden of proof in claiming that Minnesota pollution regulators had not properly considered the project’s construction impacts. The 36-in. OD 760,000-b/d pipeline would cross at least 212 streams and affect more than 700 acres of wetland.
The Minnesota Pollution Control Agency (MPCA) approved Line 3’s draft water permits for construction in February 2020. Five organizations—two Ojibwe bands and three environmental groups—subsequently requested a contested case hearing regarding the permits.
Among the allegations brought forward against the permits were that construction would permanently impact water quality and wetlands and that MPCA and Enbridge had undercounted the amount of wetland that would be affected. MPCA granted the contested case hearing earlier in 2020 (OGJ Online, June 4, 2020).
MPCA has until mid-November to decide whether to issue final water-quality permits. The Minnesota Public Utilities Commission in February 2020 approved the Line 3 project for a second time.
W2W Permian crude pipeline begins service
The Wink-to-Webster (W2W) pipeline has started transporting Permian crude and condensate from Midland, Tex. to Houston. The pipeline’s main segment, constructed by an Enterprise Products Partners (EPP) affiliate, is operated by ExxonMobil Pipeline Co.
The 650-mile, 36-in. OD W2W system is designed to transport 1.5 million b/d of crude and condensate. Underpinned by long-term commitments, the pipeline will have origin points in Wink, Tex., and Midland, multiple destinations in the Houston market, including Webster, Baytown, and the Enterprise Crude Houston Oil terminal, and connectivity to Texas City and Beaumont.
Wink-to-Webster Pipeline LLC is a joint venture consisting of affiliates of ExxonMobil, Plains All American Pipeline, Lotus Midstream, Delek US, MPLX LP, and Rattler Midstream LP.
Keystone XL receives favorable court opinion
Work on TC Energy Corp.’s Keystone XL crude oil pipeline would be allowed to continue based on an interim ruling by US District Court for the District of Montana Judge Brian Morris, who denied a request by Native American tribes to halt construction due to potential damage to cultural sites caused by future oil spills. Work started in April 2020 on the 1,179-mile, 830,000-b/d pipeline from Hardisty, Alta., to Steele City, Neb.
Even with this decision, however, progress on the line remains stalled, a ruling by the US Supreme Court earlier this year having upheld the same court’s invalidation of required US Army Corps of Engineers water-crossing permits. Work cannot resume until new permitting has been completed (OGJ Online, Apr. 16, 2020).
The Rosebud Sioux Tribe in South Dakota and the Assiniboine and Gros Ventre tribes in Montana said a 2019 permit for the project issued by President Donald Trump violated treaties signed in the mid-1800s. Judge Morris did not make a final ruling on the case and invited further arguments.