OGJ Newsletter

Jan. 25, 2021

GENERAL INTEREST Quick Takes

Thirty firms awarded stakes in Norway’s APA 2020 bid round

Thirty companies have been awarded production licenses on the Norwegian continental shelf as part of Norway’s Awards in Predefined Areas (APA) 2020 licensing round. Of these, 18 companies will be offered one or more operatorships. A total of 61 production licenses were on offer by Norway’s Ministry of Petroleum and Energy to oil and gas firms – 34 in the North Sea, 24 in the Norwegian Sea, and 3 in the Barents Sea. Twelve of the production licenses are additional acreage to existing production licenses.

The authorities assessed applications from a total of 33 companies through autumn 2020.

Equinor was awarded 17 new production licenses—10 as operator and seven as partner. Eight of the licenses are in the North Sea and nine are in the Norwegian Sea.

Neptune Energy has been awarded six licenses—four in the Norwegian North Sea and two in the Norwegian Sea. In three of the licenses Neptune has been awarded operatorship.

DNO ASA subsidiary DNO Norge AS was awarded participation in 10 exploration licenses, of which four are operatorships. Of the new licenses, six are in the North Sea and four in the Norwegian Sea.

Some of the larger awards went to Aker BP with 10 licenses (8 as operator), Lundin with 19 (seven as operator), Wintershall DEA with 16 (four as operator), and Vår Energi with 10 (five as operator).

Total withdraws from API

Total will not renew its membership to the American Petroleum Institute (API) for 2021.

The major said it assesses the main industry associations of which it is a member to ensure alignment with its climate positions, and following the 2019 and 2020 reviews, API’s positions were assessed as “partially aligned” with those of Total.

The company said certain divergences remain:

  • regarding the role of natural gas, API maintains its support for the rollback of US regulation on methane emissions, which Total opposed in November 2019;
  • regarding transport decarbonization, API is part of the Transportation Fairness Alliance, which is opposed to subsidies for electric vehicles;
  • regarding the carbon pricing principle, API expresses differing positions to those of Total.

Moreover, API gave its support during the recent elections to candidates who argued against the United States’ participation in the Paris Agreement.

“The Group acknowledges the API’s considerable contribution, for over a century, to the development of our industry. Nevertheless, as part of our Climate Ambition made public in May 2020, we are committed to ensuring, in a transparent manner, that the industry associations of which we are a member adopt positions and messages that are aligned with those of the Group in the fight against climate change,” said Patrick Pouyanné, chairman and chief executive officer of Total. 

Energean to acquire Kerogen interest in Israel development

Energean PLC has entered into a conditional agreement with Kerogen Investments No.38 Ltd., an affiliate of Kerogen Capital, to acquire Kerogen’s 30% interest in Energean Israel Ltd. (EISL). A completed deal would see Energean own 100% of EISL’s share capital.

Total consideration includes an upfront payment of $175 million, deferred cash consideration amounts of $155-180 million, and $50 million of convertible loan notes.

The deal would add 2P reserves of 29.5 bcm of gas and 30 million bbl of liquids, representing about 219 MMboe in total to Energean.

The expanded Energean group would have 2P reserves of 974 MMboe (80% gas) and a working interest production trajectory to more than 200,000 boe/d (80% gas), once Karish and Karish North fields are producing at plateau rates.

In October, the living quarter module and the eight pipe rack modules were lifted onto the Energean Power floating production, storage, and offloading vessel at Sembcorp’s Admiralty Yard in Singapore. The vessel is expected to sail away to the 267 MMboe 2P Karish field offshore Israel in third-quarter 2021. The project is expected to deliver first gas in fourth-quarter 2021.

Subject to shareholder, regulatory, and other approvals, Energean expects the deal to close in first-quarter 2021.

Equinor, YPF partner with Shell offshore Argentina

Equinor and YPF have entered into an agreement with Shell to jointly farm-down 30% non-operated interests in the CAN 100 block in the North Argentinian basin, offshore Argentina.

In October 2019, Equinor farmed in to the YPF CAN 100 block and agreed to take over the operatorship (OGJ Online, Aug. 21, 2019). Equinor and YPF currently both hold 50% equity in the license, and will after the transaction hold 35% each, with Shell holding the remaining 30% in the block.

The CAN 100 block comprises an area of 15,000 sq km and is the largest block in the North Argentinian basin.

The agreement is pending governmental approval.

Exploration & Development Quick Takes

Total, Apache make significant find offshore Suriname

Total SA and Apache Corp. have made the fourth significant oil and gas discovery at the Keskesi East-1 well in Block 58 off the coast of Suriname. This follows previous discoveries at Maka Central, Sapakara West, and Kwaskwasi (OGJ Online, Jan. 7, 2020; Apr. 2, 2020; July 29, 2020).

The well was drilled by the Noble Sam Croft drillship in about 725 m of water and encountered targets in the upper Cretaceous-aged Campanian and Santonian intervals. The shallower Campanian interval contains 58 m (190 ft) net oil, volatile oil and condensate pay, and the Santonian interval contains 5 m (16 ft) net oil and volatile oil pay. Fluid samples indicate API oil gravities of about 27-28º in Campanian and 35-37º in Santonian. Drilling is ongoing for deeper Neocomian aged targets.

Upon completion of the well, the drillship will be released.

Apache transferred operatorship of Block 58 to Total on Jan. 1, 2021 but will continue to operate the Keskesi exploration well until release of the drillship. Total and Apache each have 50% interest in the block (OGJ Online, Dec. 23, 2019).

Apex discovers oil in Egypt’s Western Desert

Apex International Energy made an oil discovery in Southeast Meleiha Concession (SEM) in the Western Desert of Egypt.

The discovery was achieved at the SEMZ-11X well 10 km west of Zarif, the nearest producing field. The well was drilled to 5,700 ft total depth and encountered 65 ft of oil pay in the Cretaceous sandstones of Bahariya and Abu Roash G formations. Testing of the Bahariya resulted in a peak rate of 2,100 b/d of oil with no water. Additional uphole pay exists in the Bahariya and Abu Roash G formations that can be added to the production stream in the future, the company said.

SEMZ-11X was Apex’s second exploration well in an ongoing three-well program following the acquisition and processing of 1,342 sq km of 3D seismic data in 2019-2020. The first well, the SEMZ-1X drilled in December 2020, also discovered Bahariya oil with 17 ft of indicated pay. The well, 23 km west of Zarif field, was also drilled to 5,700 ft and tested at a rate of 100 b/ of oil. Apex plans to fracture stimulate the 1X in the future to increase the producing rate.

The third well of the current campaign, the SEMZ-3X, is scheduled to begin later this month. Apex plans to drill the 3X to a depth of 5,700 ft in search of oil in Bahariya formation. The SEMZ-3X location is 5 km east of Zarif field, which also produces from the Bahariya.

Apex holds a 100% working interest in the SEM exploration concession, encompassing 2,534-sq km. The company acquired the concession interest through the 2016 exploration bid round of the Egyptian General Petroleum Corp. (EGPC) and signed the concession agreement on Aug. 29, 2017.

Woodside granted approval for Greater Western Flank stage 3

The Woodside Petroleum-operated North West Shelf JV received approval from the regulatory authority NOPSEMA for drilling its Greater Western Flank Stage 3 development offshore Carnarvon basin 128 km north northwest of Dampier in Western Australia.

Woodside’s Stage 3 program includes three production wells in the Greater Western Flank region in production license WA-5-L and one production well in the Lambert Deep development in WA-16-L.

Water depths are 125 m and 130 m, respectively.

The wells are targeting estimated recoverable reserves of 400 bcf of gas and will be tied back to Goodwyn A and Angel fixed platforms.

The Greater Western Flank project, initiated in 2015, is being developed to support production from the North West Shelf gas-condensate fields that have been flowing since 1984. The work involves gradually connecting an additional eight smaller fields surrounding the main North Rankin and Goodwyn fields.

The work—involving a moored semi-submersible drilling rig, a pipelay vessel, installation vessels and a variety of service craft—will begin in this year’s second quarter and be completed in 2023.

The NWS JV comprises BHP, BP, Chevron, Japan Australia LNG (Mitsui & Mitsubishi), Shell, and Woodside each with one sixth interest.

Drilling & Production Quick Takes

Wintershall produces first gas from Sillimanite South field

Wintershall Noordzee BV, a 50-50 joint venture of Wintershall Dea GmbH and Gazprom EP International BV, started production of D12-B3, the Sillimanite South field discovery well.

The gas field was discovered in 2020 following completion of the second Sillimanite development well which was taken into production in June 2020 (OGJ Online, June 16, 2020).  D12-B3 is the third new well which Wintershall Noordzee has taken into production in the past 12 months.

After hook-up activities of the Sillimanite South production well to the D12-B production satellite platform had been completed, first gas was introduced. The D12-B satellite platform is situated close to the Anglo-Dutch border in Dutch territorial waters. From there, the produced gas will be transported via the Neptune Energy-operated D15-A production platform, through the NGT (Noordgastransport) gas transportation system to shore.

The unitized Sillimanite gas field stretches across the UK and the Dutch Continental Shelves in license Block 44/19a on the UK side and Blocks D12a and D12b on the Dutch side. A treaty between the UK and Dutch governments entered into force in July 2018. Sillimanite South field lies entirely in Block D12a.

Both Sillimanite and Sillimanite South gas fields are producing from sandstone reservoirs of Carboniferous age at a depth of 3,700 m subsea.

Sillimanite South joint venture partners are Wintershall Noordzee BV (operator, 39.5%), EBN BV (50%), and Neptune Energy (10.5%).

Obsidian begins first-half 2021 Cardium drilling program

Obsidian Energy Ltd., Calgary, expects to drill seven wells in first-half 2021 furthering the company’s Cardium development activity within its Central Alberta Willesden Green asset. Depending on commodity prices and weather conditions, an eighth well could be added to the program. Most of the wells will be adjacent to or very near the company’s 2020 Cardium program wells.

The company expects $35 million in capital expenditures plus $5 million in decommissioning expenditures for first-half 2021, with production of 23,000-23,400 boe/d.

Obsidian began its first-half 2021 program in December and has rig-released the first two wells on the 4-35 Cardium pad in Crimson Lake, adjacent to the 1-27 and 12-26 pads drilled in 2020 (OGJ Online, Nov. 30, 2020). One drilling rig is being utilized to deliver the seven-well program, the company said.

While all seven wells are expected to be drilled prior to spring break up, current guidance assumes that only five wells are brought on stream in first-half 2021 with the remaining two wells scheduled to be completed as weather and ground conditions allow.

Beach Energy ready to drill offshore Otway well

Beach Energy Ltd., Adelaide, has been given the go-ahead by Australian regulator NOPSEMA to drill its long-planned Artisan-1 wildcat in the offshore Otway basin of western Victoria.

Artisan-1, in exploration permit Vic/P43 about 32 km of the coast in a water depth of 71 m, was originally slated to spud early in 2020, but the drilling contract with Diamond Offshore Drilling was terminated due to the late arrival of the Ocean Onyx semisubmersible.

The rig was stacked in Port Phillip Bay near Melbourne for the remainder of 2020.

In August Beach and joint venture partner OG Energy executed a new agreement with Diamond Offshore in which the same rig will drill up to nine wells (six firm, three options) with work to begin between December 2020 and March 2021.

The first well in the program is the Artisan-1. It will be followed by a series of development wells in nearby Geographe and Thylacine gas fields.

Beach submitted its environmental plan to NOPSEMA in July 2020 and received official approval the week of Jan. 11.

The well is now expected to spud during this year’s first quarter.

Whiting sets 2021 capital program, plans to drill 24 net operated wells

Whiting Petroleum Corp., Denver, expects capital expenditures of $240 million and production of 82,000-88,000 boe/d (48,000-52,000 b/d of oil) in 2021, holding production flat on an annual average, as compared to 2020 exit levels.

The company plans to drill 37 gross (24.0 net) operated wells; turn-in-line 56 gross (36.8 net) operated wells, including 39 gross (23.6 net) operated drilled uncompleted wells carried over from 2020.

The company’s largest projects are in the Bakken and Three Forks plays in North Dakota and Montana and the Niobrara play in northeast Colorado.

ExxonMobil begins Canje block drilling offshore Guyana

ExxonMobil has started drilling at the Bulletwood-1 wellsite on Canje block, offshore Guyana.

The block lies 180 km offshore in 1,700-3,000 m of water adjacent to Stabroek block. Bulletwood-1 is a 500 million bbl oil prospect targeting a Liza lookalike, confined channel complex of Late Cretaceous, Campanian age.

The well is the first in a multi-well drilling campaign on the block to evaluate high impact Upper Cretaceous prospects in the proven Liza play fairway with additional deeper reservoir targets.

Drilling operations by the Stena Carron drillship are scheduled to be completed on or before Feb. 23.

ExxonMobil subsidiary Esso Exploration & Production Guyana Ltd. is operator (35%) at Canje Block with partners Total (35%), JHI (17.5%), and Mid-Atlantic Oil & Gas Inc. (12.5%).

PROCESSING Quick Takes

Sinopec Hainan Refining & Chemical lets contract for ethylene expansion

China Petroleum & Chemical Corp. (Sinopec) has let a contract to John Wood Group PLC to provide engineering, procurement, and construction (EPC) services for work related to a petrochemical expansion at subsidiary Sinopec Hainan Refining & Chemical Co. Ltd.’s (HRCC) 8-million tonnes/year refinery development in the Yangpu Economic Development Zone of Hainan Free Trade Zone (FTZ) in southern China.

As part of the more than $120-million contract, Wood will deliver EPC services for the sitewide pipe rack and associated pipework, power cables, telecommunications, and lighting for HRCL’s proposed ethylene renovation and expansion project at the operator’s integrated complex, the service provider said on Jan. 12.

Already well under way and scheduled to be completed as well as commissioned by October 2022, the planned ethylene renovation and expansion project will enable the complex to produce up to 1 million tpy of ethylene derivatives as well as expand the site’s ability to further process crude oil, allowing Hainan FTZ’s ethylene output to serve ethylene demand across China and globally, according to Wood and a series of releases and reports both from the government of China and Sinopec.

On Nov. 10, 2020, construction on the supporting terminal included as part of HRCC’s ethylene expansion project officially began, accelerating the overall renovation and expansion works into “the fast lane,” the government of Hainan Province said in a Nov. 11, 2020, release.

Hainan’s provincial government said HRCC’s ethylene expansion will include a supporting terminal with four berths to accommodate the project, including:

  • One 50,000-tonnes berth.
  • Two 20,000-tonnes liquid chemical berths.
  • One 30,000-tonnes general cargo berth.

Based on the current construction plan, the supporting terminal’s fourth berth will be put into use by the end of August 2021, with all berths to be completed before July 8, 2022, according to the government of Hainan.

Sinopec first publicly announced its push for HRCC’s ethylene expansion in June 2020.

The project—which aims to boost China’s downstream sector by more than $14.1 billion/year and transform Hainan FTZ into a new engine for regional economic growth—will include 10 sets of unidentified equipment for chemical production, three sets of equipment for oil refining, and supporting storage and terminal installations, Sinopec said on June 11, 2020.

Outrigger completes Williston gas plant, gathering system

Outrigger Energy II LLC has completed construction of its Williston basin midstream project in Williams County, ND. The project includes the 250-MMcfd Bill Sanderson cryogenic gas processing plant west of Williston, ND, and an 80-mile, 20 and 24-in. OD, rich gas gathering system starting in eastern Williams County, ND.

The gathering system can transport more than 450 MMcfd of raw gas and Outrigger plans to expand the plant’s capacity based on producer needs. The high-efficiency plant features ethane recovery and rejection with direct market access to the Northern Border pipeline for residue gas and the Oneok NGL pipeline for liquids.

The project is anchored by a long-term gas gathering and processing agreement with XTO Energy Inc., a wholly owned subsidiary of ExxonMobil (OGJ Online, Jan. 7, 2020).

Construction took 8 months after groundbreaking.

TRANSPORTATION Quick Takes

Woodside boosts Scarborough development with long-term LNG supply agreement

Woodside Energy Trading Singapore Pte Ltd. has agreed to double its long-term supply of LNG to Uniper Global Commodities SE, boosting Woodside’s plans for development of Scarborough gas field.

The companies have amended their original December 2019 sale and purchase agreement such that Woodside will now begin its initial supply to Uniper this year with up to 1 million tonnes/year (tpy) and increase it to around 2 million tpy from 2026.

Woodside will supply the LNG from its global portfolio although most of the supply from 2025 will be conditional upon a final investment decision on development of Scarborough gas fields on the Exmouth Plateau offshore Western Australia.

The 13-year term of the original 2019 sales and purchase agreement remains unchanged.

Woodside also has agreed to collaborate with Uniper on potential carbon-neutral LNG, including enhanced carbon accounting, and future hydrogen opportunities.

Expansion of the original agreement demonstrated further progress towards FID for Scarborough, said Peter Coleman, Woodside chief executive officer.

“We expect the timing to be right for final investment decisions on both Scarborough development and the related Pluto Train 2 construction on the Burrup Peninsula during the second half of 2021,” he said.

Woodside has now secured long-term customers for more than 40% of its expected Scarborough equity production.

Pembina launches Cochin binding open season

Pembina Pipeline Corp. units PKM Cochin ULC and Pembina Cochin LLC launched an open season to obtain binding commitments for transportation of light condensate on the Cochin pipeline.

The open season closes Feb. 18, 2021 at 5:00 p.m. MST.

The system is a 1,561-mile, 12-inch pipeline with design capacity of as much as 110,000 b/d. In 2019, Pembina acquired ownership of the pipeline from Kinder Morgan. Cochin transports condensate from Fair Oaks, Ind., to Fort Saskatchewan, Alta.