GENERAL INTEREST Quick Takes
Ineos to acquire Hess Denmark for $150 million
Ineos E&P AS, a unit of Ineos Energy, has agreed to acquire Hess Corp. subsidiary Hess Denmark ApS for $150 million.
The Hess business in Denmark consists of operated assets focused on the production of oil. As part of the deal, Ineos will acquire 61.5% of the Hess-operated Syd (South) Arne oil field in the Danish North Sea, adding to the 36.8% share Ineos already holds in the field. Ineos will also acquire 4.8% of Solsort field, which is already operated by Ineos.
Syd (South) Arne field produced an average of 5,800 boe/d net to Hess in fourth-quarter 2021. The field, which lies about 150 miles west of Esbjerg, has produced oil and gas since 1999 and uses horizontal production and water-injection wells to optimize production from chalk reservoirs.
Ineos said it plans organic growth projects to further extend the life of the asset within the context of the Danish government’s decision to cease production on the Danish shelf by 2050.
The deal also will help support development of the Greensands carbon storage project, which plans to permanently store up to 8 million tonnes/year of CO2 in the Ineos-operated Siri area when the fields have ceased production, the company continued.
About 60 people will transfer to Ineos on completion of the deal, which is expected in third-quarter 2021, subject to government approval.
Shell mulls sale of certain non-operated Malaysian assets
Shell is exploring options to divest its non-operated interests in the Amended 2011 Baram Delta enhanced oil recovery (EOR) and SK307 production sharing contracts (PSCs) offshore Sarawak, Malaysia.
The (Amended) 2011 Baram Delta EOR PSC comprises Bokor, Baronia, Fairley Baram, Bakau, and Siwa oil fields and Tukau Timur and Baronia gas fields (OGJ Online, Nov. 11, 2011). The SK307 PSC currently produces from Baronia Barat oil field.
The decision is in line with the Shell’s strategy to focus its upstream business, the company said in a Mar. 15 release. It will continue upstream, gas-to-liquids, downstream, and business operations sectors in Malaysia. The upstream business in Malaysia has been identified as one of Shell’s nine Core Performance Units worldwide, the company said.
In January, Shell Malaysia noted plans to shed about 2% of its workforce, including 250-300 jobs from its upstream business, as part of an effort to reshape and simplify the organization (OGJ Online, Jan. 20, 2021).
Petronas Carigali is operator of the Baram Delta EOR project (60%) and SK307 (50%), with Sarawak Shell Bhd. holding the remaining interests.
Phillips 66 names Lashier as president, COO
Phillips 66 has named Mark Lashier, president and chief executive officer of Chevron Phillips Chemical Co. LLC (CPChem), as its president and chief operating officer, effective Apr. 1.
Lashier, who has over 30 years of energy industry experience, has served as CPChem’s chief executive officer 2017. He joined the global petrochemical joint venture, in which Phillips 66 owns a 50% interest, in 2000. At CPChem he has served as executive vice-president of olefins and polyolefins; senior vice-president of specialties, aromatics, and styrenics; vice-president of corporate planning and development; and regional manager of Asia.
Lashier will have responsibility for operational execution across all Phillips 66 businesses.
Petro Rio to acquire Wahoo interest from Total
Petro Rio SA agreed to acquire Total E&P do Brasil Ltda.’s 28.6% interest in exploration Block BM-C-30 (Wahoo) in Campos basin, offshore Brazil.
Wahoo lies 30-35 km north of Frade field in 1,400 m of water with a carbonate reservoir in the presalt at 5,000-7,000 m. Oil discoveries in 2008 and formation tests carried out in 2010 have shown production potential of over 140 million bbl. Average initial productivity is estimated above 10,000 b/d per well and total production exceeding 40,000 b/d, based on the formation test made in the pilot well.
The Wahoo base project covers drilling of four producer wells and two injector wells with tieback between the wells and the Frade FPSO with an expected capex of $300 million for the tieback, $360 million for well drilling, $100 million for subsea equipment, and $40 million for adjustments to the FPSO and other items.
The acquisition, together with a November 2020 deal signed with BP, will bring PetroRio’s operated interest to 64.3% (OGJ Online, Nov. 19, 2020). Both deals are subject to regulatory approvals and usual conditions.
Exploration & Development Quick Takes
SBM completes Liza Unity FPSO topsides lifting
Topsides lifting for the ExxonMobil-commissioned 220,000-b/d Liza Unity floating production, storage, and offloading (FPSO) vessel has finished at Keppel Shipyard in Singapore. System integration and onshore commissioning are the next steps in the FPSO’s construction, after which it will depart for station at Liza field in Stabroek block offshore Guyana.
Liza Unity is the first FPSO to be built using SBM Offshore’s Fast4Ward standardized design and execution plan, based on a fully completed and commission multipurpose floater (MPF) hull. SBM says the project remains on schedule for first oil in 2022.
Liza Unity moved out of drydock fourth-quarter 2020 following mooring and riser system integration. Keppel and Dyna-Mac shipyards fabricated Liza Unity’s topsides modules.
ExxonMobil last year increased its estimated recoverable resource base in Guyana to 8 billion boe from 6 billion boe. The company has 16 discoveries in Stabroek block. It also last year advanced development of its third Stabroek field, Payara, using another SBM MPF-based FPSO (OGJ Online, Oct. 1, 2020).
Adani Welspun discovers gas offshore Mumbai
Adani Welspun Exploration Ltd. (AWEL) confirmed a gas discovery in Nelp-VII block MB-OSN-2005/2 in the Tapti-Daman sector of Mumbai offshore basin.
The block is spread across 714.6 sq km. Out of the three potential zones identified during drilling of the current well, two had substantial gas and condensate flow to the surface. Object-I (3 m), a clean sandstone reservoir, flowed at 9.7 MMscfd gas along with 378 b/d condensate. Object-II (15 m), another thick-clean sandstone reservoir, flowed at 9.1 MMscfd gas along with 443 b/d condensate.
AWEL, a 65-35 joint venture between Adani Enterprises Ltd. and Welspun Natural Resources Pvt. Ltd., holds 100% interest and is operator in the block.
The company is also an operator with 100% interest of an adjacent discovered small field B-9 Cluster in this gas-bearing zone. The proximity of these two prospective blocks will enable AWEL to optimize development of both blocks, the company said.
Talon holds high hopes for Perth basin prospect
Talon Petroleum Ltd., Perth, holds high hopes on the North Perth basin of Western Australia. The company has released its initial estimated recoverable prospective reserves for the high relief Condor prospect in permit EP494 and special prospecting authority SPA 0081 which lie 50 km north of Perth.
Formerly known as the Muchea structure, Condor has an estimated (P50) prospective gas resource of 408 bcf along with a P50 prospective 20 million bbl of condensate.
Talon moved into the permits earlier this year following execution of an agreement with privately held Macallum Group Ltd. that provides for Talon’s acquisition of 100% interest and operatorship of the two areas.
Talon already has a stake in the basin through a farm-in interest in Strike Energy Ltd.-operated permit EP 447 to the north which surrounds Waylering gas field. Talon will earn a 45% interest by funding the Waylering-5 appraisal well that is due to spud later this year.
If Waylering-5 is successful, the Condor prospect will provide an important follow-on drilling opportunity, Talon said.
Condor has been mapped as an elongate north-south trending feature with high vertical relief and two crestal areas within an interpreted overall three-way closure wrapping into the downthrown side of the basin-bounding Darling Fault. The likely reservoir target will be the Jurassic-age Cattamarra Coal Measures that contain sandstone intervals as well as providing potential source and seal.
Under its agreement with Macallum, Talon intends to undertake low-cost initial exploration work, including additional seismic, to better define the potential of Condor and mature the prospect to drillable status.
Elsewhere in the Perth basin, Talon secured a right of first refusal over the Ocean Hill gas discovery in permit EP495 immediately north of Waylering.
Equinor to increase Asgard recovery with low-pressure system
Equinor and Asgard license partners will invest just under 1.4 billion kroner to further develop the field and implement the Asgard B low-pressure project in the Norwegian Sea.
Asgard started producing in 1999, and the transition to low-pressure production is important to secure improved recovery from the field, the company said.
“We can still produce 400-500 million barrels of oil equivalent from the field. This means value creation in the order of NOK 150-200 billion. The current recovery rate for the field is almost 50%, but our ambition is to extract 60% of the hydrocarbons in the reservoirs before the field will have to be shut down,” said Randi Hugdahl, vice-president for Asgard operations.
The concept will modify the platform to reduce inlet pressure by replacing reinjection compressors and rebuilding parts of the processing infrastructure. The project will increase production from current Smørbukk wells. Start-up of low-pressure production is expected in 2023.
A front-end engineering and design (FEED) contract was awarded to Aker Solutions in December 2019 for modification work in connection with the project. The contract has been expanded into an engineering, procurement, construction, and installation contract valued at 800 million kroner. Project management and engineering will be carried out in Trondheim, while prefabrication will take place at the yard in Egersund. Work will start immediately and is planned to continue through 2024.
Gas from Asgard is piped through Asgard Transport to Karstø, north of Stavanger. Installations at Asgard have delivered more than 2.8 billion boe.
Equinor is operator with 34.57%. Partners are Petoro AS (35.69%), Var Energi AS (22.06%), and Total E&P Norge AS (7.68%).
Drilling & Production Quick Takes
Norway production decreased in February, NPD says
Norway’s liquids production averaged 2.108 million b/d in January, the Norwegian Petroleum Directorate reported. Norway’s daily liquids production averaged 2.137 million b/d in January (OGJ Online, Feb. 16, 2021).
Oil production in February is 0.4% higher than the NPD’s forecast, and 0.1% higher than the forecast so far this year.
The average daily liquids production in February consists of 1.792 million b/o, 303,000 bbl of NGL, and 13,000 bbl of condensate.
The total petroleum production for the first 2 months in 2021 is about 39.1 million standard cu m oil equivalents.
Var Energi granted Marulk field life extension
Var Energi AS has been given consent from the Petroleum Safety Authority Norway to use subsea infrastructure on Marulk field in the Norwegian Sea beyond original operating life.
The operating life has been extended until Dec. 31, 2030 from Dec. 31, 2021 to recover remaining reserves from the field.
Marulk lies 25 km southwest of Norne field in 370 m of water. It was discovered in 1992 and the plan for development and operation was approved in 2010. The field is developed with a subsea template tied back to the Norne production, storage, and offloading vessel (FPSO). Production started in 2012 (OGJ Online, Apr. 2, 2012).
Var Energi AS is operator with 20% interest. Partners are Equinor Energy AS (33%), Ineos E&P Norge AS (30%), and DNO Norge AS (17%).
Gulf Keystone resumes Shaikan growth plan
Gulf Keystone Petroleum Ltd. resumed growth plans to ramp-up gross oil production towards 55,000 b/d in Shaikan field, about 60 km to the northwest of Erbil covering an area of 280 sq km in the Kurdistan Region of Iraq.
Remaining expansion activity includes completion of SH-13, which was suspended last year, drilling SH-I—the final well in the program from the same pad—and installing electric submersible pumps in two existing wells.
Workstreams have begun, and the company is targeting to restart SH-13 drilling in this year’s third quarter.
Average gross production guidance for 2021 remains unchanged at 40,000-44,000 b/d, with the increase in gross production towards 55,000 b/d expected to occur in first-quarter 2022. Remaining capex required to deliver the program is estimated to be $40-45 million net, resulting in total 2021 capex of $55-65 million net.
Gulf Keystone is operator in the Shaikan license (80%) with partner Kalegran BV (20%), a subsidiary of MOL Hungarian Oil & Gas PLC.
PROCESSING Quick Takes
Lucid Energy commissions Delaware basin gas plant
Lucid Energy Group has commissioned its 230-MMcfd Red Hills V cryogenic natural gas processing plant in Delaware basin. The addition of Red Hills V brings Lucid’s total gas processing capacity in northern Delaware basin to 1.2 bcfd.
The company also operates more than 2,000 miles of high- and low-pressure pipeline servicing Eddy and Lea Counties, NM, and can produce nearly 150,000 b/d of NGL.
Valero starts up new unit at St. Charles refinery
Valero Energy Corp. has commissioned a new alkylation complex based on novel proprietary process technology from Lummus Technology LLC at subsidiary Valero Refining New Orleans LLC’s 340,000-b/d St. Charles refinery in Norco, La. (OGJ Online, Apr. 25, 2019).
With a high-octane alkylate production capacity of 17,000 b/sd, the St. Charles refinery’s new alkylation complex is equipped with Lummus’s CDAlky C5 alkylation process, which uses a low-temperature sulfuric acid alkylation process to convert C5 olefins from sources such as FCCs or steam crackers into alkylate by reacting the light olefins streams with isoparaffins, Lummus said on Mar. 1.
The St. Charles alkylation complex includes a CDHydro depentanizer column for recovery of C5 olefins from light catalytic-cracked (light cat) naphtha and removal of feedstock impurities, as well as the CDAlky unit—the first in the world—to covert C5 olefins into alkylate product with minimum acid consumption, according to the service provider.
Lummus said it received a contract award for the St. Charles project from Valero in 2016, under which it delivered technology licensing and basic engineering design for the complex, including design of the CDHydro depentanizer, C5 CDAlky unit, as well as technical services support for commissioning, startup, and unit performance testing. At the time, the CDAlky unit was to produce 25,000 b/d of alkylate from FCC-derived olefin feedstocks at the site (OGJ Online, Mar. 1, 2018).
Valero said it completed and started up the new alkylation unit—designed to convert low-value feedstocks at the refinery into premium alkylate—in fourth-quarter 2020 on time and under the original budget of $400 million.
Lukoil lets contract for Nizhny Novgorod refinery
PJSC Lukoil has let a contract to Honeywell UOP LLC to provide licensing for a suite of technologies to enable expanded production of Russian Class 5 (equivalent to Euro 5)-quality gasoline at subsidiary LLC Lukoil Nizhegorodnefteorgsintez’s 17-million tonne/year Kstovo refinery in central Russia’s Nizhny Novgorod region.
UOP will deliver licensing, design services, key equipment, and catalysts, and adsorbents for a new UOP Ethermax unit to be integrated into Nizhny Novgorod’s existing FCC complex that will convert isobutylene and methanol into 215,000 tpy of high-octane additive methyl tertbutyl ether, which will help reduce exhaust emissions from vehicles using gasoline produced by the refinery, UOP said.
UOP’s scope of work on the project also will include revamping the refinery’s existing selective hydrogenation units, as well as execution of a process revamp study for the site’s hydrofluoric alkylation units to maximize alkylate production for cleaner-burning fuels.
TRANSPORTATION Quick Takes
Northern Access gets favorable court ruling
National Fuel Gas Supply Corp. and Empire Pipeline Inc. have received a favorable ruling from the US Second Circuit Court of Appeals regarding the 97-mile, 24-in. OD Northern Access natural gas pipeline. The court ruled against a New York State Department of Environmental Conservation (DEC) and Sierra Club effort to block the pipeline based on legal deadlines.
The US Federal Energy Regulatory Commission (FERC) said in 2018 that the DEC had waived its certification authority on the project by failing to act within 1 year. DEC and Sierra Club contested the decision in court.
Northern Access would carry gas from western Pennsylvania to National Fuel’s existing Porterville compressor station in Erie County, NY. National Fuel will install an additional 5,350 hp of compression at Porterville and build an interconnection with Tennessee Gas Pipeline at a second Erie County location.
Empire will build a new 22,214-hp compressor station, 2 miles of 16-in. and 24-in. pipeline, and gas dehydration in Niagara County, NY. Dehydration would occur before further shipment of gas to an interconnect at Chippawa, Ont.
FERC last year granted a 3-year extension for completion of the project. The companies expect to begin construction in 2022 and for Northern Access to enter service in 2023.
Venture Global set to start Calcasieu Pass operations late 2021
Venture Global LNG may begin exports from its 10-million tonne/year (tpy) Calcasieu Pass liquefaction plant in Cameron Parish, La., in late 2021, according to recent filings with the US Federal Energy Regulatory Commission (FERC). Calcasieu Pass anticipates that it will begin full export operations in mid-2022 and plans for a phased operational start-up that could include first exports in late 2021.
Site construction began in February 2019, with Venture Global taking final investment decision (FID) later that year. The 2022 start of full exports is consistent with projections made at the time (OGJ Online, Aug. 21, 2019).
Venture Global says construction is proceeding well. Calcasieu Pass raised the roof on its two LNG storage tanks and received and set onto foundations the initial liquefaction modules (OGJ Online, Nov. 11, 2020).
The company has six binding, long-term agreements for sale of a total of 8 million tpy, as well as agreements for available quantities in excess of its 10-million tpy nameplate capacity. Agreements were made with Shell NA LNG LLC, Edison SPA, BP Gas Marketing Ltd., Galp Energia E&P BV, Repsol LNG Holding SA, PGNiG, and Venture Global Commodities LLC. Calcasieu Pass anticipates that it will contract its remaining 2 million tpy before completion of construction.
The Department of Energy has authorized Calcasieu Pass to export as much as 620 bcf of natural gas per year, equivalent to the plant’s 12-million tpy peak capacity
The 23.4-mile, 42-in. OD TransCameron pipeline that will bring feedgas to the plant from Grand Cheniere station will begin service soon, Venture Global said. Initial service will be interruptible, firm transportation agreements with suppliers not beginning until the start of commercial service.
Annova cancels Brownsville liquefaction project
Annova LNG has discontinued work on its proposed 6.5-million tonne/year (tpy) LNG plant under development in Brownsville, Tex. The company ascribed the decision to “changes in the global LNG market.”
The US Federal Energy Regulatory Commission approved the project in November 2019, with environmental groups requesting a reversal of that approval almost immediately. Annova signed a 20-year gas supply deal with Enbridge Inc. in January 2020.
Annova was majority owned by Exelon Corp., with minority owners Black & Veatch Corp., Kiewit Energy Group Inc., and Enbridge.
Two other liquefaction projects remain active in Brownsville. NextDecade Energy expects to take final investment decision (FID) on its 27-million tpy Rio Grande LNG plant in 2021. Glenfarne Group also plans FID this year on its 4-million tpy Texas LNG project.
Refidomsa replacing refined-product import pipelines
The Dominican Petroleum Refinery (Refidomsa) is building a new pipeline that will connect with Bajos de Haina port to supply fuels to the domestic market. The project, which will take about 18 weeks to complete, involves replacement of two 12- and 6-in. OD pipes with 12- and 8-in ones.
The pipelines will transport imported fuels 1.7 km from Pier 1/2 to Refidomsa’s storage tanks. Refidomsa also exports 0.5%-sulfur fuel oil to North America from its 34,000-b/d refinery (OGJ Online, Mar. 2, 2020). The project will cost 100 million pesos ($1.75 million).