GENERAL INTEREST Quick Takes
Eni assumes full interest, operatorship of block offshore Vietnam
Eni SPA affiliate Eni Vietnam BV is sole owner and operator of Block 115/09 in the Song Hong basin offshore central Vietnam following completion of a deal with KrisEnergy Ltd.
The 7,382 sq-km block in water depths of 90-1,000 m borders Eni Vietnam-operated (100%) Block 116 and is adjacent to Block 114 where operator Eni Vietnam (50%) and partner Essar Exploration and Production Ltd. reported the Ken Bau gas and condensates discovery, which is currently under appraisal (OGJ Online, July 27, 2020).
Tamarack Valley to acquire Anegada Oil
Tamarack Valley Energy Ltd., Calgary, has agreed to acquire Anegada Oil Corp., a privately held pure play producer in the Carnian Charlie Lake light-oil formation in British Columbia.
Assets include about 11,800 boe/d of Charlie Lake light oil production (71% oil and natural gas liquids) and over 200 net future drilling locations across 332.4 (321.2 net) sections of Charlie Lake land, proved developed producing reserves of 10.5 MMboe (70% liquids) and total proved plus probable reserves of 40.1 MMboe (71% liquids) based on Tamarack’s internal reserves evaluation effective June 1. Production in 2022 is expected to increase and be maintained at 12,000-13,000 boe/d.
Total net consideration for the deal is $494 million (Can.) after deducting the proceeds from the sale of a 2% newly created gross overriding royalty. The total net consideration consists of $247.5 million in cash and debt, subject to adjustment, and 105.3 million common shares of Tamarack. In conjunction with the deal, Tamarack agreed to sell a 2% gross overriding royalty interest on the assets to Topaz Energy Corp., Calgary, for gross proceeds of $32 million.
The acquisition is expected to close May 31, subject to certain customary conditions and regulatory and other approvals.
Tamarack has updated its preliminary 2021 capital budget based on the acquisition to $165-175 million from $125-130 million, and its average production to 33,000 boe/d from 26,000 boe/d.
Earthstone acquires additional Midland basin assets
Earthstone Energy Inc. agreed to acquire operated Midland basin assets from Tracker Resource Development III LLC and an affiliate, and from affiliates of Sequel Energy Group LLC, which hold wellbore interests in certain producing wells operated by Tracker.
With the deal, Earthstone acquires some 20,300 net acres (100% held by production, 100% operated) in Irion County, Tex., with no drilling commitments required on the acreage. Current net production is 7,800 boe/d (21% oil, 59% liquids) from 71 wells (30 horizontal, 41 vertical).
Earthstone said it has identified an inventory of 49 horizontal Wolfcamp locations.
Second-half 2021 production increase of 5,800-6,000 boe/d (19% oil, 59% liquids) is expected prior to adjustments for date of closing.
Tracker is backed by 1901 Partners Management LP and EnCap Investments LP, with each holding a 49% ownership interest and Tracker management holding the remainder.
The deal advances the company’s consolidation strategy following the January close of the $185.9-million acquisition of Warburg Pincus-backed Independence Resources Management LLC, said Robert Anderson, Earthstone president and chief executive officer (OGJ Online, Dec. 18, 2020).
A purchase price was not disclosed. Closing is expected early in this year’s third quarter.
Exploration & Development Quick Takes
BP, partners to appraise Puma West oil discovery
BP and partners will begin planning an appraisal program to better define an oil discovery in the US Gulf of Mexico Green Canyon Block 821. Preliminary data supports the potential for a commercial volume of hydrocarbons, the company said in a release Apr. 13.
The Puma West well—15 miles from BP-operated Mad Dog field and 131 miles off the coast of Louisiana in 4,108 ft of water—was drilled to a total depth of 23,530 ft. It encountered oil pay in a high-quality target sub-salt Miocene sand. Fluid properties from the discovered zone carried similar properties as other productive Miocene reservoirs in the area.
The wellbore has been suspended as a keeper well to preserve future utility.
BP is operator with 50% interest. Talos Energy Inc. and Chevron each hold a 25%.
The Puma West exploration prospect was evaluated following the farm-in by BP to Green Canyon Block 821 and subsequent farm-in by Chevron USA Inc. (OGJ Online, Sept. 19, 2019).
Ineos lets contract to advance Norwegian Sea prospect work
Ineos Oil & Gas has let a contract to ASCO Norge AS as base supplier for the company’s first drilling operation on the Norwegian continental shelf.
ASCO Norge will be responsible for the delivery of base services for Ineos’ drilling operation of the Fat Canyon prospect in a Norwegian Sea Jurassic reservoir out of Kristiansund, Norway, where work is expected to begin in July. Fat Canyon is updip of the Neptune Energy-operated Fenja oil and gas field.
The scope for the project includes complete logistics and supply base services, including loading/unloading of vessels, transport and customs clearance, storage, waste management, CCU services and management of equipment.
In January, Ineos let a contract to Dolphin Drilling for use of the Borgland Dolphin semisubmersible to drill the first well. The estimated duration is 40 days.
Neptune installs subsea trees at Duva development
Neptune Energy Norge AS advanced Duva development at PL636, 14 km northeast of Gjøa field in the Norwegian sector of the North Sea, with the installation of four enhanced horizontal subsea tree systems (EHXT).
The development, in water depth of 360 m, is an oil and gas subsea tieback to Gjøa’s semi-submersible facility.
The installation was carried out by the vessel Far Samson, operated by Solstad Offshore, instead of a rig—a first for Neptune Energy for a standalone EHXT operation. The systems were deployed on template wellheads over an 18-hr period, with total installation and subsea system testing completed within 8 days in cooperation with TechnipFMC, Ross Offshore, Solstad Offshore, Oceaneering, Fugro, IKM, and Tigmek.
Deploying the subsea trees from a vessel saved about 20 days of rig time, reducing costs by about $12 million, and emissions by about 60%, said Thor Løvoll, director of drilling and wells, Norway.
The Deepsea Yantai drilling rig, operated by Odfjell Drilling, will drill and complete remaining sections of the Duva well program during second- to third-quarter 2021. First production is expected in third-quarter 2021. Gross 2P reserves are 88 MMboe (76% gas).
Neptune Energy is operator at Duva (30%) with partners Idemitsu Petroleum Norge (30%), PGNiG Upstream Norway (30%), and Sval Energi (10%).
BP’s Argos platform arrives in Texas
BP’s Argos platform for the Mad Dog 2 project has arrived in the US after safely completing its 16,000-mile journey to the Kiewit Offshore Services fabrication yard in Ingleside, Tex. from South Korea (OGJ Online, Jan. 12, 2017).
Argos is a semi-submersible floating production platform and will be the company’s fifth operated platform in the Gulf of Mexico. Following work at Kiewit, Argos will be towed to its offshore home in the Gulf of Mexico, and will be installed about 6 miles from the original Mad Dog spar, about 190 miles south of New Orleans, where it will operate in 4,500 ft of water.
Mad Dog 2 will produce up to 140,000 gross b/d of crude oil from up to 14 production wells. Start-up is projected for second-quarter 2022.
BP is operator in Mad Dog (60.5%) with partners BHP (23.9%) and Chevron (15.6%).
Drilling & Production Quick Takes
Continental to record adverse winter weather impact of 6,000 boe/d
Continental Resources Inc., Oklahoma City, expects first-quarter 2021 oil production to average 152,000 b/d and natural gas production to average 935 MMcfd, including an adverse impact of about 6,000 boe/d (60% oil) due to severe winter weather in February.
Preliminary production guidance for second-quarter 2021 is 160,000-165,000 b/d of oil and 920-940 MMcfd. Production guidance for the year is 160,000-165,000 b/d of oil and 880-920 MMcfd.
First quarter results are expected Apr. 28, 2021 after market close.
Canacol expects May production start for Esperanza tie-in
Canacol Energy Ltd. will tie in the Esperanza block Cañahuate 4 development well in the Lower Magdalena basin of northwestern Colombia with production expected to begin early May (OGJ Online, Mar. 2, 2021).
The well encountered 72 ft true vertical depth of gas pay within the upper Cienega de Oro sandstone reservoir.
Canacol also drilled the Milano 1 exploration well but did not encounter commercial gas. The well has been plugged.
The rigs are being mobilized to drill the Nelson 9 development well and Aguas Vivas 1 exploration well. Each will take about 5 weeks to drill and test.
The wells are part of the company’s 2021 drilling program in which it expects to drill 12 wells (9 exploration, 3 development), all operated with 100% working interest.
Technical issues plague 88 Energy’s Merlin-1 test program
Technical issues have prevented 88 Energy Ltd., Perth, from sampling prospective hydrocarbon zones in the Merlin-1 wildcat in its Project Peregrine on the North Slope of Alaska (OGJ Online, Mar. 29, 2021).
The company said that the first run of the wireline program identified several potential pay zones corresponding to the shows and logs encountered during drilling and the nuclear magnetic resonance indicated good mobility across most of the zones.
However, the second run— designed to take samples across these zones—suffered a power failure and the sampling tool had to be withdrawn from the hole. The run back in was plagued by poor holes conditions. A clean-out failed to rectify the problem as communication with the test zone could not be re-established.
Samples from less prospective zones were gathered on the way out of the hole and will be sent for analysis. The company said that, while these are encouraging for regional prospectivity, they do not constitute a discovery.
Time is limited for the Arctic drilling season and Merlin-1 has been plugged, although it may be re-entered at a later date to drill a sidetrack well to conduct flow testing.
Wile some uncertainty remains, Merlin-1 has provided the best outcome of any of the five wells drilled by the company in its Alaskan acreage during the last 6 years, said David Wall, 88 Energy managing director.
PROCESSING Quick Takes
Nigeria lets contract for Port Harcourt refinery revamp
The Nigerian government’s Federal Executive Council (FEC) has let a contract to a subsidiary of Maire Tecnimont SPA to provide a suite of services for the major rehabilitation of Nigerian National Petroleum Corp. (NNPC) subsidiary Port Harcourt Refining Co. Ltd.’s (PHRC) Port Harcourt refining complex—which includes a 60,000-b/sd hydroskimming refinery and 150,000-b/sd full-conversion refinery—in Rivers state.
As part of the contract, Tecnimont SPA will deliver engineering, procurement, and construction (EPC) activities for the full rehabilitation project, which aims to restore the complex to a minimum of 90% of its nameplate capacity, Maire Tecnimont said on Apr. 6.
Tecnimont will execute the project in phases over 24-32 months, with the final stage to be completed by yearend 2024, or 44 months from the April 2021 award date, according to the service provider.
Without disclosing further details regarding specific projects to be carried out during the rehabilitation, Maire Tecnimont confirmed overall value of the EPC contract at about $1.5 billion.
At the contract signing ceremony, Mallam Mele Kyari, NNPC’s group managing director, said NNPC will continue to move forward with the presidential mandate to fix the country’s federally owned refineries, which will include future works at NNPC subsidiaries Warri Refining & Petrochemcial Co. Ltd.’s 125,000-b/sd refinery in Delta state, and Kaduna Refining & Petrochemical Co. Ltd.’s 110,000-b/sd refinery in Kaduna state, according to a series of Apr. 6 posts to both NNPC’s and Kyari’s official social media accounts.
The PHRC rehabilitation contract award follows local Nigerian media reports of FEC’s February 2021 approval of the revised modernization plan at Port Harcourt, as well as NNPC’s 2020 announcement that it is planning to relinquish control of Nigeria’s three state-run refineries following completion of the long-planned program to rehabilitate and optimize processing capacities at the sites (OGJ Online, Apr. 14, 2020; Sept. 30, 2019; Dec. 21, 2016).
NNPC previously let a contract to Maire Tecnimont subsidiaries for previous rehabilitation works at the Port Harcourt complex (OGJ Online, Sept. 23, 2019; Apr. 3, 2019).
Neste preps for major turnaround at Porvoo refinery
Neste Corp. is preparing to undertake 12 weeks of planned maintenance previously postponed from 2020 as a result of the coronavirus (COVID-19) pandemic at its 206,000-b/d refinery in the Kilpilahti industrial area of Porvoo, Finland (OGJ Online, Mar. 23, 2020).
Scheduled to begin Apr. 5 with the staged shutdown of processing units, the major turnaround event will entail an investment of about €330 million to complete regulatory inspections, maintenance works, and unidentified asset-improvement initiatives required for the refinery’s ongoing safe and competitive operation, Neste said on Mar. 31.
“[The upcoming turnaround is an investment] to secure safety, availability, and competitiveness of the Porvoo refinery for the next [5-year] operating cycle. During the turnaround, we will execute several investment projects related to the development of the refinery, including extensive asset, automation, and electrification renewals,” said Marko Pekkola, Neste’s executive vice-president for oil products.
The refinery’s maintenance shutdown will not affect product deliveries to customers, and Neste’s harbor and distribution terminal in Porvoo will continue operating normally during the major turnaround, the operator said.
Following completion of scheduled works, Neste said it expects the refinery’s return to normal operations by the end of June.
Initially planned for execution during spring 2020, the turnaround was delayed due to the impossibility of completing the full scope of planned works amid Neste’s protocols for limiting the spread of COVID-19. The operator, however, did complete critical maintenance works during the original second-quarter 2020 timeframe.
Confirmation of the upcoming turnaround follows Neste’s late-2020 announcement that it will proceed with restructuring of its Finnish refining operations under a program that will involve permanently shuttering processing and production at its 58,000-b/d Naantali refinery as well as upgrading the Porvoo to co-processing renewable and circular raw materials.
Cooper Energy extends transition agreement for Orbost gas plant
Cooper Energy Ltd., Adelaide, has extended its transition agreement with APA Group in relation to the Orbost gas plant in Victoria by 12 months.
The companies entered into the agreement in August 2020 with the aim of providing the framework for commencing gas sales agreements for Sole field in eastern Bass Strait and commissioning the Orbost processing plant as soon as possible.
The agreement includes revenue and cost-sharing mechanisms during the plant commissioning phase along with payments to Cooper Energy for the cost of sourcing back-up gas supply if needed.
That agreement is due to expire May 1, but Cooper has exercised an option to extend the agreement for another year.
The companies are working to improve output of the Orbost plant, which has underperformed since coming on stream in 2020.
The plant’s two sulphur absorbers were reconfigured during the December quarter last year, resulting in improved production rates. Average production in March was 42 terajoules/day of gas compared with 39 terajoules/day in February.
Periodic cleaning of the absorbers is still required every 6 weeks to reach 45 terajoules/day.
Cooper and APA are discussing further capital works to be undertaken this year. The goal is to reach a nameplate capacity of 68 terajoules/day.
Under consideration are installation of solids removal equipment to reduce fouling from solids deposition within the absorbers, changing the liquid distributors within the absorbers, and installation of a polishing unit to reduce the impact of hydrogen sulphide breakthrough during foaming events in the sulphur recovery unit.
Sole field, in 124 m of water about 65 km offshore Australia, came on stream in March 2020. The original plan was for field production of 24 petajoules/year.
The field was originally discovered by Shell Australia in 1973 but deemed sub-commercial. Cooper Energy became 100% owner upon purchase of Santos’ 50% share in October 2016.
TRANSPORTATION Quick Takes
H-Energy takes delivery of Höegh Giant FSRU
H-Energy has taken delivery of India’s first floating storage and regasification unit (FSRU), berthed at its Jaigarh LNG terminal in Maharashtra on India’s west coast. The company says testing and commissioning of the 6-million tonne/year (~750 MMcfd) unit will start “soon.”
Natural gas will travel via the 56-km Jaigarh-Dabhol pipeline to the national grid. Truck loading and transfer to smaller LNG carriers for bunkering or further shipment will also be available.
The 2017-built FSRU Höegh Giant was modified at Keppel Shipyard, Singapore, after completing a charter with Naturgy Energy Group SA as an LNG carrier. The vessel has 170,000 cu m of storage. H-Energy chartered it for 10 years.
India plans to increase natural gas’s share of its energy mix to 15% by 2030 from the current 6%.
Gazprom starts service on Chechen gas pipeline
OAO Gazprom has begun service on its 28-in. OD, 101.7-km Mozdok–Grozny natural gas pipeline, running in the same corridor as the Stavropol–Grozny gas pipeline. The line crosses 13 roads and six bodies of water, including the Terek River.
Gazprom says the new pipeline and an associated distribution network will further strengthen reliability of power supplies in the Chechen Republic and bring gas directly to more consumers.
The project is part of a 5-year program for 2021–25 between Gazprom and the Chechen Republic on gas infrastructure expansion. Gazprom reports completing construction of four inter-settlement gas pipelines in Chechen Republic’s Groznensky District and three in its Shalinsky District. These are now undergoing startup and commissioning.
The company continues building 13 more gas pipelines in the Groznensky, Gudermessky and Shalinsky Districts. Before end-2021, Gazprom plans to start laying another three gas pipelines in the city of Grozny and in the Achkhoy-Martanovsky and Urus-Martanovsky Districts.
Venture Global to start service on TransCameron pipeline
Venture Global LNG Inc. has received US Federal Energy Regulatory Commission permission to start service on the 23.4-mile, 42-in. OD TransCameron pipeline. The line will deliver gas from interconnects with multiple interstate pipelines at Grand Cheniere station to Venture Global’s 10-million tonne/year (tpy) Calcasieu Pass LNG plant.
Initial service on TransCameron will be interruptible. Firm transportation agreements with suppliers won’t begin until Calcasieu Pass starts commercial service.
A phased operational startup of the plant could include first exports as soon as late 2021, with full export operations planned for mid-2022. Venture Global has six binding long-term agreements in place for sale of 8 million tpy (OGJ Online, Mar. 22, 2021).
Phillips 66 withdraws from Liberty crude pipeline project
Phillips 66 Partners LP is pulling out of its 350,000-b/d Liberty Pipeline project with Bridger Pipeline LLC. The 700-mile, 24-in. OD pipeline was intended to carry crude oil from the Rockies and Bakken production areas to Cushing, Okla.
Liberty was put on hold more than a year ago as part of reducing capital spending in the face of the COVID-19 pandemic (OGJ Online, Mar. 24, 2020).
Phillips 66 Partners expects a roughly $200-million impairment to first-quarter 2021 earnings as a result of exiting the project.