OGJ Newsletter
GENERAL INTEREST Quick Takes
Vista acquires Argentina interests from Wintershall
Vista Oil & Gas SAB has acquired 50% interest including operatorship in the unconventional Aguada Federal and Bandurria Norte blocks in the Argentine province of Neuquén from Wintershall Dea Argentina SA.
Vista acquired 50% share of ConocoPhillips in the concessions in 2021 and now holds 100% of the shares in the blocks (OGJ Online, Oct. 4, 2021).
Through the Wintershall deal, Vista will acquire 25,231 net acres, increasing its total acreage in Vaca Muerta to 183,084 acres. The company also will add 150 new well locations to its Vaca Muerta portfolio, adding up to a total of up to 850 identified new well locations to date.
Vista will pay a total of $140 million. The deal terminates Vista’s obligation to pay the $77 million carry assumed by the company on Sept. 16, 2021, by acquiring the initial 50% interest in the assets.
Equinor downgrades reserves at Mariner
Equinor Energy AS revised downward its estimated total recoverable reserves in Mariner oil field to 180 million bbl from the previous estimate of about 275 million bbl.
Mariner lies on the East Shetland Platform of the UK North Sea, about 150 km east of Shetland and 320 km northeast of Aberdeen. The field began producing in 2019 and consists of two reservoirs: Heimdal and Maureen (OGJ Online, Aug. 15, 2019).
The reserve revision is linked to an updated seismic interpretation and experience from production of the Maureen reservoir which led to a revised reservoir model. This model is further supported by results from the first well drilled into the Heimdal reservoir in fourth-quarter 2021.
The revision will result in an impairment of about $1.8 billion, which will be reflected in IFRS net operating income for Equinor’s Exploration and Production International segment in fourth-quarter 2021. Results will be reported Feb. 9, 2022.
Mariner field development includes a production, drilling, and quarters platform based on a steel jacket, with oil exported to a floating storage unit and then transported to shore via tankers.
Equinor is operator of Mariner (65.11%) with partners JX Nippon Corp. (20%), Siccar Point Energy E&P (8.89%), and ONE-Dyas BV (6%).
Norway offers 53 licenses in APA 2021
Norway offered ownership interests in 53 production licenses to 28 oil and gas firms out of 31 that applied as part of its Awards in Predefined Areas (APA) 2021 licensing round.
Of the 53 licenses offered by Norway’s Ministry of Petroleum and Energy, 28 are in the North Sea, 20 are in the Norwegian Sea, and 5 are in the Barents Sea. Seventeen of the production licenses are additional acreage to existing production licenses.
Equinor Energy AS has been awarded 26 new production licenses—12 as operator and 14 as partner. The licenses are comprised of 12 in the North Sea, 10 in the Norwegian Sea, and 4 in the Barents Sea.
In 2022, the company plans to take part in around 25 exploration wells, mainly near existing infrastructure. Most of the wells will be drilled in the North Sea, some in the Norwegian Sea and a few in the Barents Sea.
Wintershall Dea has been awarded seven exploration licenses, including four as operator. Five of the new licenses are in the North Sea. The other two are in the Norwegian Sea, including a new operated license close to Njord field.
DNO ASA subsidiary DNO Norge AS has been awarded participation in 10 exploration licenses, of which three are operatorships. Of the 10 new licenses, six are in the North Sea and four in the Norwegian Sea.
Lundin Energy AB subsidiary Lundin Energy Norway AS has been awarded interests in 10 exploration licenses.
The award includes six licenses in the North Sea, three in the Norwegian Sea, and one in the Southern Barents Sea. Five of the licenses will be operated by Lundin.
Talon Energy lodges environmental impact assessment for Mongolian CGS project
Talon Energy Ltd., Perth, has lodged an environmental impact assessment (EIA) study for its proposed Gurvantes XXXV coal seam gas project in the Gobe basin of southern Mongolia with the Mongolian Government.
Talon said that its partner, Mongolian-based Telmen Resources, completed the EIA following a public consultation program in nearby communities conducted during November and December 2021.
Feedback from the process has been positive, the company said.
Talon expects approval for the project from the Mongolian Ministry of Nature, Environment, and Tourism late this month or early February. Once approved, field work, including a multi-well drilling program, will begin in this year’s first quarter.
Talon hopes to provide a gas resource estimate before mid-2022.
The Gurvantes XXXV project covers 8,400 sq km in what the company believes is one of the most prospective coal seam gas basins in the world.
The project is less than 20 km from the Mongolia-China border and about 300 km from an existing gas pipeline network in northern China.
Wintershall to exit Brazil
Wintershall Dea will terminate all its operations in Brazil and close the current office in Rio de Janeiro after the execution of all required measures. The company has nine exploration licenses spread over Potiguar, Ceará, Campos, and Santos basins.
The decision is the result of a thorough analysis of the company’s global portfolio and how projects fit with
the long-term strategy, said Wintershall board member Thilo Wieland.
Termination of operations in the country will be made in accordance with all contractual and legal regulations. The company has no remaining minimum work commitments in the licenses or other material financial obligations.
Exploration & Development Quick Takes
Chariot discovers gas offshore Morocco
Chariot Ltd. found gas in its Anchois-2 appraisal and exploration well within the Lixus license, offshore Morocco.
The well was drilled to 2,512 m TD by the Stena Don drilling rig in 381 m of water. Comprehensive evaluation of the well was through wireline logging, petrophysical evaluation, and subsurface formation testing including reservoir pressures and gas sampling, sidewall cores, and well bore seismic profiles.
Preliminary data confirms the presence of gas accumulations in the appraisal and exploration objectives of the well, with a calculated net gas pay of more than 100 m, compared to 55 m in the Anchois-1 discovery well.
Gas Sand B appraisal target has calculated total net gas pay of more than 50 m in two stacked reservoirs of similar thickness. The upper reservoir is a continuation of a reservoir drilled in the original discovery well, with the lower reservoir being newly identified.
Gas Sands C, M, and O exploration targets were encountered with multiple gas-bearing intervals across a gross interval of 250 m measured distance with no water-bearing reservoirs identified, materially exceeding pre-drill expectations.
The previously discovered Gas Sand A was not targeted in the Anchois-2 well due to the intention of evaluating it in the subsequent Anchois-1 re-entry operations. The Anchois-2 well encountered gas bearing sands at this level, however, providing important additional subsurface data.
Chariot is operator of Lixus (75%) with partner ONHYM, the Office National des Hydrocarbures et des Mines (25%).
ExxonMobil lets Guyana SURF contract
Esso Exploration and Production Guyana Ltd. (EEPGL), a subsidiary of ExxonMobil, has let a contract to Saipem SPA for the Yellowtail development project in the Stabroek block, offshore Guyana. The contract relates to engineering, procurement, construction, and installation (EPCI) of subsea umbilicals, risers, and flowlines (SURF).
Yellowtail is a greenfield development project encompassing subsea drilling centers (each equipped with separate oil production, water injection, and gas injection wells) linked to a new FPSO (OGJ Online, Nov. 17, 2021).
Yellowtail-1 was the fifth discovery in the Turbot area that includes Tilapia, Turbot, Longtail, and Pluma discoveries. It is expected to become a major development hub (OGJ Online, Apr. 18, 2019). The well encountered 292 ft of oil-bearing sandstone reservoir and was drilled to 18,445 ft in 6,046 ft of water.
Saipem’s flagship vessel FDS2 will conduct offshore operations while Saipem’s fabrication facility in Guyana will build deepwater structural elements.
Lundin drills dry hole east of Ormen Lange
Lundin Energy Norway AS will plug well 6306/9-1 in Norwegian Sea production license (PL) 886 about 72 km east of Ormen Lange field. The well is dry.
The exploration well, the first in the license, was drilled by the Deepsea Stavanger drilling facility in 228 m of water to a vertical depth of 1,025 m below sea level. The well was terminated in basement rock.
The primary exploration target was to prove petroleum in Upper Jurassic reservoir rocks (Rogn formation). The secondary exploration target was to investigate the reservoir potential in basement rock.
The well encountered 152 m of sandstone, 73 m of which were presumably in the Rogn formation from the Upper Jurassic Age, with good to very good reservoir quality. The sequence under the Rogn formation consists of sandstones of unknown age, 25 m of which with moderate reservoir quality. In the secondary exploration target, the well encountered about 76 m of tight basement rock. Data acquisition has been performed.
Lundin Energy is operator of PL 886 (60%) with partners Petoro AS (20%) and Spirit Energy Norway AS (20%).
COPL confirms Wyoming oil discovery
Canadian Overseas Petroleum Ltd. (COPL) confirmed a conventional light oil discovery in Converse and Natrona counties, Wyoming.
Barron Flats Federal (Deep) Unit exploration well BFU 14-30VF, drilled in August 2021, intersected 140 ft of net reservoir sand in three Frontier 1 formation sands, a single Frontier 2 sand, and Lower Cretaceous Dakota formation sands.
Light oil (40° API) was recovered from the lowermost Frontier 1 and the underlaying Frontier 2 sand on perforation. All four Frontier sands experienced formation damage from the invasion of drilling fluids and cement through drilling, casing, and remedial cementing operations. Indicative flow rates were not achieved as the company believed further reservoir stimulation through hydraulic fracturing to be high risk. Reservoir characteristics which caused the issues have been identified and are being incorporated into well planning for exploitation drilling of the Frontier reservoirs.
Frontier will cover an area of about 51 sq mi with capacity of up to three horizontal wells per sq mi, each initially producing 1,000-3,000 b/d. A phased production program is planned with permits applied covering four horizontal wells.
The Dakota sand, the deepest or lowermost oil-bearing horizon, was completed and placed on production to comply with the Barron Flats Federal (Deep) Exploration Unit terms. The well is producing 100-120 b/d and COPL estimates 1.5-1.9 billion bbl total oil in place (OIP), of which 1.275-1.64 billion bbl OIP underlays COPL lands.
Oil production at the Shannon Unit is ahead of original 2,000 b/d expectations which will increase once high working pressure issues are resolved. In addition, recent simulations have indicted modifications to injection gas-NGL mix to maximize sweep efficiency and reduce injection costs, the company said.
COPL’s working interest on operated leasehold is 55-85%.
PetroRio plans Wahoo tieback
PetroRio SA is planning a 35 km tieback from Wahoo field in exploratory block C-M-101, offshore Brazil, to the Frade field FPSO, with associated gas used for platform power generation.
Wahoo is in the presalt of Campos basin in 1,400 m of water. PetroRio plans to drill four producer wells in Wahoo in 2022 (OGJ Online, July 14, 2021).
Production at Wahoo, initially estimated at 10,000 b/d per well, could exceed 40,000 b/d, based on the results of the drill test carried out in an exploratory well. Wahoo could produce more than 140 million bbl and contains an estimated 126 million bbl recoverable reserves within a carbonate reservoir.
PetroRio is operator at Wahoo with 64.3% interest.
Drilling & Production Quick Takes
Appraisal further defines Winterfell resource potential
Beacon Offshore Energy encountered oil in the Winterfell-2 appraisal well on Block 943 in the Green Canyon area of the US Gulf of Mexico, said partner Kosmos Energy (16.4%).
The objective of the well—drilled to a total depth of about 8,700 m (28,500 ft) in 1,600 m (5,800 ft) of water—was to evaluate the adjacent fault block to the northwest of the original Winterfell discovery and to test two horizons that were oil bearing in the Winterfell-1 well, with an exploration tail into a deeper horizon (OGJ Online, Jan. 19, 2021).
The well discovered about 40 m (120 ft) net oil pay in the first and second horizons with better oil saturation and porosity than pre-drill expectations. The exploration tail has discovered an additional oil-bearing horizon in a deeper reservoir which is also prospective in the blocks immediately to the north.
Results of the appraisal further define resource potential in the central Winterfell area, with about 100 million bbl gross estimate.
Separately, Kosmos farmed down an interest in two blocks immediately to the north of the Winterfell discovery to owners of the central Winterfell discovery in exchange for cash consideration and the retention of an overriding royalty interest.
The Winterfell complex lies within tie back distance to existing and planned host infrastructure and the partnership is working to define the development plan, Kosmos said.
An affiliate of Beacon Offshore Energy LLC is operator of the Winterfell-2 well. Interest owners include Red Willow Offshore LLC, Ridgewood Monarch North LLC, CSL Exploration LP, CL&F Offshore LLC, Houston Energy LP, Beacon Offshore Energy Exploration LLC, and Beacon Asset Holdings LLC.
NOVATEK hydrocarbon production up year-over-year
PAO NOVATEK increased its total hydrocarbon production in 2021 by 17.8 MMboe, or 2.9%, as compared to 2020.
In 2021, the operator’s production totaled 626 MMboe, including 79.89 billion cu m (bcm) of natural gas and 12.3 million tons of liquids (gas condensate and crude oil).
Preliminary 2021 total natural gas sales volumes, including volumes of LNG sold, aggregated 75.81 bcm, representing an increase of 0.3% as compared with the corresponding volumes in 2020. The natural gas volumes sold in the Russian Federation were 67.87 bcm, representing an increase of 1.8% as compared with the prior year period, whereas LNG volumes sold on international markets amounted to 7.94 bcm, representing a decline of 11.1%. The decrease attributable to volumes sold on international markets was mainly due to the increase in Yamal LNG direct sales under long-term contracts and a corresponding decrease in Yamal LNG shareholders’ share, including NOVATEK’s share, of LNG volumes sold on the spot market.
The company processed 12.8 million tons of unstable gas condensate at the Purovsky processing plant, an increase of 8.8% compared to corresponding volumes processed in the prior reporting period. NOVATEK further processed 7.0 million tons of stable gas condensate at the Ust-Luga complex, representing a slight decrease of 0.7% in volumes processed there in 2021.
Preliminary 2021 petroleum product sales volumes aggregated 6,785 thousand tons, including 4,398 thousand tons of naphtha, 1,039 thousand tons of jet fuel, and 1,347 thousand tons of fuel oil and gasoil. NOVATEK sold 3,909 thousand tons of crude oil and 2,341 thousand tons of stable gas condensate.
As of Dec. 31, 2021, NOVATEK had 0.9 bcm of natural gas, including LNG, and 660,000 tons of stable gas condensate and petroleum products in storage or transit and recognized as inventory.
CNOOC outlines 2022 drilling, production plans
CNOOC Ltd. plans to drill 227 offshore exploration wells, 132 onshore unconventional exploration wells, and acquire about 17,000 sq km 3D seismic data in 2022.
Thirteen new projects are expected to come on stream. In China, these include the Bozhong 29-6 oil field development, Kenli 6-1 oilfield Block 5-1, 5-2, 6-1 development, Enping 15-1/10-2/15-2/20-4 joint development, and Shenfu South gas field development. Other projects include Liza Phase II in Guyana and 3M (MDA, MBH, MAC) in Indonesia.
The company’s targeted net production for 2022 is 600-610 MMboe. Production from China and overseas accounts for about 69% and 31%, respectively. Net production for 2021 is expected to be 570 MMboe. Net production for 2023 and 2024 are estimated at 640-650 MMboe and 680-690 MMboe, respectively.
Total capital expenditure for 2022 is budgeted at RMB 90-100 billion. Capital expenditures for exploration, development, production, and others will account for about 20%, 57%, 21%, and 2% of total capital expenditures, respectively.
Neptune connects new well at Adorf Carboniferous development
Neptune Energy Group Ltd. began production from its Adorf Z16 development well in Adorf Carboniferous gas field in Hoogstede, northwestern Germany.
The well reached final depth of 5,378 m in September 2021. The well has been connected to an onsite gas processing plant.
Initial production tests indicate flow rates up to 2,800 boe/d. The well is expected to increase Neptune’s production from the license to about 4,000 boe/d.
The operator is planning further field development with construction of a new well pad in the neighboring community of Georgsdorf. A third well is to be drilled in second-quarter 2022.
The field was discovered in 2020 and the first well, Adorf Z15, was brought into production in October the same year.
Neptune Energy is operator and 100% owner of the field.
Genel Energy suspends Kurdistan well drilling
Genel Energy PLC suspended drilling on the QD-2 well at Qara Dagh block in the Kurdistan Region of Iraq. An evaluation of the well will be conducted to determine next steps.
The well had been sidetracked in response to encountering more complex geology above the target reservoir than expected. Two further sidetracks have been initiated, but license partners concluded that it is impractical to continue drilling operations from this wellbore to reach the primary objective because of insurmountable technical problems. The minimum work obligation has been satisfied.
Qara Dagh is in pre-production and has about 400 million bbl mean prospective resources. Genel estimates that the downdip segment tested by the QD-1 well defines a 2C resource of 47 million bbl.
Genel Energy is operator at Qara Dagh through a carry arrangement covering activity for the QD-2 well after acquiring 40% equity from Chevron in 2019.
PROCESSING Quick Takes
Iraqi refinery adds units to produce cleaner fuels
Lanaz Co. has let a contract to Honeywell UOP LLC to deliver technology licensing and equipment for a project to increase production of cleaner-burning transportation fuels at the operator’s 100,000-b/d refinery at Erbil in the Kurdistan region of Iraq.
As part of the contract, Honeywell UOP supplied basic engineering design, licensing, and full-modular units equipped with its proprietary naphtha hydrotreating and fixed-bed platforming process technology for the Lanaz clean-fuels upgrading project, the service provider said in a Jan. 10 release.
Honeywell UOP disclosed no further details regarding its scope of work under the contract, but Ilsung Hisco Ltd. of South Korea, which acted as UOP Honeywell’s equipment fabricator, said in an early January 2020 presentation that—in addition to a series of storage vessels, drums, tanks, and related components—it manufactured the following major units for the Lanaz project:
- One naphtha hydrotreating reactor.
- Three fluidized bed process reactors.
- One naphtha splitter.
- One natural gas chloride treater.
- One debutanizer.
- One LPG chloride treater.
Lanaz has yet to officially confirm either additional details or a status of the upgrading project, but the refinery was scheduled to commission a new high-octane plant at the site by yearend 2021, according to the latest information available on the operator’s website.
Consisting of eight production units and also equipped to produce 3,600 tonnes/day of bitumen, the Lanaz refinery was commissioned in 2008.
LUKOIL lets contracts for Perm refinery’s proposed FCC complex
PJSC LUKOIL has let multiple contracts to Honeywell UOP LLC to license technologies and provide equipment for new units to be added as part of a grassroots catalytic cracking complex to be built at subsidiary LLC LUKOIL-Permnefteorgsintez’s 13.1-million tonnes/year (tpy) refinery in Russia’s North Urals region, on the north bank of the Kama River (OGJ Online, Aug. 20, 2021).
As part of its scope of work under the Jan. 12 contracts, Honeywell UOP will deliver technology licensing, design services, key equipment, catalysts, and adsorbents for four processing units to be installed at the new FCC complex, which will equip the refinery to covert 1.8 million tpy of low-value vacuum gas oil into high-octane motor gasoline and polymer-grade propylene, the service provider and LUKOIL said.
A first phase of the project will include installation of a new UOP vacuum distillation unit and a UOP FCC unit to increase production of propylene and improve gasoline yields, according to Honeywell UOP.
Alongside addition of a UOP Merox unit to extract low-molecular weight mercaptans from gas and LPG streams, the project also will subsequently include installation of a UOP propylene recovery unit to allow for production of polymer-grade propylene that will be used as feedstock for the operator’s petrochemical production units, the companies said.
Part of LUKOIL’s ongoing program to upgrade and modernize its Russian refining system to ensure long-term competitiveness and improve production qualities, Perm’s new complex—scheduled for startup in 2026—previously garnered support from the Russian Ministry of Energy, which agreed to an incentive plan granting LUKOIL an investment premium to the refundable excise tax on crude oil until Jan. 1, 2031, to enable the project’s completion (OGJ Online, Sept. 9, 2021).
The Perm refinery currently has a catalytic cracking capacity of 9,300 b/d.
Cooper reports first gas into Otway Athena plant
Cooper Energy Ltd., Adelaide, has processed first gas through its new Athena plant in the Otway basin of western Victoria near Port Campbell.
The company said the milestone was achieved in December when first gas from offshore fields at Casino, Henry, and Netherby was introduced.
This followed the successful cutover of the pipeline from the previous Iona gas plant to Athena which was completed on schedule earlier in the month.
First gas sales from Athena began just before Christmas.
Ramp up of gas supply to, and processing through Athena has continued reaching current rates of 28 terajoules/day.
Cooper is operator of the project with 50% interest. Mitsui E&P Australia and Peedmulla Petroleum each have 25% interest.
TRANSPORTATION Quick Takes
Trans Mountain pipeline returns to full operations
Canada’s 300,000-b/d Trans Mountain pipeline has returned to normal operating pressure following its Dec. 5, 2021, restart. The restart followed a 21-day precautionary shutdown following heavy rains and flooding in British Columbia and Washington state (OGJ Online, Dec. 17, 2021).
Starting in mid-December, crews focused on coating repairs in preparation for backfilling exposed areas, berm fortification, and planning to return to full capacity. Trans Mountain will continue with these emergency works throughout the winter period to fortify the pipeline right-of-way in preparation for spring runoff.
Work has focused on reinstatement of sites impacted by heavy rains and flooding in the regions north of Hope and south of Merritt, BC, the Canadian government said.
Trans Mountain delivers crude oil and gasoline to Kamloops and Burnaby, BC, and Washington state.
Venice Energy gets Outer Harbor LNG terminal approval
Venice Energy has received approval from the South Australian Government for construction of its 415-MMcfd LNG regasification terminal in the Outer Harbor of Port Adelaide. The first shipment of LNG into the terminal and connection to the South Australian gas network is anticipated late 2023 to early 2024.
Venice expects construction to begin mid-2022 and take 12-14 months. The terminal will include two new wharves at Outer Harbor Berths 9 and 10 and a moored 150,000-cu m floating storage and regasification unit, to be supplied by GasLog (OGJ Online, July 7, 2021).
The company says the terminal will prevent forecast domestic gas shortages for both South Australia and Victoria.
Development approval opens the way for Venice to undertake a feasibility study into making the 680 km Seagas pipeline from Victoria to South Australia bidirectional, enabling the terminal to supply gas to both states. The terminal will also connect with the Moomba-to-Adelaide pipeline system.
Iran to build refined products pipeline
National Iranian Oil Refining and Distribution Co. plans to build a 948-km, 150,000-b/d refined products pipeline from Rafsanjan, Kerman Province to Mashhad, Khorasan, Razavi.
The pipeline, which local media reports will include three terminals and two pump stations, will supply Iran’s east and northeast provinces, and potentially exports to neighboring countries.
Iranian private lender Bank Mellat will finance the project, expected to cost $425.1 million.
MOL awards China Shipbuilding subsidiary six-vessel LNGC contract
Mitsui OSK Lines (MOL) Ltd. awarded Chinese shipbuilder Hudong-Zhonghua, a subsidiary of China Shipbuilding Corp. (CSSC), an order for six 174,000-cu m Changheng-series LNG carriers. MOL will charter the ships to China National Offshore Oil Corp. (CNOOC) Gas & Power.
CNOOC Gas & Power last year reached agreement with Venture Global LNG Inc. for 3.5 million tonnes/year of LNG to be loaded from Venture Global’s Louisiana LNG plants.
The shipbuilding contract is worth $1.18 billion.
China in 2021 passed Japan to become the world’s largest LNG importer. CNOOC Gas & Power is China’s biggest LNG importer.
FGSZ commissions DNV to assess hydrogen shipment through gas pipeline
FGSZ Ltd., owner and operator of the 5,874-km Hungarian high-pressure natural gas transmission pipeline system, has commissioned DNV to assess the suitability for hydrogen transport of FGSZ’s DN600 pipeline and valve station. FGSZ has set up different scenarios to assess the implications of exchanging natural gas with as much as 100% gaseous hydrogen.
As part of the European Green Deal, with the European Climate Law, the EU has set itself a binding target of achieving climate neutrality by 2050. In this context, the EU Hydrogen Strategy provides guidelines and actions for how to kickstart the hydrogen economy. FGSZ is contributing to this strategy by examining the transportability of hydrogen and hydrogen mixtures in the Hungarian natural gas system.
DN600 runs 158 km through southwestern Hungary, connecting Nagykanizsa, Kaposvar, and Kozarmisleny and serving as the Slovenian-Hungarian interconnector. The Hungarian Energy and Public Utility Regulatory Authority (HEA) is examining the possibility of making it bidirectional.
HEA on Nov. 30, 2021, approved the establishment of Serbian-Hungarian natural gas entry capacity of 6 billion cu m/year (bcmy), and increasing this capacity to as much as 8.5 bcmy without additional pipeline development. Work on this this project is expected to be completed by Oct. 1, 2022, when modifications to the Varosfold node are finished.