GENERAL INTEREST Quick Takes
Fossil fuel sources made up 79% of 2021 US primary energy consumption
Fossil fuels—petroleum, natural gas, and coal—accounted for 79% of the 97 quadrillion British thermal units (quads) of primary energy consumption in the US in 2021, according to the US Energy Information Administration. About 21% of US primary energy consumption for the year came from fuel sources other than fossil fuels, such as renewables and nuclear, EIA’s monthly energy review data show.
The 4-quad increase in US primary energy consumption in 2021 was the largest annual increase on record, mostly attributable to a gradual return to pre-COVID levels of activity, the agency said in a release July 1. Last year’s increase came on the heels of a 7-quad decrease in 2020, which was the largest annual decrease on record.
US renewable energy consumption increased slightly to a record 12.2 quads in 2021 from 11.5 quads in 2020. Increased use of renewables for electricity generation, including wind and solar energy, was partially offset by a decline in hydroelectricity generation, the data show. US nuclear energy consumption of 8.2 quads in 2020 was the lowest level since 2012.
US petroleum consumption remains lower than its 2005 peak, totaling 35 quads in 2021, but remains the most-consumed primary energy source in the US since surpassing coal in 1950. US natural gas consumption totaled 31.3 quads in 2021, a slight decline from the previous year, EIA said.
US coal consumption increased to 10.5 quads in 2021, the first annual increase in US coal consumption since 2013. Overall US coal consumption has declined by more than half since its 2005 peak, the agency said, driven by reduced coal-fired electricity generation.
ConocoPhillips farms into offshore Otway permit
ConocoPhillips Australia (CPA) will become operator of permit Vic/P79 in the Otway basin offshore western Victoria through a farm-in of 80% interest from 3D Oil Ltd., Melbourne. 3D oil—awarded the permit in February—will retain 20%.
3D will receive an up-front cash payment of $3 million and will be carried for the first $35 million of well costs.
The 2,576-sq km permit has a minimum work commitment of a single well by February 2025.
The permit contains leads in its southeast portion, adjacent to discovered gas fields in the permits to the east.
The largest of these is the Vanguard prospect, an east-west trending tilted fault block that lies 5 km northwest of Beach Energy’s Geographe producing gas field in production license Vic/L23.
Vanguard has a best estimate resource of 160 bcf of gas.
Two other prospects in Vic/P79 (Defiance and Trident) lie northwest of Vanguard adjacent to Beach’s La Bella gas field in permit Vic/P73. Both are fault-bound tilted fault blocks lying down-flank from the La Bella block with potential reserves in the Upper and Lower Waarre reservoirs of Cretaceous age.
Best estimates for resources are 32.5 bcf for Defiance and 37.2 bcf for Trident.
In the vicinity are two other leads, La Bella Southwest, and La Bella East.
VAALCO, TransGlobe agree to merge
VAALCO Energy Inc., Houston, has agreed to acquire all outstanding common shares of TransGlobe Energy Corp. to create an African-focused exploration and production company in a stock-for-stock deal valued at $307 million.
Together, the combine will hold assets in established basins in Egypt, Gabon, Equatorial Guinea, and Canada, creating a larger, and more diversified reserves and production base with increased optionality to high-grade and sequence investment projects towards the highest-return projects, the companies said in a joint statement July 14.
A combined 2022 midpoint production guidance of 19,100 boe/d is expected on a net revenue interest (NRI) basis (96% oil and liquids) across Egypt, Gabon, and Canada, and 24,400 boe/d on a working interest (WI) basis.
Proved (1P) reserves for the combine on an NRI basis of 32 MMboe (92% oil) and 41 MMboe on a WI basis (92% oil) are expected.
The combined company, expected to remain a Delaware corporation headquartered in Houston, will continue to be led by George Maxwell as chief executive officer and Ron Bain as chief financial officer, with the executive team of TransGlobe remaining with the business through a 3–6-month transition period.
At closing—expected in this year’s second half subject to stockholder and shareholder approval as well as approval of Queen’s Bench of Alberta and other considerations—the company board will be proportionally comprised of VAALCO and TransGlobe non-executive directors, with Andrew L. Fawthrop as chair.
VAALCO stockholders and TransGlobe shareholders would own about 54.5% and 45.5% of the combined company, respectively.
Ovintiv to sell certain Uinta, Bakken assets
Ovintiv Inc., Denver, has agreed to sell portions of its Uinta and Bakken basins assets for $250 million to two undisclosed sellers. The company plans to update its 2022 production and total cost guidance with its second quarter results. The 2022 capital guidance will remain unchanged, the company said in a release July 6.
The operator said the Uinta basin assets being sold are mature waterflood assets with operating expenses of about $35/boe. The assets include about 3,000 gross vertical wells, the company continued. Following closing of the deal, Ovintiv will retain some 130,000 net acres in the horizontal oil-rich shale portion of the play.
The Bakken assets to be sold include about 88 wells mainly in Richland County, Mont., about 30 miles from Ovintiv’s primary Bakken position, the company said.
Combined volume from the assets to be sold, as of April 2022, is 5,000 boe/d, including 4,900 b/d of oil and condensate.
The agreements are subject to ordinary closing conditions, regulatory approvals, and other adjustments and are expected to close in this year’s third quarter.
Newfoundland and Labrador updates Hibernia field reserve estimate
The Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB) updated the most likely estimated ultimate recovery (EUR) for Hibernia field offshore Newfoundland and Labrador.
The proven and probable (2P) EUR for the field is now 1.812 billion bbl oil, based on data acquired from drilling and production activities along with an updated, long-term drill schedule, C-NLOPB said in late June.
The previous 2P EUR from 2014 was 1.644 billion bbl, according to C-NLOPB staff.
C-NLOPB’s petroleum resources management system defines EUR as quantities of petroleum estimated to be recoverable as of a given date plus quantities that have already been produced.
Hibernia field is operated by Hibernia Management & Development Co. Ltd., shareholders of which include ExxonMobil Canada (33.125%), Chevron Canada Resources (26.825%), Suncor Energy (20%), Canada Hibernia Holding Corp. (8.5%), Murphy Oil (6.5%), and Equinor Canada Ltd. (5%).
Exploration & Development Quick Takes
CNOOC opens offshore China acreage for bidding
China National Offshore Oil Corp. (CNOOC) has opened bidding for exploration blocks offshore China.
Thirteen blocks are available covering an area of 17,205 sq km. One block is in Bohai Bay covering 330 sq km, eleven blocks are in Pearl River Mouth basin covering 16,235 sq km, and one block is in Yinggehai basin covering 640 sq km.
The opening period for access to the data room is from July 19 to Dec. 31, 2022. The closing date for bids is Feb. 28, 2023.
Shell UK drills dry hole
Shell UK Ltd. drilled a dry hole in the Edinburgh exploration well, Block 30/14a- 5, in offshore UK license P255, according to a release by DNO ASA.
The well reached total depth of 16,500 ft and encountered two sandstones of Jurassic age, but wireline logging indicated no movable hydrocarbons within the sandstones. Data collected will be integrated with existing seismic data and further studies will be undertaken to assess the remaining potential within the license.
Edinburgh was drilled through a joint well agreement covering four separate, contiguous licenses, of which two are in the UK (P255 and P2401) and two are in Norway (PL018ES and PL969).
Shell is operator of the Edinburgh well with partners DNO (45%) and Spirit Energy Resources Ltd. (15%).
Melbana Energy shows oil onshore Cuba
Melbana Energy Ltd. had an encouraging oil show in its Block 9 contract area, onshore Cuba.
After reaching 1,666 m and logging the open hole, the 11 3/4-in. liner was successfully run and cemented over the 14-in. diameter hole section to a depth of 1,243 m. After cleaning out the hole, drilling continued within the ophiolite overburden section to a depth of 1,698 m, at which point the drill string became stuck.
While attempting to retrieve the drill string, free oil was observed on the shakers at surface, indicating an oil discovery. The decision was made to sever the string above the stuck point at 1,507 m and recover the remaining drill pipe. Following this operation, a cement plug was set with the top at 1,252.5 m.
Operations have now commenced to initiate a sidetrack and continue drilling to the main carbonate target below the ophiolite.
Woodside lets contract for 4D survey over Scarborough field
Woodside Energy Ltd. let a contract to Shearwater Geoservices to acquire a 4D baseline seismic survey over Scarborough and Jupiter gas fields on the Exmouth Plateau offshore Western Australia.
The survey—to be run by the Geo Coral seismic vessel equipped with multicomponent sensor streamers—is scheduled to begin data acquisition this quarter and take 2-3 months to complete.
The objective is to provide modern, high-definition data for field development planning. The survey will be used as the baseline for time-lapse data in the event of acquisition of other monitoring seismic surveys in the future.
Scarborough and Jupiter fields were discovered in 1979 by Esso-BHP Petroleum and Phillips Petroleum, respectively. They are now part of the Greater Scarborough gas fields owned by Woodside and are estimated to contain about 13 tcfd of dry gas.
Drilling & Production Quick Takes
Norway production down in June, NPD says
Norway’s production averaged 1.529 million in June, the Norwegian Petroleum Directorate (NPD) reported. The figure is down from the 1.831 million b/d produced in May.
Average daily liquids production in June consists of 1.298 million b/o, 213,000 bbl of NGL, and 18,000 bbl of condensate.
Oil production in June was 0.2% lower than the NPD’s forecast and 4.2% lower than the forecast so far this year.
bp lets contract to drill offshore Newfoundland
BP Canada Energy Group ULC has let a contract to Stena Drilling for the Stena Icemax mobile offshore drilling unit for a one well drilling program off the coast of Newfoundland.
Drilling is scheduled for 2023 and has an estimated duration of 80 days.
bp holds an interest in six exploration licenses between 343 and 496 km offshore Newfoundland and Labrador and will conduct an exploration drilling program in 2023 within four exploration licenses (ELs) in West and East Orphan basins, subject to regulatory approval.
DeNovo delivers first gas from renewable-powered platform
DeNovo Energy Ltd. delivered first gas from its unmanned platform in Zandolie field, Block 1 (a) on the west coast of Trinidad about 45 km offshore Point Lisas industrial estate.
The 40-MMscfd capacity conductor-supported platform is DeNovo’s second offshore field development in the block and contains a single well. Field development builds off existing Iguana field infrastructure to provide a compact topside structure which minimizes steel in its design. Powered by wind and solar, the 100% renewable-powered platform was fully fabricated in country and is the first design of its kind in Trinidad and Tobago.
The platform has also been designed to prevent methane slip in transporting gas both during extraction and in its movement to DeNovo’s onshore gas processing plant at Point Lisas.
Construction of the platform was completed at United Engineering Services Ltd.’s local fabrication yard. The well was drilled by Well Services Rig 110.
PROCESSING Quick Takes
Construction to restart on Corpus Christi PTA-PET plant
Corpus Christi Polymers LLC (CCP)—a partnership of Indorama Ventures PCL (IVL) subsidiary Indorama Ventures Corpus Christi Holdings LLC, Alpek SAB de CV subsidiary DAK Americas LLC, and Far Eastern New Century subsidiary APG Polytech USA Holdings—will resume construction of its integrated purified terephthalic acid-polyethylene terephthalate (PTA-PET) plant in Corpus Christi, Tex., later this summer.
Scheduled to begin in August, proposed restart of construction on the PTA-PET plant follows a previous halt to development activities amid pandemic-related disruptions, IVL said July 19.
CCP’s plant will use a feedstock of paraxylene and monoethylene glycol to produce 1.1 million tonnes/year (tpy) and 1.3 million tpy of PET and PTA, respectively.
The plant will be the world’s largest vertically integrated PTA-PET producer upon startup in early 2025 and will also produce its own industrial water via desalination, CCP said in a separate release on July 18.
Production technologies to be implemented at the plant include the following:
- For solid-state PET, former M&G Chemicals’ Easy-Up PET technology, or horizontal continuous inclined reactor.
- For PET melt, an unspecified process technology from Koch Industries Inc. subsidiary Invista Performance Technologies.
- For PTA, Grupo Petrotemex SA de CV’s IntegRex PTA, a process that allows oxidation at milder conditions to reduce the plant’s overall consumption of raw materials, limit generation of by-product, and reduce the site’s environmental impact.
Formed in 2018, the CCP partnership purchased now-defunct M&G USA Corp.’s partially constructed PET-PTA plant, certain M&G intellectual property, and a desalination-boiler plant as part of a stated strategy to revive the project to meet rising global demand for polymers.
Sited in Port Corpus Christi near railroads, highways, and the Gulf of Mexico, the CCP PET-PTA plant sits on 410 acres along the port’s north bank of the Inner Harbor, within a couple of miles of refineries from which the plant is to receive its feedstock.
TRANSPORTATION Quick Takes
Triangle establishes new route for Cliff Head crude
Triangle Energy (Global) Ltd. and Pilot Energy Ltd., joint venture partners at Cliff Head oil field in production license WA-31-L in shallow water offshore North Perth basin, Western Australia, established a new crude oil export route from the Port of Geraldton to Singapore.
The JV completed the first oil load-out from refurbished and expanded storage tanks at the onshore Arrowsmith stabilization plant to a chartered tanker (AB Paloma) at Geraldton.
Cliff Head, 11 km off the coast, is connected by pipeline to the Arrowsmith plant.
Some 24,500 bbl of crude was trucked from the plant the week of July 11. The tanker will remain on standby while the JV produces and stores a further 25,000-30,000 bbl of crude during the next 6 weeks. The crude will be loaded onto the vessel, which will head to Singapore where the oil will be sold to refineries.
The new export route will enable the continuation of oil production from Perth basin for Cliff Head and other small onshore producers, which had been threatened with closure when bp’s oil refinery in Kwinana, south of Perth, discontinued crude refining for conversion to a fuel import terminal, the JV said.
Cliff Head field is expected to increase production in late August when the CH-10 well workover has been completed. Work will resume late July when an electric submersible pump arrives from overseas.
In the meantime, the JV is working to finalize arrangements and alignment on future Cliff Head development plans focused on a proposed 500,000 tonnes/year carbon capture storage (CCS) operation for service to third parties. Such a plan would extend the working life of Cliff Head infrastructure, the JV said.
Triangle is operator of Cliff Head and Arrowsmith with 78.75% interest. Pilot Energy holds 21.25%.
CPC begins Taichung Phase III LNG terminal expansion
CPC Corp. has broken ground on two new 180,000-cu m full-containment LNG tanks as part of its Taichung Phase III LNG terminal expansion in Taichung, Taiwan. Bechtel Corp. will execute engineering, procurement, and construction of the tanks, scheduled for 2026 completion.
Post-expansion terminal capacity will be 10 million tonnes/year (tpy).
CPC earlier this year awarded Daigas Gas and Power Solution Co. Ltd. a front-end engineering and design and technical consulting services contract for Taichung Phase IV expansion to 13 million tpy, scheduled for completion by 2029 (OGJ Online, Apr. 7, 2022).
Expansion will include four 180,000-cu m/year tanks, additional regasification capacity, and an additional jetty.
NextDecade to sell Rio Grande LNG output to China Gas
NextDecade Corp., Houston, executed a 20-year contract with China Gas Hongda Energy Trading Co. Ltd., a subsidiary of China Gas Holdings Ltd., to supply liquefied natural gas (LNG) from its 27-million tonne/year (tpy) Rio Grande LNG liquefaction plant in Brownsville, Tex.
Under the agreement, China Gas will purchase 1.0 million tpy of LNG indexed to Henry Hub on a free-on-board basis from NextDecade’s second train of Rio Grande LNG, which is expected to start commercial operations as early as 2027.
Assuming further sales agreements and financing and based on current expected demand for LNG, NextDecade anticipates making a positive final investment decision (FID) on up to three Rio Grande trains in second-half 2022, with FIDs of its remaining trains to follow.
Delfin signs 15-year LNG sale agreement with Vitol
Delfin Midstream Inc. has finalized a binding LNG sale agreement with Vitol Inc. Vitol, meantime, finalized an investment in the company.
Under the agreement—valued by Delfin at $3 billion in revenue over 15 years—Delfin will supply to Vitol 500,000 tonnes/year (tpy) on a free on-board basis at the Delfin Deepwater Port off the coast of Louisiana for a 15-year period. The agreement is indexed to Henry Hub.
In addition to the agreement, Delfin has signed other HoAs and term sheets that are being finalized into fully termed agreements. As a modular project requiring only 2-2.5 million tpy of long-term contracts to begin construction, Delfin is expected to make final investment decision on the first FLNG vessel by yearend, the company said.
Delfin has completed permitting work with a positive record of decision from the Maritime Administration with a 13 million tpy non-FTA DoE export license, said Wouter Pastoor, chief operating officer, in a statement July 13. The company also has completed front-end engineering and design with Samsung Heavy Industries and Black & Veatch, putting the company on pace to execute the project this year with operations to begin in 2026, he continued.