GENERAL INTEREST Quick Takes
ExxonMobil assumes operatorship of areas offshore Greece following negotiations
ExxonMobil will assume operatorship of lease areas West Crete and Southwest Crete offshore Greece following negotiations by joint venture partners following the withdrawal of TotalEnergies EP Greece BV from the consortium, partner Hellenic Petroleum Holdings SA noted in a July release.
The parties agreed that the 40% interest held by TotalEnergies is to be assumed by ExxonMobil Exploration and Production Greece (Crete) BV (taking 75% of the 40%) and by the Hellenic Petroleum subsidiaries Hellenic Petroleum Exploration and Production West Crete Single Member SA and Hellenic Petroleum Exploration and Production Southwest Crete Single Member SA (taking 25% of the 40%), with TotalEnergies EP Greece BV fulfilling its financial and other obligations, Hellenic said.
Following completion of the transaction, interests in each of the respective lease agreements will be ExxonMobil, operator, with 70% interest, and Hellenic subsidiaries 30%.
The adjustment is subject to consents from authorities.
Lease agreements for hydrocarbons exploration and exploitation rights for the two offshore areas were ratified by Greek Parliament in October 2019.
Denbury expands potential CO2 sequestration acreage with Louisiana lease
Denbury Inc. has signed an agreement that will expand its US Gulf Coast CO2 storage assets.
The company signed a definitive agreement with a landowner near Donaldsonville, La., to lease about 18,000 acres for future carbon dioxide (CO2) sequestration, the company said in a release July 21. The site lies in Assumption and St. James Parishes, less than 5 miles from the company’s existing 320-mile Green Pipeline and near the state’s industrial corridor.
The company anticipates the site’s geologic characteristics, including thick laterally extensive, low dip reservoirs, will enable total sequestration capacity of more than 80 million metric tons of CO2.
First potential CO2 injection for the site could be as early as 2025, Denbury said.
With the acquisition, Denbury expects to be able to sequester about 300 million metric tons of CO2 near Donaldsonville and expand its total sequestration site capacity to about 1.5 billion metric tons, which includes sites along the US Gulf Coast in Alabama, Louisiana, and Texas. Similar agreements were secured with private landowners in Louisiana in March.
Denbury plans to drill a stratigraphic test well in one or more of its potential storage locations later this year to confirm the geologic understanding and progress Class VI permitting efforts with the US Environmental Protection Agency.
Russia, Iran sign $40-billion oil, gas MOU
PJSC Gazprom and National Iranian Oil Co. have signed an MOU under which Gazprom would make $40 billion of direct investments in Iran’s oil and gas industry. Highlights of the MOU include development of Kish and North Pars gas fields in the Persian Gulf, pressure enhancement at South Pars field, development of six oil fields, a gas and product swap, completion of LNG projects, and construction of gas export pipelines.
Iran’s state-owned Petropars Co. in 2019 became sole developer of South Pars Phase 11 following the withdrawal of China National Petroleum Corp. (CNPC). CNPC had been designated operator after TotalEnergies SE exited the project in August 2018 in response to the reimposition of US sanction on the country.
The MOU was signed as part of a state visit by Russian Pres. Vladimir Putin to Iran, during which he met with Iranian Pres. Ebrahim Raisi and supreme leader Ayatollah Ali Khamenei. NIOC chief executive officer Mohsen Khojastehmehr described the MOU as one of the biggest foreign direct investment deals in the history of Iran’s oil and gas industry.
Iran and Russia have been in crude oil price competition as they compete for market share in China while under sanctions from other countries.
Tellurian increases upstream footprint
Tellurian Inc. subsidiary Tellurian Production LLC (TPC) agreed to acquire Haynesville shale natural gas assets from EnSight IV Energy Partners LLC and EnSight Haynesville Partners LLC for $125 million.
The assets include about 5,000 net acres in DeSoto, Bossier, Caddo, and Webster Parishes, La. with current net production of about 45 MMcfd of natural gas (100% natural gas) from 44 producing wells. At closing, expected in this year’s third quarter, five wells are expected to be in progress, Tellurian said in a July 13 release. EnSight is currently operating a one-rig drilling program, which Tellurian plans to maintain on the assets through fourth-quarter 2022.
Additionally, the assets include a de-risked drilling inventory of over 30 gross drilling locations and proved reserves of about 108 bcf of natural gas, the company continued.
Pro-forma 2022 net production for TPC is estimated to be 140 MMcfd, up from 39 MMcfd in 2021. At closing, TPC’s Haynesville shale acreage will increase to about 20,000 net acres, with some 275 gross drilling locations and a net resource of over 2 tcf expected.
Based on a proposed capital budget of $300 million, TPC plans a two-rig drilling program in 2023 with about 350 MMcfd of net production.
Tellurian has been growing its natural gas production and reserves in the Haynesville, providing both cash flow and a physical hedge for Driftwood LNG, said John Howie, TPC president.
The purchase price is $125 million, subject to closing adjustments, and a contingent payment of $7.5 million based on the price of natural gas and may be payable in March 2023 under certain conditions.
Exploration & Development Quick Takes
Shell makes FID for Jackdaw development
Shell UK Ltd. affiliate BG International Ltd. has sanctioned development of Jackdaw gas field in the UK North Sea following regulatory approval earlier this year.
Jackdaw will comprise a wellhead platform that is not permanently attended, four production wells, and a 31-km pipeline from the Jackdaw platform to the Shearwater gas hub.
The project is expected to come online mid-2020s, and at peak production rates estimated at 40,000 boe/d, could represent over 6% of projected UK North Sea gas production in the middle of this decade, the operator said in a July 25 release.
Gas from Jackdaw field will come ashore at St Fergus, where Shell is involved in the development of the Acorn Carbon Capture and Storage project, which could sequester CO2 from industrial clusters in Scotland, the UK, and northern Europe. The project also could reform natural gas into low-carbon hydrogen by capturing and storing CO2.
Jackdaw field lies about 250 km east of Aberdeen, Scotland, and is adjacent to the UK-Norway median line. It is 100% owned and operated by BG International.
Eni makes oil, gas discovery onshore Algeria
Eni and SONATRACH discovered oil and associated gas in the Sif Fatima II concession in the Algerian desert as part of an exploration campaign that includes drilling 5 wells in the Berkine North basin.
The Rhourde Oulad Djemaa Ouest-1 (RODW-1) exploration well, in the Sif Fatima II research perimeter, is the third well in the campaign, Eni said in a release July 25. Oil and associated gas were discovered in the Triassic sandstones of the Tagi reservoir. During the production test, the well produced 1,300 b/d of oil and about 2 MMscfd of associated gas.
The find comes after the discovery of HDLE-1 in Zemlet el Arbi and the successful appraisal well HDLS-1 in the adjacent Sif Fatima II (OGJ Online, Mar. 22, 2022).
Development of these discoveries will be fast-tracked due to their proximity to existing infrastructure, the company said.
Zemlet el Arbi and Sif Fatima II concessions are operated by a joint venture between Eni (49%) and SONATRACH (51%).
Aker BP makes gas discovery near Skarv
Aker BP ASA discovered gas at the Storjo exploration well in production license (PL) 261 near Skarv field in the Norwegian Sea. Further delineation of the discovery is planned in 2023.
The well encountered gas in several geological formations, the operator said in a release July 11. Preliminary estimate of recoverable gas volume is 25-80 million bbl of oil.
Aker BP is operator of PL 261 with 70% interest. Wintershall Dea Norge AS holds the remaining 30%.
Drilling & Production Quick Takes
Neptune finishes Fenja campaign
Neptune Energy Norge AS finished drilling on Fenja field in preparation for production start-up. The field lies 36 km southwest of Njord A platform in 325 m of water in the Norwegian Sea.
Fenja consists of two subsea templates tied back to Njord A via a production pipeline, water and gas injection pipelines, and an umbilical. The wells are planned as two oil producers, one water injector, and a gas injector. The gas injector will be converted to a gas producer towards the end of field life.
Four production wells were drilled by the Deepsea Yantai, a semisubmersible rig operated by Odfjell Drilling.
The field is scheduled to come on stream in first-quarter 2023 and will produce about 28,000 boe/d at plateau.
Earlier this summer, Equinor, on behalf of Neptune, successfully pulled in the Fenja risers and dynamic umbilical to the host platform, Njord A, which is now back on the field. Final tie-in activities will be completed shortly, and all subsea infrastructure is ready, the company said. Fenja has been developed with an electrically trace-heated (ETH) pipe-in-pipe solution that will transport oil from Fenja field to the Njord A platform. At 37 km, it is the world’s longest ETH subsea production pipeline.
Neptune Energy is operator at Fenja (30%) with partners Vår Energi AS (45%), Suncor Energy Norge AS (17.5%), and DNO Norge AS (7.5%).
Beach completes offshore Otway drilling campaign
Beach Energy Ltd., Adelaide, completed its seven-well offshore Victorian-Tasmanian Otway basin campaign that began in February 2021. The final well, Thylacine North-2, was completed in July.
The program provided a new gas discovery in the Artisan prospect along with six successful development wells—four on Thylacine gas field and two on Geographe gas field.
Maximum tested flow rates in the two producing fields averaged 61 MMcfd of gas.
Three of the wells were drilled horizontally in the gas reservoirs and achieved a total lateral section of 8.1 km. Of these, Thylacine North-2, with a lateral section of 3.5 km, is the longest horizontal well ever drilled in the basin.
The two Geographe wells (G-4, G-5) were brought on stream less than 9 months from spud date. Pipeline connections and tie-ins of the four Thylacine wells are scheduled to begin early 2023.
The Artisan discovery in March 2021 found a net gas pay of 67 m and is now undergoing pre-FEED evaluation.
Commissioning of the two Geographe wells contributed to an increase in onshore Otway gas plant production to 140 terajoules/day in 2022 from 53 terajoules/day in 2021.
Connection of the four Thylacine wells by mid-2023 will enable the plant to produce at nameplate capacity of 205 terajoules/day with the gas sold into existing contracts.
ExxonMobil plans 35-well campaign at Stabroek
ExxonMobil applied to Guyana’s Environmental Protection Agency (EPA) for a 35-well drilling campaign in Stabroek block, about 200 km offshore Guyana.
Four prospect areas have been identified, but exact drilling locations are not yet finalized. Exploration wells will be drilled, but appraisal wells may be drilled in proximity of drilled exploration areas.
Work is expected to begin third-quarter 2023, and if discoveries are made, well test(s) may be performed. Conclusion of the proposed campaign is expected by fourth-quarter 2028. The schedule is preliminary and could be influenced by new discoveries, determination of the need for sidetracks, and well tests—all of which could extend the drilling period. The same factors could also influence locations and sequence of subsequent wells.
ExxonMobil affiliate Esso Exploration and Production Guyana Ltd. is operator with 45% interest. Partners are Hess Guyana Exploration Ltd. with 30% interest, and CNOOC Petroleum Guyana Ltd. with 25% interest.
PROCESSING Quick Takes
Neste lets contract to expand Rotterdam renewables refinery
Neste Corp. has let a contract to Technip Energies NV to deliver a suite of services for Neste’s approved plan to expand production capacity of renewable fuels at its refinery on the Port of Rotterdam in Rotterdam, the Netherlands (OGJ Online, June 28, 2022).
As part of the contract awarded on July 21, Technip Energies will provide engineering, procurement services, and construction management (EPsCm) on the Rotterdam expansion, which will increase the refinery’s overall renewable production capacity by 1.3 million tonnes/year (tpy), the service provider said in a release.
Technip Energies—which valued the new EPsCm agreement at €50-€250 million—said the newly awarded contract follows the service provider’s delivery last year of front-end engineering design (FEED) on the proposed expansion at Rotterdam.
The service provider additionally confirmed it also is participating in Neste’s ongoing €1.4-billion, 1-million tpy expansion of sustainable aviation fuel (SAF) production at its 1.3-million tpy renewable diesel refinery in Singapore (OGJ Online, Mar. 16, 2021).
Scheduled for startup during first-half 2026, the €1.9-billion Rotterdam refinery expansion will boost Neste’s current 1.4-million tpy renewable product capacity at the Port of Rotterdam refinery to 2.7 million tpy, of which 1.2 million tpy will be SAF production, the operator said.
Part of Neste’s execution of its renewables’ growth strategy to remain globally competitive and its commitment to the global energy transition, the Rotterdam expansion will include implementation of Neste’s proprietary NEXBTL technology to enable flexible refining of a wide range of lower-quality renewable waste and residues into finished renewable diesel, SAF, as well as renewable feedstock for polymers and chemicals, said Matti Lehmus, Neste’s chief executive officer and president.
Neste said, once in operation, the Rotterdam expansion—together with the Singapore SAF expansion and the company’s pending joint venture with Marathon Petroleum Corp. at Martinez, Calif.— will increase its current 3.3-million tpy global production capacity for renewable fuels to 6.8 million tpy by yearend 2026.
Equinor granted consent for Tjeldbergodden modifications
Equinor ASA has been granted consent by Norwegian authorities for modifications to the Tjeldbergodden plant.
The consent covers modification to install a mercury removal unit at the plant, the Petroleum Safety Authority (PSA) Norway said in a release July 25.
The Tjeldbergodden industrial complex, in Nordmøre, Norway, comprises a 900,000-tonnes/year methanol plant, an LNG plant, and a hydrogen plant.
The methanol plant began production in 1997 and is now at an age at which corrosion under insulation can start to become challenging, PSA said. The plant’s design life was 20 years, but Equinor now envisions operation until 2030.
OMG-TotalEnergies JV commissions Texas ethylene plant
Bayport Polymers LLC (Baystar)—a 50-50 joint venture of OMV AG subsidiary Borealis AG and TotalEnergies SE—has commissioned its 1-million tonne/year (tpy) ethane steam cracker at TotalEnergies Petrochemical & Refining USA’s 200,000-b/d integrated refining complex in Port Arthur, Tex. (OGJ Online, Mar. 17, 2017).
Baystar officially began commercial operations of the new Port Arthur ethane cracker on July 21, TotalEnergies and OMV said in separate releases.
To be operated by TotalEnergies, the nearly $2-billion cracker project will supply ethylene feedstock to Baystar’s existing 400,000-tpy polyethylene (PE) production site in Bayport, Tex.
Ethylene produced by the new cracker also will provide feedstock to a 625,000-tpy PE unit currently under construction at the Bayport site, the partners said.
To be equipped with Borealis’ proprietary Borstar PE process technology, the Bayport Borstar PE unit—once operable—will more than double the site’s PE production capacity to 1.1 million tpy (OGJ Online, Sept. 25, 2018).
Designed to help meet growing global demand for PE by taking advantage of abundant, competitively priced US ethane feedstock supplies and easy export access to markets abroad, the newly commissioned Port Arthur cracker and forthcoming Bayport Borstar PE unit come as part of the partners’ strategies to help further integrate and expand their respective businesses in the US, the companies said.
A definitive timeframe for startup of Bayport’s Borstar PE unit has yet to be revealed.
TRANSPORTATION Quick Takes
Cheniere signs LNG supply agreement with PetroChina
Cheniere Marketing LLC, a Cheniere Energy Inc. subsidiary, has agreed to supply LNG to PetroChina International Co. Ltd., a subsidiary of PetroChina Co. Ltd.
Under the agreement, PetroChina will purchase up to 1.8 million tonnes/year (tpy) of LNG on a free-on-board basis. Deliveries will begin in 2026, reach the full 1.8 million tpy in 2028, and continue through 2050, Cheniere said in a release July 20.
The purchase price for LNG under the SPA is indexed to Henry Hub, plus a fixed liquefaction fee. Half of the total volume (about 900,000 tpy) is subject to Cheniere making a positive final investment decision (FID) to construct additional liquefaction capacity at the Corpus Christi LNG terminal beyond the seven-train Corpus Christi Stage 3 Project.
The deal increases Cheniere’s long-term sales to PetroChina to about 3 million tpy, Cheniere said.
New Fortress awards Flour second modular LNG plant contract
New Fortress Energy (NFE) Inc. awarded Fluor Corp. a full notice-to-proceed contract for engineering, procurement, and fabrication management of the 1.4-million/tonne year NFE Fast LNG 2 project. The project includes gas treatment and liquefaction plants to be placed on fixed offshore platforms at a yet-to-be-determined location as market conditions warrant.
NFE awarded a similar project, NFE Fast LNG 1, to Flour first-quarter 2022. Both will use repurposed drilling jack-up rigs as their bases.
The modular plants are part of NFE’s strategy to access multiple natural gas supply sources around the world as opportunities emerge.
Fluor will book the undisclosed reimbursable contract value in second-quarter 2022.
Harvest acquires remaining interest in Arrowhead Gulf Coast
Harvest Midstream has purchased the remaining interest of Arrowhead Gulf Coast Holdings LLC (AGCH), a network of pipelines and terminals serving the Louisiana refinery market and regional production.
The deal brings AGCH under full ownership of Harvest, the company said in a release July 20. Prior to the deal closing, a fund managed by BlackRock Real Assets held a 37.5% stake and Harvest owned the remaining 62.5%.
The AGCH system includes about 300 miles of crude and condensate pipelines and terminal assets in southern Louisiana. The Bay Marchand-to-Ostrica-to-Alliance (BOA) and Clovelly-to-Meraux (CAM) pipelines are integral to the crude supply of the Valero Meraux and PBF Chalmette refineries, Harvest said. Other pipeline and terminal assets include Golden Cocodrie, Atchafalaya, Eugene Island, Erath Tank Farm, Burns dock, Burns terminal, and Sabine.
HEP plans Texas gas transport expansion
Howard Energy Partners (HEP), San Antonio, Tex., through its joint venture Dos Caminos LLC, plans to expand capabilities to gather, treat, and transport natural gas produced from the Austin Chalk and Eagle Ford shale plays in and around Webb County, Tex.
Through a combination of ongoing enhancements to existing systems and new greenfield pipelines, Dos Caminos—a joint venture between HEP and an affiliate of Eagle Ford Midstream LP—plans to increase throughput capacity to about 2 bcfd, the company said in a release July 26. The systems currently gather, treat, and transport up to 1 bcfd to markets, including Mexico and Gulf Coast LNG.
The projects are expected to be completed in phases. Completion of the initial phase is anticipated in third-quarter 2023 with the remainder completed in 2024.
