GENERAL INTEREST Quick Takes
SilverBow signs bolt-on deal in South Texas
SilverBow Resources Inc., Houston, has agreed to acquire oil and gas assets in DeWitt and Gonzales counties in Texas, adding to the company’s liquids-weighted position in the Karnes trough.
The deal, agreed with an undisclosed seller for $87 million cash, is the seventh acquisition announced by the company since August 2021, the company said in a release Oct. 3.
The transaction is comprised of incremental working interest on SilverBow’s existing acreage as well as new adjacent acreage; provides for extended laterals, additional inventory locations, and more efficient development, the company said.
June 2022 net production from the assets was about 1,100 boe/d (44% oil). The deal adds 5,200 net acres in the oil and condensate windows of Dewitt and Gonzales counties and adds upside in Austin Chalk, which has been de-risked with one well in the center of acreage block having produced over 200,000 bbl of oil to date, the company said.
In combination with SilverBow’s existing position, the deal creates a consolidated 13,000 net acre block with 100 high rate of return drilling locations that allows for 70,000 additional lateral feet to be drilled with 12 fewer wells, the company said.
Closing is expected in this year’s fourth quarter.
Shell emerges as buyer of Corallian asset offshore UK
Shell UK Ltd. has agreed to acquire the entire issued share capital of Corallian Energy Ltd., a privately held UK oil and gas company, Reabold Resources plc said in a release Oct. 5. Corallian is a privately held UK oil and gas company in which Reabold Resources holds investment.
The $36.7 million (gross) sale agreement sees Shell acquire interest in license P2596, West of Shetland, which contains Block 207/1a and the Victory gas asset. The discovery is considered a “fully appraised commercially attractive gas discovery requiring subsea development tie back for production,” according to Corallian. The environmental statement and draft development plan for the field was submitted earlier this year. First gas is targeted for fourth-quarter 2024.
Reabold agreed in May to acquire all Corallian’s non-Victory UK offshore assets and noted an agreed conditional sale to an undisclosed oil and gas major of the Victory license.
Santos increases Mahalo CSG project stake
Santos Ltd. exercised an option to increase its interest in the Mahalo coal seam gas project in Denison Trough of central eastern Queensland north of Rolleston by acquiring an additional 12.86% from joint venture partner Comet Ridge Ltd., Brisbane.
Comet Ridge will hold 57.14% and Santos will hold 42.86%.
The acquisition is part of the loan-option arrangements put in place between the two companies concurrent with Comet Ridge’s purchase of Australia Pacific LNG Pty Ltd.’s 30% share of the project completed earlier this year.
The option will reduce Comet Ridge’s loan from Santos by $5.14 million (Aus.) to $8.01 million (Aus.).
Santos will assume liability for its $3.43 million (Aus.) share of the $8.01 million (Aus.) deferred consideration payable to APLNG. The first $2 million tranche of deferred consideration is payable to APLNG in June 2023 with Comet Ridge’s share of that tranche now reducing to $1.14 million (Aus.).
There will be no change to Comet Ridge’s 100% ownership of the northern Mahalo Hub blocks.
Both parties can now focus on moving the gas project into production, said Comet Ridge managing director Tor McCaul.
Comet Ridge is continuing discussions with Santos about a mutually beneficial arrangement to consolidate the Mahalo Gas Hub area to a 50/50 joint venture.
Initial concentration of the Mahalo gas project lies in production licenses 1082 and 1083, about 65 km from the Gladstone LNG and Jemena gas pipelines to Gladstone. Environmental approvals have been obtained.
The target coal seams are at shallow depths of 180-400 m. Mahalo-7 and Mira-6 short lateral pilot wells flowed 1,200-1,500 cu ft of gas per meter of coal intersected. The gas is of high-quality pipeline specifications with a low CO2 content of 0.05%.
Chevron takes stake in deepwater Namibia license
Chevron closed a deal with Trago Energy (Pty) Ltd., the Namibian affiliate of Sintana Energy Inc., for interest in PEL 90 in Orange basin offshore Namibia.
Through a spokesperson, Chevron confirmed to OGJ via email that a wholly owned subsidiary, Chevron Namibia Exploration Ltd., acquired an 80% working interest in the license.
Trago will retain a 10% interest in the ultra-deepwater exploration license, which lies in Block 2813B. Chevron will carry Trago through initial exploration activities including 3D seismic and drilling of the first exploration well. Post carry period, Trago will be responsible for approved expenses associated with its interest, the company said in release Oct. 4. Additional terms were not disclosed.
The southern boundary of PEL 90 lies 60 km from the TotalEnergies-operated Venus-1 light oil discovery, where 84 m of net oil pay was encountered in good quality Lower Cretaceous reservoir.
The license covers 5,433 sq km offshore southern Namibia in water depths of 2,300-3,300 m.
Exploration & Development Quick Takes
ONE-Dyas to develop gas field offshore Netherlands
ONE-Dyas BV made a final investment decision to develop N05-A gas field in the North Sea.
The field is part of “Gateway to the Ems” (GEMS), about 20-100 km north of the mouth of the Ems River in northwestern Germany. The proposed N05-A platform will be in the Netherlands, about 1.5 km from German waters and will be the first Dutch offshore gas treatment platform in the North Sea to run entirely on wind energy. For this purpose, a cable will be installed to the nearby Riffgat German wind farm.
With development, the project will contribute to natural gas to the Netherlands and Germany with emissions close to zero, said Chris de Ruyter van Steveninck, chief executive officer of ONE-Dyas. Further, he said, the company has “agreed to produce natural gas from the GEMS area only as long as there is domestic demand for natural gas in the Netherlands and Germany.”
As the project now enters preparations and investments (over 500 million euro), natural gas from the field is expected to be available to Dutch and German households ahead winter 2024, he said.
The expected volume to be produced from N05-A field and surrounding prospects is 4.5-13 billion normal cu m. Potential of the wider Dutch-German GEMS field has been estimated at 50 billion normal cu m, depending on exploration success.
The Ministry of Economic Affairs and Climate (EZK) awarded final permits for field development June 3, 2022. The Environmental Impact Assessment Committee concluded Feb. 18, 2022, that the environmental impacts have been sufficiently outlined, and that the utility and necessity of the N05-A project have been satisfied.
ONE-Dyas is operator at GEMS. Partners are Energie Beheer Nederland (EBN) and Hansa Hydrocarbons Ltd.
Mubadala Energy discovers gas offshore Malaysia
Mubadala Energy, Abu Dhabi, discovered gas in Block SK320, Central Luconia province, offshore Malaysia.
Cengkih-1, about 220 km off the coast of Bintulu, Sarawak, is near Pegaga field, also within the block, which started commercial gas production in March. The exploration well was drilled to a total depth of 1,680 m in August 2022, hitting a gas column of more than 110 m in Miocene Cycle IV/V pinnacle carbonate reservoirs, increasing gas resources within the block, the operator said.
The discovery builds on exploration successes in the region and “confirms the large potential of this proven carbonate play type in Central Luconia,” said Mohamed Firouz Asnan, PETRONAS senior vice-president of Malaysia petroleum management. PETRONAS holds 25% interest in the block.
Mubadala Energy, which recently changed its name from Mubadala Petroleum, is operator of the block with 55% interest. PETRONAS Carigali Sdn Bhd holds 25% and Sarawak Shell Berhad holds the remaining 20%.
TotalEnergies lets contract for work offshore Angola
TotalEnergies EP Angola has let a contract to McDermott International for work on the Begonia project, offshore Angola.
Begonia, in Block 17/06, will collect hydrocarbons from a reservoir via subsea tieback to an existing floating production, storage, and offloading (FPSO) vessel. Water depth at the site is 400-750 m.
Production from three wells will be gathered through a 20 km multiphase production flowline, and two water injection wells are connected to an existing riser. After commissioning, expected in late 2024, it will add 30,000 b/d to the FPSO’s production (OGJ Online, July 28, 2022).
The contract to McDermott includes engineering, procurement, supply, construction, installation, pre-commissioning, and assistance to commissioning and start-up (EPSCI). McDermott will provide all EPSCI services for subsea umbilicals, water injection, and production flowlines.
McDermott will utilize the North Ocean 102 to install umbilicals, and the Amazon to install rigid pipelines. Project management and engineering will be executed in London, UK, and Kuala Lumpur, Malaysia. Fabrication will take place in Angola, West Africa.
The service provider values the contract at $250-500 million.
TotalEnergies is operator at Block 17/06 with 30% interest. Partners are Sonangol P&P (30%), SSI (27.5%), ACREP/Somoil (5%), Falcon Oil (5%), and PTTEP (2.5%).
Lakes Blue begins PNG Cape Vogel region exploration
Lakes Blue Energy NL, Sydney, has started first phase exploration in its technical collaboration agreement with TotalEnergies in the Cape Ward Hunt and Cape Vogel regions of eastern Papua New Guinea.
Work involves rock and fluid sampling (liquids and gas) from locations where the potential source and reservoir rocks outcrop and where oil and gas seeps have been reported.
Recent reconnaissance activities and discussions with local province leaders have identified previously unrecorded oil seeps that will be targeted during the field work program, the company said.
Samples will be collected from both onshore and offshore locations surrounding the predominantly offshore PPL560 permit in Buna subbasin off the country’s northeast coast near Popondetta. In some cases, samples will be taken where local fishermen have observed gas bubbling from the seafloor.
Sampling will take about 1 month, after which, the samples will be shipped to France for analysis by TotalEnergies to confirm the presence of a working hydrocarbon system.
TotalEnergies will have the option, at its cost, to undertake a seismic acquisition program to delineate the PPL560 Buna prospect, which has potential to hold multi-tcf of gas, Lakes said. The program could then lead to drilling a Buna wildcat.
Drilling & Production Quick Takes
Neptune to continue increased Duva gas supplies to UK
Neptune Energy plans to further increase gas production from Duva oil and gas field in the Norwegian North Sea through a new permit allowing for additional supply of gas to the UK this winter.
The extended supply is enough to heat a further 550,0001 UK homes per day, the company said in a release Oct. 6.
In April, Norwegian authorities granted the operator and its Duva license partners a permit to temporarily increase gas production by 6,500 boe/d until September. Under the new permit, the higher production rate will be maintained until yearend.
Duva’s production is around 40,000 boe/d, of which 15,000 boe/d is natural gas. Duva is a subsea installation with three oil producers and one gas producer, tied back to the Neptune-operated Gjøa semisubmersible platform. The gas is transported by pipeline to the UK’s St Fergus gas terminal.
Neptune Energy is operator at Duva with 30% interest. Partners are INPEX Idemitsu (30%), PGNiG Upstream Norway (30%), and Sval Energi (10%).
The company is operator at the Gjøa license (30% interest). Partners are Petoro (30%), Wintershall Dea Norge (28%), and OKEA (12%).
Eco Atlantic begins Gazania-1 exploration drilling offshore South Africa
Eco Atlantic has started operations on the Gazania-1 exploration well following arrival of the Island Innovator semisubmersible drilling rig on Block 2B offshore South Africa.
Eco is drilling 25 km offshore the Northern Cape in Orange Basin South Africa in about 150 m of water. Gazania-1 is being drilled to a depth of 2,800 m through a multizone pay section and up dip of the AJ-1 discovery well on the block, which proved about 50 million bbl of contingent resources, the company said in a release Oct. 4.
The Gazania-1 prospect is targeting over 300 million bbl of light oil. Pending discovery in the vertical section, the joint venture partners have the option to directionally drill a second sidetrack well from the main well bore. Both the vertical well and the sidetrack optional well will be logged and then plugged back to surface, the well will be sealed, plugged and the casing cut off below surface. No equipment will remain on the sea floor.
Eco Atlantic is operator at Block 2B with 50% interest. Partners are Africa Energy Corp. (27.5%), Panoro 2B Ltd., a subsidiary of Panoro Energy ASA (12.5%), and Crown Energy AB (10%).
CNOOC to drill WZ12-8E Phase 2 in Beibu Gulf
China National Offshore Oil Corp. (CNOOC) will drill an additional three to five wells for Weizhou (WZ) 12-8E Phase 2 in Beibu Gulf Block 22/12 in the South China Sea, according to a Sept. 30 release by partner Horizon Oil Ltd.
The wells will be drilled in about 40 m of water using the Strike rig used in Phase 1. The rig is currently drilling appraisal-infill wells in the WZ6-12 area. The program is expected to be complete in the next 2 weeks with the rig returning to WZ12-8E field in late October.
Strong production from Phase 1 wells, short-term availability of the Strike rig, and demonstrated efficient rig performance—which has been in Block 22/12 for 7 months—led to approval of the second-phase drilling program.
The six WZ12-8E Phase 1 production wells were producing 6,359 b/d of oil (gross) in September, following commissioning of the water processing and disposal system on the WZ12-8E wellhead platform, freeing up pipeline capacity to allow increased rates from the WZ12-8E wells.
Total Block 22/12 Beibu Gulf production on Sept. 25, including WZ12-8E, was 14,486 bo/d gross. The WZ6-12 workover program was completed in August and the rig then proceeded to drill the WZ6-12 M3 appraisal well in early September. M3 did not intersect commercial hydrocarbons and was immediately sidetracked to drill a WZ6-12 M1 infill well—a follow-up to the development well drilled in 2021. The M1 sidetrack intersected oil in at least three reservoirs and will be batch-completed and brought onto production together with the WZ6-12 North infill well.
CNOOC is operator of the block with partners Horizon, Roc Oil, and Majuko Corp.
PROCESSING Quick Takes
BASF lets contracts for Zhanjiang petrochemical megacomplex
BASF SE has let two contracts to Fluor Corp. to provide engineering, procurement, and construction management (EPCM) services for the addition of a new unit and related infrastructure as part of the ongoing construction of subsidiary BASF Integrated Site (Guangdong) Co. Ltd.’s grassroots Verbund chemicals manufacturing site in Zhanjiang, Guangdong Province, China.
As part of the contracts covering two primary packages of the site’s development, Fluor will deliver EPCM services for a new ethylene oxide (EO)-ethylene glycol (EG) derivative unit, as well as for infrastructure, offsites, and utilities, including unidentified site infrastructure, utility generation, and site logistics, the service provider said.
Performance of additional unidentified services as part of the project’s centralized program management team activities are also covered by the contracts, according to Fluor.
In its early October announcement, Fluor confirmed the combined value of the two reimbursable EPCM contracts at more than $2 billion, which the service provider booked in third-quarter 2022.
Contract awards for the EO-EG unit and associated infrastructure packages for the Zhanjiang complex follow BASF’s September 2022 commissioning of the site’s first plant, which will initially produce 60,000 tonnes/year (tpy) of engineering plastics before increasing production capacity to 420,000 tpy in 2023 to meet growing demand by the Asia Pacific’s automotive and electronics industries, BASF said on Sept. 6.
Startup of the first plant at the integrated Zhanjiang Verbund site follows BASF’s final investment decision (FID) in July 2022 to move forward with main construction of the project’s core production complex, including a steam cracker equipped to produce 1 million tpy of ethylene for use in a series of unidentified downstream derivatives units planned for the complex.
First announced in 2018 and officially cleared for construction of early units in late 2019, the Zhanjiang Verbund integrated production site will require an overall investment of more than $10 billion—BASF’s largest ever—by its full completion in 2030, the operator said.
Designed to serve as a global role model for smart manufacturing and sustainable production, the Zhanjiang Verbund site—which is to be powered with 100% renewable electricity by 2025—currently is slated to commission its second plant—which will produce thermoplastic polyurethanes (TPU)—in 2023, with startup of the complex’s steam cracker to follow in late 2025.
An expansion phase involving construction of additional downstream plants for production of other petrochemicals and intermediates is scheduled to completed and in operation by 2028, according to BASF.
Part of the operator’s Verbund approach that implements advanced digitalization technologies into plant operations to improve production reliability and efficiency, BASF said its Zhanjiang Verbund integrated chemical manufacturing hub supports the company’s commitment to meeting the Asia Pacific’s rising demand for basic chemical components in a way that also advances a regional circular economy in line with the global energy transition.
Supporting its goal of net-zero emissions by 2050, BASF signed a purchase agreement for renewable electricity with China Resources Power of Hong Kong in June 2021 to enable operation of the first plants at Zhanjiang Verbund entirely on renewable energy, the operator said in its 2021 annual report to shareholders.
PTTEP lets contract for Malaysian gas plant, carbon capture project
PTT Exploration and Production Public Co. Ltd. (PTTEP), through subsidiary PTTEP HK Offshore Ltd. (PTTEP HKO), has let a contract to Technip Energies to deliver front-end engineering design (FEED) for an onshore gas plant (OGP) to process sour production from Lang Lebah field in the Sarawak SK 410B project, about 90 km offshore Malaysia.
Technip Energies’ scope of work on the FEED contract covers design of the Lang Lebah OGP 2, including integrated flow assurance of a native carbon dioxide (CO2) capture, compression, and transportation system that will connect via pipeline back to the offshore wellhead platform for reinjection, the service provider said on Oct. 6.
Following treatment at the Lang Lebah OGP 2, offshore gas produced from Lang Lebah field will be delivered to the Malaysia LNG complex, according to Technip Energies.
To be sited within the Petchem Industrial Park in Tanjung Kidurong, Bintulu, Sarawak, the Lang Lebah OGP 2 is a key project of the Sarawak Integrated Sour Gas Evacuation System (SISGES), a joint development of Sarawak State Government and Petronas, Sarawak Shell Bhd., and PTTEP HKO to spur increased development of untapped sour gas resources off the coast of Sarawak.
The contract award for the OGP follows PTTEP HKO’s mid-January 2021 completion of the Lang Lehah-2 appraisal well that, showing a flow rate of 50 MMcfd of gas, accelerated the operator’s development plan for the project.
At the end of second-quarter 2022, PTTEP said Lang Lebah field—the company’s largest gas discovery ever—was undergoing a development study to reflect larger anticipated gas volumes, including a potential increase of the OGP’s processing capacity as well as ways to manage higher CO2 content to meet greenhouse gas (GHG) emissions targets, according to the operator’s quarterly earnings report.
Additional details of the carbon capture and storage system planned for Lang Lebah OGP 2 have yet to be revealed.
In its latest presentations to investors in August-September 2022, PTTEP said it expects to take final investment decision (FID) on the SK 410B project in 2023.
Operator PTTEP HKO holds 42.5% interest in SK 410B alongside partners KUFPEC Malaysia (SK-410B) Ltd. (42.5%) and Petronas Carigali Sdn. Bhd. (15%).
TRANSPORTATION Quick Takes
PGNiG secures 10 years of natural gas through Klaipeda LNG
Polish-state Polskie Górnictwo Naftowe i Gazownictwo SA (PGNiG) has secured 0.5 billion cu m/year (bcmy) of regasification capacity at the 3.75-bcmy Klaipeda LNG terminal in Lithuania. PGNiG’s term offtake will begin Jan. 1, 2023, and last for 10 years.
PGNiG began using Klaipeda LNG earlier this year, with its first cargo delivered May 6, 2022, and has received a total of seven cargoes through the terminal to date. Gas is either sold to customers in the Baltic States or transported to the Polish market via the 2-bcmy Gas Interconnection Poland–Lithuania pipeline, which also began operations earlier this year (OGJ Online, May 9, 2022).
PGNiG is one of multiple European companies signing LNG supply agreements in an effort to reduce the continent’s dependence on Russian gas following its invasion of Ukraine. Earlier this week, RWE signed an MoU with ADNOC for long-term supplies also starting in 2023 (OGJ Online, Sept. 30, 2022).
With this agreement, terminal operator Klaipedos Nafta said it had concluded its long-term regasification capacity allocation.
Australian government signs HoA with Curtis Island LNG exporters
The Australian Government signed a Heads of Agreement (HoA) with the country’s three joint ventures exporting LNG through Curtis Island plants in Queensland to secure competitively priced gas for the east coast domestic market.
The aim is to prevent a gas supply shortfall, improve security and affordability of future domestic gas supply, and introduce transparency measures for improved customer information.
New commitments from the JVs, led by Shell (Queensland Curtis LNG), Santos (Gladstone LNG), and Origin Energy (Australia Pacific LNG), will lead to an extra 157 petajoules of gas for the domestic market in 2023, with gas to be supplied in line with seasonal demand, the government said.
Under the HoA, LNG exporters will offer uncontracted gas to the domestic market on competitive terms with reasonable notice before seeking export sales. Domestic gas customers will not pay more for the LNG than international customers.
There also will be enhanced accountability, with quarterly compliance reporting to the Federal Minister for Resources and oversight by the competition watchdog, the Australian Competition and Consumer Commission (ACCC).
Prior to signing, exporters had expressed concern that any precipitate move to head off the forecast 2023 gas supply shortfall could damage Australia’s sovereign risk and scare off foreign investment in the country’s gas resources.
However, the HoA has been welcomed by the exporters. Santos said the arrangement respects existing export contracts, thus safeguarding Australian exporters’ relationships with international markets.
Northern Territory Minister Madelaine King said the new agreement means the projected gas shortfall will be avoided and that there is now no current need to activate the Australian Domestic Gas Security Mechanism.
Linden buys 10% capacity on newly operating IGB natural gas pipeline
Linden Energy Holding Inc. has finalized its participation as a 20-year holder of 10% of capacity on the 3-billion cu m/year (bcmy) Interconnector Greece-Bulgaria (IGB) natural gas pipeline.
The 162-km IGB began commercial operations Oct. 1, 2022. It connects the two countries’ transmission systems, carrying gas produced in Azerbaijan and transported through Greece via the 10-bcmy Trans-Adriatic Pipeline (TAP) to Greece, Bulgaria, and greater Europe. TAP connects to the 16-bcmy Trans-Anatolian Pipeline at the Greek-Turkish border.
Linden in August 2022 finalized its acquisition of 50% of Bulgarian natural gas distribution company Overgas Inc. AD. PJSC Gazprom owns the other 50%.
Overgas in July 2022 signed a tentative 10-year agreement with Excelerate Energy Inc. for 1 bcmy of gas from Excelerate’s planned 5-bcmy Vlora LNG terminal on the Albanian coast.
