OGJ Newsletter

GENERAL INTEREST Quick Takes

Six companies apply for North Sea CO₂ storage acreage

Six companies have applied to secure acreage for carbon dioxide (CO₂) storage in North Sea blocks, the Norwegian Ministry of Petroleum and Energy (MPE) said in a release Jan. 11.

As of the Jan. 3 deadline, MPE received applications from Aker BP ASA, Altera Infrastructure Group, Horisont Energi AS, Neptune Energy Norge AS, OMV (Norge) AS, and Wintershall Dea Norway ASA. According to the plan, acreage will be awarded before summer this year.

This is the fifth time acreage has been allocated for CO₂ storage on the Norwegian Continental Shelf. Up until now, four permits have been awarded on the Norwegian Continental Shelf, three in the North Sea and one in the Barents Sea, according to the Norwegian Petroleum Directorate. 

Pathways Alliance, Alberta reach CCS evaluation agreement

The Pathways Alliance, representing Canada’s largest oil sands producers, has entered into a carbon sequestration evaluation agreement with the Government of Alberta. The agreement enables Pathways to immediately start detailed testing to further assess sequestration suitability, with field work set to start later this quarter. This testing—and existing information collected by Pathways Alliance companies with operations in the area—will help shape field development plans to support the final application for a storage agreement and further regulatory approvals.

The proposed carbon storage hub in the Cold Lake area of Alberta would be connected to a 400-km pipeline that would initially gather captured CO₂ from an anticipated 14 oil sands sites in the Fort McMurray, Christina Lake, and Cold Lake, Alta. regions. Pathways plans to grow the transportation network to include more than 20 oil sands sites, and to accommodate other industries in the region interested in CCS. It has completed pre-engineering work on the pipeline and begun detailed engineering.

In 2022, Pathways collected a full year’s worth of environmental field data and will do additional collection this year to have its application ready to submit to the Alberta Energy Regulator by fourth-quarter 2023. The Alliance is conducting engineering studies for Phase 1 CO₂ capture, having completed nine feasibility studies as of October 2022.

Pathways Alliance describes its project as critical to achieving its plan to reduce CO₂ emissions from its member companies’ oil sands operations by 22 million tonnes by 2030 and to reach net-zero emissions by 2050. Engagement is ongoing with local parties and First Nation and Métis communities along the proposed CO₂ transportation line and storage network.

Pathways is a collaboration between Canadian Natural Resources Ltd., Cenovus Energy Inc., ConocoPhillips Canada (BRC) Ltd., Imperial Oil Ltd., MEG Energy Corp., and Suncor Energy Inc., which together operate roughly 95% of Canada’s oil sands production. It describes this project as one of the world’s largest CCS developments.

Alberta last year selected 25 proposals to develop storage hubs in the province.

CNOOC raises production target, capex budget for 2023

CNOOC Ltd. raised its production target and capital expenditure budget for 2023. The company is targeting net production of 650-660 MMboe, of which, production from China and overseas accounts for about 70% and 30%, respectively. Net production is expected to reach 690-700 MMboe in 2024 and 730-740 MMboe in 2025, the company said in a release Jan. 11.

This year, the company expects nine new projects to come on stream. In China, the projects include the first phase of the Bozhong 19-6 condensate gas field development, Lufeng 12-3 oilfield development, and Enping 18-6 oilfield development. Overseas projects include Payara in Guyana, and Buzios5 and Mero2 in Brazil.

Total capital expenditure for 2023 is budgeted at RMB 100-110 billion, of which, capital expenditures for exploration, development, production, and others will account for about 18%, 59%, 21%, and 2%, respectively.

Exploration & Development Quick Takes

Equinor makes commercial gas discovery offshore Norway

Equinor discovered gas in production license 1128 in the Norwegian Sea and will consider tieback to Irpa field. The commercial discovery, Obelix Upflank, holds estimated recoverable gas of 2-11 billion standard cu m, or about 12.6-69.2 MMboe, the operator said in a release Jan 18.

Exploration wells 6605/1-2 S&A were drilled by the Deepsea Stavanger drilling rig, about 23 km south of the Irpa gas discovery, and 350 km west of Sandnessjøen.

The objective of well 6605/1-2 S was to prove petroleum in Upper Cretaceous reservoir rocks in the Springar formation. The objective of appraisal well 6605/1-2 A was to confirm the discovery in a downfaulted neighboring segment, the Norwegian Petroleum Directorate said in a separate release.

Well 6605/1-2 S encountered three sandstone layers in the Springar formation, with moderate to good reservoir quality. The uppermost sandstone layer, about 10-m thick, was gas-bearing. In the 35-m middle sandstone layer, a 2-m gas column was encountered, and the gas-water contact was proven at about 3,190 m subsea. The lowest sandstone layer was 25 m thick and water-bearing.

Well 6605/1-2 A proved a 12-m gas column in the uppermost sandstone layer, with moderate to good reservoir quality. No gas-water contact was encountered. The deeper sandstone layers are water-bearing.

Pressure data indicates communication both vertically between the three sandstone layers and horizontally between the two wells, in both the water and hydrocarbon zones. The total gas column proven in the two wells amounts to 29 m, NPD said.

The wells were not formation-tested, but extensive data collection and sampling have been carried out.

Equinor is operator of the license with 70% interest. Partners are Petoro (20%) and Wintershall Dea Norge (10%).

Shell encounters gas in Southern North Sea

Shell plc encountered gas in exploration well 41/05a-2 on License P2252 in the Southern North Sea, said partner Deltic Energy PLC in a Jan. 11 release. 

The joint venture recommended that a full well-testing program be undertaken to evaluate commerciality of the Pensacola prospect and update the geological model (OGJ Online, Nov. 23, 2022). Testing is expected to take about 30 days.

Shell is operator of the well (65%) with partners Deltic (30%) and ONE-Dyas (5%).

ExxonMobil lets jumper contract for Uaru field

ExxonMobil has let a contract to Strohm BV for its thermoplastic composite pipe (TCP) jumper on demand service for Uaru field in Stabroek block, offshore Guyana.

The jumpers are made from carbon fiber and PA12 polymer and will be installed in deep water at depths over 1,700 m. They will be subject to about 10,000 psi operating pressure.

The jumpers will be used for water-alternating-gas (WAG) injection and will be supplied in a single continuous length along with associated pipe handling equipment. The longer lengths can be cut to desired length, terminated, and tested onsite in Guyana.

This latest award follows a TCP jumper on demand contract awarded a year ago for the Yellowtail development, also offshore Guyana.

ExxonMobil affiliate Esso Exploration and Production Guyana Ltd. is operator of the 6.6-million-acre Stabroek block with 45% interest. Hess Guyana Exploration Ltd. holds 30% and CNOOC Petroleum Guyana Ltd. holds 25%.

TotalEnergies takes FID to develop Lapa South-West

TotalEnergies has made a final investment decision to develop the Lapa South-West oil project in the presalt Santos basin, 300 km off the coast of Brazil.

Lapa South-West will be developed through three wells connected to the existing Lapa FPSO 12 km away and currently producing the North-East part of Lapa field since 2016 (OGJ Online, Dec. 21, 2016).

At production start-up, expected in 2025, Lapa South-West will increase production from Lapa field by 25,000 b/d of oil, bringing the overall production to 60,000 b/d of oil.

TotalEnergies operates the project with a 45% interest in partnership with Shell (30%) and Repsol Sinopec (25%).

Drilling & Production Quick Takes

NOVATEK increases y-o-y production by 2%

PAO NOVATEK increased its year-over-year hydrocarbon production by 2% in 2022. For the year, the company’s production totaled 638.9 MMboe, including 82.14 billion cu m (bcm) of natural gas and 11.9 million tons of liquids (gas condensate and crude oil), resulting in an increase of 12.6 MMboe compared with full year 2021.

Preliminary 2022 total natural gas sales volumes, including LNG, aggregated 76.55 bcm, representing an increase of 1.0% compared with the corresponding volumes in 2021. Natural gas volumes sold in the Russian Federation were 68.09 bcm, an increase of 0.3% compared with the prior year period, whereas LNG volumes sold on international markets amounted to 8.45 bcm, representing an increase of 6.3%.

NOVATEK processed 13.2 million tons of unstable gas condensate at the Purovsky processing plant, representing an increase of 3.3% compared with the corresponding volumes processed in the prior reporting period. NOVATEK further processed 6.9 million tons of stable gas condensate at the Ust-Luga complex, about the same as in the previous year.

Preliminary 2022 petroleum product sales volumes aggregated 6.2 million tons, including 3.8 million tons of naphtha, 1.0 million tons of jet fuel, and 1.4 million tons of fuel oil and gasoil. NOVATEK sold 2.9 million tons of crude oil and 3.3 million tons of stable gas condensate.

As of Dec. 31, 2022, NOVATEK had 1.0 bcm of natural gas, including LNG, and 1.2 million tons of stable gas condensate and petroleum products in storage or transit and recognized as inventory.

Devon reduces Q4 production guidance on weather-related impacts

Devon Energy, Oklahoma City, has reduced its expected fourth-quarter 2022 production guidance by 2%, or 15,000 boe/d, citing the impact of severe winter weather across its operations.

The curtailments are estimated to limit Devon’s production to an average of 636,000 boe/d in the quarter, including 316,000 b/d of oil, the company said in a release Jan. 10.

The most significant production impact was associated with the company’s Williston basin operations in North Dakota. Severe weather conditions during December resulted in well shut-ins, infrastructure downtime, and delays in completion activity.

Production across all operating areas has been restored, the company said, and weather-related downtime is expected to be confined to fourth-quarter 2022.

Devon expects to release its full fourth-quarter 2022 results on Feb. 14.

Magnolia reduces fourth quarter production guidance

Magnolia Oil & Gas Corp., Houston, revised down its preliminary fourth-quarter 2022 estimated oil and gas production volumes to 73,000-74,000 boe/d. Earlier guidance had volumes at the midpoint of 78,000 boe/d.

Two factors led to the volume reduction, the company said. First, a single large pad was brought online later than expected during fourth-quarter 2022. The pad is currently fully operational and performing in line with expectations, the company said. Second, freezing temperatures impacted both Magnolia’s Karnes and Giddings assets in Texas in late December, resulting in some well shut-ins and infrastructure downtime in both areas.

Production has recovered with volumes currently exceeding 80,000 boe/d, the company said, and 2023 guidance remains unchanged, with full-year 2023 production growth of 10% compared with 2022 at current product prices.

PROCESSING Quick Takes

Momentum awards Haynesville gas treatment, processing contract

M6 Midstream LLC (Momentum) has awarded Opero Energy, an affiliate of Audubon Engineering Co. LLC, an engineering, design, and fabrication contract for its 1.7-bcfd New Generation Gas Gathering (NG3) project in the Haynesville shale. Opero will be responsible for NG3’s natural gas treatment and processing plants.

The gathering system will include 4,000 miles of pipeline and both it and the gas plants will be expandable to 2.2 bcfd. NG3 will also include carbon capture and sequestration (CCS) to address CO2 emissions.

Opero expects gas to flow through NG3 in 2024 and said the project will help alleviate constraints in delivering Haynesville production to domestic and international markets.

Momentum took final investment decision on NG3 last year. The system is anchored by long-term volume commitments from Haynesville shale producers, including Chesapeake Energy Corp., which also has an option to own 35% of the project. Southwestern Energy Co. will also be shipping on NG3.

CPChem, QatarEnergy take FID, ink contracts for Qatari chemical complex

QatarEnergy and Chevron Phillips Chemical Co. LLC (CPChem)—a joint venture of Chevron USA Inc. and Phillips 66 Co.—have taken final investment decision to jointly build and operate the Ras Laffan petrochemical project (RLPP) in Ras Laffan Industrial City, Qatar.

The companies will invest a combined $6 billion for construction of the integrated olefins and polyethylene complex, which will house an ethane cracker equipped to produce 2.08 million tonnes/year (tpy) of ethylene and a two-unit, high-density polyethylene (HDPE) plant with a total production capacity of 1.68 million tpy.

Joint venture Ras Laffan Petrochemicals (RLP) was formed to operate the refinery (QatarEnergy 70%, CPChem 30%).

The partners also confirmed awarding engineering, procurement, and construction (EPC) contracts for RLPP’s Packages 1 and 2, covering construction of the complex’s ethylene plant and associated polyethylene plant, respectively.

For Package 1, the Samsung Engineering CTCI joint venture (SCJV)—a consortium of South Korea’s Samsung Engineering Co. Ltd. and CTCI Corp. of Taiwan—will deliver EPC services for RLPP’s main ethane cracker.

While Samsung Engineering and CTCI will jointly execute procurement and construction works for the project, Samsung Engineering will deliver engineering of major ethylene production installations including furnaces, ethylene (C2) hydrogenation, a hydrogen purification unit, and three main compressors. CTCI will cover engineering of the cracker’s furnaces and utility infrastructure such as steam-condensate collecting, boiler-feed water, among others.

Maire Tecnimont SPA said has been awarded a $1.3-billion contract to provide EPC services for RLP’s polyethylene plant, which will consist of two HDPE units equipped with production capacities of 1 million tpy and 680,000 tpy, respectively.

Tecnimont’s scope of work—which also covers the plant’s associated utilities and offsite installations—includes complete engineering services, equipment and material supply, and construction activities.

CPChem—which is also providing project management services for RLPP—will license its MarTech loop slurry process for HDPE production at the complex.

The RLP JV let a contract to Emerson Electric to provide main automation works for the Ras Laffan complex, but further details have not been revealed.

Scheduled for mechanical completion by 2026, the Ras Laffan petrochemical complex is slated for startup later that year, the RLP JV said.

In 2022, Consolidated Contractors Co. began early site-preparation works for RLP’s grassroots complex on a 435-acre project site in Ras Laffan Industrial City, which—in addition to housing a massive LNG export terminal—serves as an onshore base for the processing of gas and other hydrocarbons produced from Qatar’s offshore North Field.

TRANSPORTATION Quick Takes

TotalEnergies starts regasification at Lubmin, Germany, terminal

TotalEnergies SE and Deutsche ReGas GMBH & Co. KGaA have started regasification at the 5-billion cu m/year (bcmy) Deutsche Ostsee LNG terminal in Lubmin on the German Baltic Sea coast. TotalEnergies last month delivered the Neptune—one of its two floating storage and regasification units (FSRU)—to Deutsche ReGas for use in Lubmin.

In October 2022, TotalEnergies contracted 2.6 bcmy of Deutsche Ostsee’s capacity, bringing the total amount of gas it is importing into Europe as LNG to more than 20 bcmy.

TotalEnergies also last year entered into a heads of agreement for development of the Cameron Phase 2 LNG plant in Hackberry, La., and began marketing LNG from a planned FSRU in Le Havre, France, starting September 2023.

The US Energy Information Administration (EIA) last year forecast a 34% increase in European Union (EU) and UK import capacity by 2024 compared with 2021. Regasification terminals under construction in seven EU countries could add 3.5 bcfd (36.2 bcmy) of capacity by end 2023, EIA said (OGJ Online, Nov. 29, 2022).

Petronas awards JGC-Samsung contract for third Malaysian FLNG

Petroliam Nasional Berhad (Petronas) has awarded a consortium of JGC Corp. and Samsung Heavy Industries Co. Ltd. (SHI) the engineering, procurement, construction (EPC), and commissioning contract for a 2-million tonne/year (tpy) nearshore floating LNG (FLNG) in Malaysia. The plant, to be completed in 2027, will be the third FLNG plant to be built to serve offshore gas fields in Malaysia.

JGC’s main responsibilities will cover engineering, procurement, and commissioning of the FLNG topside and associated onshore infrastructure as well as overall project management. SHI will be responsible for the FLNG hull’s EPC work and modular fabrication of the topside.

Petronas is developing the nearshore plant with Sabah Oil & Gas Development Corp. The vessel will be stationed near Sipitang Oil and Gas Industrial Park in Sabah, East Malaysia. The plant could serve as an alternative outlet for natural gas production from Kebabangan cluster, owned by Shell PLC, ConocoPhillips East Malaysia Ltd., and Petronas.

JGC Group executed EPC for all nine trains of the 29-million tpy Petronas LNG complex in Bintulu, Sarawak, Malaysia, and for 1.5-million tpy PFLNG Dua, operating at Rotan gas field, 140 km offshore Kota Kinabula, Sabah (OGJ Online, Feb. 15, 2021). PFLNG Satu (1.2 million tpy) was Malaysia’s first floating LNG plant, coming online in 2016.

Sempra to sell Port Arthur Phase 1 LNG to RWE

Sempra Infrastructure, a subsidiary of Sempra, agreed to sell RWE Supply & Trading GMBH, a subsidiary of RWE AG, 2.25 million tonnes/year (tpy) of LNG from its 13.5-million tpy Port Arthur LNG Phase 1 project under development in Jefferson County, Tex. The LNG will be delivered on a free-on-board basis for 15 years.

Sempra Infrastructure has long-term agreements in place with ConocoPhillips Co., INEOS Group Ltd., and ENGIE SA for the sale and purchase of 7.3 million tpy from Phase 1 (OGJ Online, Dec. 6, 2022). Sempra hopes to take final investment decision (FID) in first-quarter 2023, with first cargo deliveries expected in 2027.

Port Arthur LNG Phase 1 is permitted and will include two 6.75-million tpy liquefaction trains and as many

as three 160,000-cu m LNG storage tanks. The similarly sized Port Arthur LNG Phase 2 project is under active marketing and development.

Development of both phases of the Port Arthur LNG project is contingent upon completing required commercial agreements, securing and maintaining necessary permits, obtaining financing, and reaching FID, among other factors.

Finland takes delivery of Excelerate FSRU

Excelerate Energy Inc.’s 5-billion cu m/year (bcmy) floating storage and regasification unit (FSRU) Exemplar has arrived at the port of Inkoo, Finland, loaded with a partial cargo which will be used for the terminal’s initial commissioning. Exemplar is chartered to Gasgrid Finland Oy for 10 years and will provide regasified LNG to Finland and other Baltic countries.

In addition to providing regasification services under the time charter with Gasgrid, Excelerate, through its recently formed Finnish gas marketing subsidiary, Excelerate Finland Gas Marketing Oy, has executed an agreement for the sale of commissioning volumes and regasification capacity rights during the commissioning phase.

Exemplar departed drydock in Spain on Dec. 6 following customer-requested winterization upgrades. It subsequently loaded its cargo via a ship-to-ship transfer with Excelerate’s FSRU Excelsior near Gibraltar.

The 5-bcmy Excelsior recently completed 10-year service in Israel and will go on charter to the Federal Republic of Germany for a 5-year term starting first-quarter 2023. Excelsior will be stationed in Wilhelmshaven as part of an LNG terminal being developed by Tree Energy Solutions (TES) GMBH, E.ON SE, and Engie SA (OGJ Online, Oct. 25, 2022).