GENERAL INTEREST Quick Takes
Equinor adds equity interest in five North Sea discoveries
Equinor has agreed to acquire equity interest in five discoveries in the Troll, Fram, and Kvitebjørn area in the North Sea on the Norwegian Continental Shelf (NCS) from Wellesley Petroleum AS.
The transaction adds to Equinor’s equity share in the following discoveries: An additional 18.8% in Grosbeak, 45% in Toppand, 40% in Atlantis, and 20% in Røver Nord, and Røver Sør.
The discoveries can be put into production with low costs and low CO2 emissions by being connected to infrastructure in the area, said Kjetil Hove, executive vice-president for exploration and production, Norway.
The Troll and Fram area, while a mature part of the NCS, has become an exploration hotspot, Equinor said, having made discoveries in this area, including Swisher, Toppand, and Røver Nord, and Sør.
Equinor has started field developments projects to coordinate the development of these discoveries in collaboration with partners.
Upon completion, subject to customary government and license approvals and expected in first-half 2023, Equinor’s interest in the discoveries will be: Atlantis (license PL878/878B/878C), 80%; Grosbeak (license PL248I), 5%; Grosbeak (license PL925), 85%; Røver Nord/Sør (license PL923/PL923B), 60%; and Toppand (license PL630/PL630CS), 95%.
Petrobras, Shell sign 5-year MoU for potential collaboration
Petróleo Brasileiro SA (Petrobras) and Shell plc signed a memorandum of understanding (MoU) to identify potential upstream opportunities.
The MoU was signed during CERAWeek in Houston by Petrobras chief executive officer Jean Paul Prates and Shell’s chief executive officer Wael Sawan to encourage discussion and collaboration between the companies, Petrobras said in a Mar. 9 release.
The 5-year, non-binding agreement focuses on potential exploration opportunities in and beyond Brazil’s presalt region, including the Equatorial Margin. It also contemplates energy transition efforts, with an emphasis on renewables and carbon capture, utilization, and Storage (CCUS).
Exploration & Development Quick Takes
Equinor considers tying back Heisenberg discovery
Equinor Energy AS and partners will consider tying the Heisenberg discovery into the Troll B platform in the North Sea. Volumes are estimated at 24-84 MMboe, with slightly more oil than gas.
Discovery well 35/10-9 was drilled by the Deepsea Stavanger in production license (PL) 827S. The well encountered hydrocarbons in Hordaland Group sandstones of Paleogene age. A part of the discovery may extend into the adjacent PL248F license.
An appraisal well is needed to get a more precise estimate of reserves before deciding whether to connect to Troll B about 40 km to the southeast. Partners are considering drilling the appraisal in 2024.
Equinor recently made the Røver South discovery in the Troll-Gjøa area (OGJ Online, Mar. 26, 2023). Seven previous discoveries in the area are Echino South, Swisher, Røver North, Blasto, Toppand, Kveikje, and Røver South.
Equinor is operator at PL 827S (51%) with partner DNO Norge AS (49%).
Arrow Exploration discovers hydrocarbons in Llanos basin
Arrow Exploration Corp. encountered hydrocarbons at Rio Cravo Este (RCE) field on Tapir block in Llanos basin, Colombia.
RCE-4, the fifth well drilled by Arrow in the block, reached 8,546 ft total depth (8,053 ft true vertical depth) Mar. 8, 2023. The well encountered six hydrocarbon bearing intervals totaling 45 net ft measured depth of oil pay. Identified hydrocarbon bearing intervals include 25 ft net oil pay over two intervals in Carbonera C7 and 20 ft net oil pay over four intervals in Lower Gacheta. Interval thicknesses are not necessarily indicative of long-term performance or ultimate recovery.
RCE-4 production is expected in late March 2023. The rig will then be moved to the RCE-5 location to spud within a few days of RCE-4 being brought on production. Once RCE-5 is drilled, the rig will mobilize to drill three planned wells 20 km away on the Carrizales Norte Structure.
Arrow Exploration is operator at Tapir (50%).
Genel Energy to explore Lagzira block, offshore Morocco
Genel Energy PLC will explore Lagzira block (formerly Sidi Moussa) offshore Sidi Ifni in Morocco after signing a petroleum agreement and association contract with the Office National des Hydrocarbures et des Mines (ONHYM).
Lagzira is a large offshore license in water depths of 200-1,200 m with a proven petroleum system following Genel’s 2014 SM-1 well, which recovered oil in fractured and brecciated cavernous Upper Jurassic carbonates from the Upper Jurassic reservoirs.
New multi-azimuth broadband 3D seismic acquired in 2018 by Genel resulted in a significant uplift and improvement in subsurface imaging, and prospects have been high-graded, with follow on potential in the wider area, the company said in a release Mar. 1. The data has highlighted new plays and provided an enhanced understanding of the SM-1 well result, it continued.
In total, 18 prospects and leads have been identified with over 2.5 billion boe mean recoverable prospective resource potential and individual prospects estimated at 100-700 million bbl each.
Genel Energy is seeking a partner to take a material equity position and jointly pursue exploration in the block by drilling and testing one of the high-graded prospects.
Genel Energy is operator of Lagzira with 75% working interest.
Drilling & Production Quick Takes
Aramco advancing crude development projects to boost output by 1.5 million b/d
Construction and engineering activities for Saudi Aramco’s Marjan and Berri offshore crude oil increments continue, according to the company, which expects them to add 300,000 b/d and 250,000 b/d of production, respectively, by 2025. Aramco in 2019 awarded 34 contracts for engineering, procurement, and construction work on expansion of the two fields (OGJ Online, July 9, 2019).
Construction is also continuing on the Dammam development project, which is expected to add 25,000 b/d by 2024 and 50,000 b/d by 2027. The Zuluf oil field expansion is in its engineering phase and will include a new onshore central plant to process a total of 600,000 b/d of Arab Heavy from the offshore field 240 km north of Dhahran by 2026.
The Saudi government has mandated that Aramco increase maximum sustainable crude oil capacity to 13 million b/d by 2027. In 2022, Aramco’s average hydrocarbon production was 13.6 million boe/d, including 11.5 million b/d of total liquids.
Natural gas compression projects at Haradh and Hawiyah fields have begun commissioning, and full capacity is expected to be reached in 2023. Construction of the Hawiyah Unayzah gas reservoir storage, Saudi Arabia’s first underground natural gas storage project, is at an advanced stage and has commenced injection activities, Aramco said. The program is designed to provide up to 2 bcfd to the country’s domestic gas system by 2024.
Aramco also announced its final investment decision (FID) to participate with Shandong Energy Group Co. Ltd. in the development of a major integrated refinery and petrochemical complex in Shandong Province, northeast China, to which it will supply 210,000 b/d of crude oil. The decision comes roughly 1 year after Aramco took FID on its joint-venture Huajin Aramco Petrochemical Co.’s 300,000-b/d refining and ethylene-based steam-cracking complex to be built in Panjin City, Liaoning Province (OGJ Online, Dec. 13, 2022).
In November, a joint development agreement was signed between Aramco and the Ministry of Energy to build what Aramco describes as one of the largest planned carbon capture and storage hubs in the world in Jubail, Saudi Arabia, with a storage capacity of up to 9 million tonnes/year of carbon dioxide by 2027.
Aramco had a record net income of $161.1 billion in 2022, compared with $110 billion in 2021.
Karoon achieves first oil from Patola field, offshore Brazil
Karoon Energy Ltd has achieved first oil from its PAT-2 development well in Patola oil field in its 100%-owned BM-S-40 production license offshore Brazil. PAT-2, one of two new production wells drilled into the field, was brought onstream at 12,000-14,000 b/d.
Production followed installation of a subsea flowline and umbilical to connect the well to the Cidade de Itajai floating production, storage and offloading (FPSO) vessel nearby. Production from the second well, PAT-1, is scheduled to be brought on stream by the end of March 2023.
Output from the two wells is expected to stabilize near 10,000-15,000 b/d which will take total production from the permit to more than 30,000 b/d before the onset of natural decline.
Karoon said that, depending on the reservoir and aquifer response, one of these two wells may be switched to water injection in the future. Any associated gas production from Patola will be reinjected into the nearby Bauna field via the SPS-89 gas-injection well.
Petrobras discovered Patola in 2011, encountering 38° API oil in the same Oligocene turbidite sandstones found in Bauna and Piracaba fields. Patola is in 280m of water.
Due to better reservoir quality than expected at both PAT-1 and PAT-2, Karoon has upgraded its proven and probable (2P) reserves for the field to 16.4 million bbl.
Patola is Karoon’s first new field development in Brazil. The company bought the BM-S-40 assets from Petrobras in June 2021.
Aker BP starts production at Frosk
Aker BP started production at the Frosk field development in the Alvheim area of the North Sea
The field, an injectite sandstone reservoir in North Sea licenses PL340 and PL 869 about 25 km southwest of the Alvheim FPSO, will be developed via tieback to existing Bøyla and Alvheim subsea infrastructure. Production started only 18 months after the Plan for Development and Operation (PDO) was submitted (OGJ Online, Sept. 27, 2021).
Initial investment at Frosk was about $230 million. Recoverable reserves are estimated at about 10 MMboe.
Frosk is the first of three new subsea tie-back projects to the Alvheim FPSO, with Kobra East and Gekko planned to come onstream early 2024 and Tyrving expected onstream in 2025.
Aker BP is operator at Frosk (80%) with partner Vår Energi AS (20%).
Empire encounters strong gas flows in Beetaloo tests
Empire Energy Ltd., Sydney, encountered strong gas flows in a test program of two wells in permit EP187 in the Beetaloo subbasin of the Northern Territory. The work is progress toward a final investment decision (FID) for the planned pilot project.
The Carpentaria-3H horizontal well has been flow tested for 27 days and is currently shut in for fracture stimulation. Gas production of 2.3-5.7 MMcfd has been observed in the first month with an average flow of 2.6 MMcfd. Higher flow rates are probable once the well is reopened, the company said.
Carpentaria-2H was brought back online following a shut in and has sustained a gas flow rate of 3.24 MMcfd for 8 days (normalized rate of 3.5 MMcfd per 1,000 m). The test is over the 927-m fracture-stimulated horizontal section. Results are about 21% higher than the flow prior to shut-in with a lower decline rate, the company said.
Empire plans to continue testing Carpentaria-2H to develop an early production-type curve to be incorporated into the ongoing front-end engineering and design process. FID for a pilot project is expected later this year.
At the Carpentaria-4V vertical well, petrophysical data confirmed net pay in the Middle Velkerri B reservoir is 20% greater and 150 m deeper than at Carpentaria-2H/-3H. The results will be factored into an updated independent resource assessment that should be complete by end-March.
PROCESSING Quick Takes
China’s 2022 refinery activity down on domestic policy, geopolitics
In 2022, Chinese refineries processed less crude oil than in 2021, the first year-on-year decline since 2000. The reduction was the result of various factors, including mobility restrictions related to the COVID-19 pandemic and low petroleum product export quotas, according to the US Energy Information Administration (EIA).
Chinese refineries processed an average of 13.5 million b/d of crude oil in 2022, down 4% from the record high of 14 million b/d set in 2021, according to China’s General Administration of Customs. The sharpest reduction in crude oil processing occurred between April and August 2022, when refiners in China processed an average of 12.5 million b/d.
Chinese refineries processed more crude oil at the beginning and end of 2022. In July, refiners processed the lowest volume of crude since January 2018 (11.3 million b/d). Refining in China hit an all-time monthly high of 15.1 million b/d in September 2022, then fell slightly before rising to more than 14 million b/d in November and December.
Demand for petroleum products in China declined in 2022 in response to COVID-19 outbreaks and related mobility restrictions in major cities, including Shanghai. These restrictions significantly slowed China’s economic activity.
Lower petroleum product export quotas also reduced refining activity in China last year. China sets fuel export quotas each year, allocating a fixed amount of exports to a select few refineries, most of them state-owned. China began issuing lower export quotas around second-half 2021, and the low export quotas continued through most of 2022. The quotas kept China’s petroleum product exports below 1.5 million b/d between July 2021 and August 2022, subduing refinery demand.
According to EIA, China’s crude oil processing hit a record high in September, most likely because refiners expected China to issue new petroleum product export quotas to promote economic growth, which it did on Sept. 30. China’s petroleum product exports also increased sharply in September, possibly because the expectation of new quotas prompted refiners to use up existing export quota allocations. Once new export quotas were in place, refinery activity rose significantly during the fourth quarter. The increase in China’s refinery activity at end-2022 was partially due to increased exports, which averaged 1.7 million b/d from September through December, up an average 600,000 b/d from the first 8 months of the year.
TRANSPORTATION Quick Takes
Freeport LNG Train 3 granted restart approval
Freeport LNG Development LP received regulatory approvals from the Federal Energy Regulatory Commission (FERC) and the Pipeline and Hazardous Materials Safety Administration (PHMSA) to restart Train 1 of its 15-million tonne/year (tpy) liquefaction plant on Quintana Island, Tex. The 5-million tpy train is the final of the three trains to receive restart authorization.
Trains 2 and 3 returned to full commercial operation in recent weeks, reaching production levels over 1.5 bcfd, the company said in a release Mar. 8.
As the recommissioning of the liquefaction plant continues and trains are restarted, changes in feed gas flows and production rates are to be anticipated given the duration of the plant’s outage, the company said. Operations at the site were originally halted following a June 2022 explosion.
A conservative ramp-up profile to establish full three-train production of LNG is anticipated to occur over the next few weeks.
Mountain Valley pipeline gets US FWS approval
The US Fish and Wildlife Service (FWS) has concluded that construction and operation of Equitrans Midstream Corp.’s 303-mile, 42-in. OD Mountain Valley natural gas pipeline (MVP) “is not likely to jeopardize the continued existence” of five particular species. The agency has reached this conclusion twice in the past, but in both instances had its findings overturned in the courts.
The species in question are the Virginia spiraea (plant), Indiana bat, Northern long-eared bat, Roanoke logperch (fish), and Candy darter (fish). FWS found that “individuals were not likely to experience reductions in reproductive success or survival likelihood,” meaning that “fitness consequences for the species rangewide” would also not be expected.
Following Federal Energy Regulatory Commission (FERC) approval and pending receipt of necessary permits, Mountain Valley is targeting the resumption of construction on the 2-bcfd pipeline in second-quarter 2023 and completing construction, including final right-of-way restoration, by end 2023. Equitrans last year received a 4-year extension from FERC—to Oct. 13, 2026—to put MVP in service.
As of December 2022, MVP had completed construction of 272 miles, with about 169 miles fully restored. An estimated 56% of the alignment is permanently restored and the remaining 44% is temporarily stabilized.
MVP will cross 17 counties within West Virginia and Virginia, beginning at an interconnection with Equitrans’ existing H-302 pipeline at the Mobley interconnect and tap in Wetzel County, W. Va., and running to Transcontinental Gas Pipeline Co.’s existing Compressor Station 165 in Pittsylvania County, Va. Additional components include three new compressor stations, four meter and regulation stations (i.e., interconnects), three taps, eight pig launchers and receivers at five locations, 36 new mainline valves, and 31 cathodic protection beds.
Gaz-System holding open season for FSRU near Gdansk
Polish-state OGP Gaz-System SA is holding a second open season to gauge interest in a new 6.1-billion cu m/year (bcmy) floating storage and regasification unit (FSRU)-based LNG terminal near Gdan´sk. The company anticipates the new non-binding open season, combined with an initial one held in 2021, will show roughly 4.5 bcmy of initial demand.
The FSRU’s startup design capacity will be guided by market response to the open season, but Gaz-System says the terminal would be expandable depending on future both domestic and regional natural gas demand. The company intends to assess market interest both in additional regasification capacity and in exporting regasified LNG to Slovakia, Lithuania, Denmark, Germany, the Czech Republic, and Ukraine.
The current open season closes Mar. 20, 2023.
Gaz-System has built more than 2,000 km of new gas transmission pipelines in recent years, and implemented projects it describes as aimed at diversifying gas supply sources and improving energy security, including three pipeline interconnections launched in 2022: with Lithuania, Slovakia, and Denmark. The company says it is holding talks with the Czech Republic and Ukraine regarding implementation of new cross-border interconnections.
Venture Global sanctions Plaquemines LNG Phase 2
Venture Global LNG Inc. has taken final investment decision (FID) on Phase 2 of its 20-million tonne/year (tpy) Plaquemines LNG plant in Plaquemines Parish, La. Accordingly, the company also issued a full notice to continue with Phase 2 construction to contractors KZJV LLC, a joint venture of Zachary Group and KBR Inc.
Plaquemines LNG has received all necessary permits, including US Federal Energy Regulatory Commission authorization and non-Free Trade Agreement export authorization from the Department of Energy. Plaquemines LNG Phase 2 customers include ExxonMobil Corp., Chevron Corp., Energie Baden-Württemberg AG (EnBW), New Fortress Energy Inc., China Gas Hongda Energy Trading Co. Ltd., Petroliam Nasional Berhad (Petronas), and Excelerate Energy Inc. (OGJ Online, Feb. 28, 2023).
The project has also successfully closed its full $7.8 billion financing. The two phases combined will cost $21 billion. Venture Global took FID on Phase 1 last year (OGJ Online, May 25, 2022).
Marketing is actively underway for production from Venture Global’s third plant, the 24-million tpy CP2 LNG in Cameron Parish, La., and sales agreements have been signed with ExxonMobil, Chevron, EnBW, Inpex Corp., China Gas, and New Fortress (OGJ Online, Feb. 24, 2023).
Qilak LNG planning 4-million tpy North Slope plant
Qilak LNG, owned by Lloyds Energy Ltd., plans to build a 4-million tonne/year near-shore LNG plant off Alaska’s North Slope. Additional capacity could be brought online in future phases.
The company will use a shipyard-built gravity-based structure to be connected to shore via a 6-mile pipeline. It says the plant would load 3-5 icebreaking LNG carriers per month for shipment to Asia.
Qilak says it has signed heads of agreement with ExxonMobil Corp., operator of 8-tcf Point Thomson reservoir and that “ExxonMobil continues to evaluate [plant] modifications and development activities necessary to support major gas sales agreements with Qilak LNG.”
Former Lt. Governor of Alaska, Mead Treadwell, is Qilak’s chairman and chief executive officer.