GENERAL INTEREST Quick Takes
Chevron, Sempra-backed US Gulf Coast hydrogen hub applies for DOE funding
HyVelocity Hub—a US Gulf Coast hydrogen hub being organized by Chevron Corp., Sempra Infrastructure, Ørsted AS, Air Liquide SA, GTI Energy, University of Texas at Austin, and The Center for Houston’s Future, among others—has applied for funding from the US Department of Energy’s (DOE) $8-billion regional clean hydrogen hubs program to rapidly scale clean hydrogen supply and demand along the Gulf Coast in Texas and southwest Louisiana.
The US Congress, in 2021’s Infrastructure Investment and Jobs Act, authorized a program of regional clean hydrogen hubs, appropriating the funding for DOE to make awards to support at least four demonstration projects involving networks of clean hydrogen producers and consumers and the connecting infrastructure (OGJ Online, Dec. 5, 2022).
The Gulf Coast is well situated for a clean hydrogen hub, according to HyVelocity, as it already contains the world’s largest concentration of existing hydrogen production, customers, and energy infrastructure, with a network of 48 hydrogen production plants and more than 1,000 miles of dedicated hydrogen pipelines.
HyVelocity’s plans will accelerate DOE’s clean hydrogen policy goals, including its Hydrogen Shot, which seeks to decrease carbon emissions to not more than 2 kg of carbon per 1 kg of hydrogen produced, and reduce the cost of clean hydrogen by 80% to $1 per 1 kg in 1 decade. The hub has additional support from more than 90 commercial, academic, nonprofit, and government supporters.
The HyVelocity team has collaborated with several regional hub teams to facilitate an interconnected, national framework for hydrogen production and end use. HyVelocity continues to discuss potential projects and new partnerships in Texas and the Gulf Coast region.
Petronas signs farmout for Samarang field
Petronas Carigali Sdn Bhd (PCSB) has agreed to farmout a 50% non-operated participating interest in the Samarang production sharing contract to SMJ Sdn Bhd (SMJSB), a company wholly owned by the State Government of Sabah, Malaysia.
Samarang field, about 50 km off the coast of Sabah, is currently producing about 36,000 boe/d. The gas, at 134 MMscfd, is part of the supply for customers in Kota Kinabalu and Labuan.
Under the agreement, PCSB will continue as operator of the Samarang PSC.
The agreement follows a commercial collaboration agreement signed between Petronas and the State Government of Sabah in December 2021 aimed at further enhancing collaboration in developing the oil and gas industry in Sabah.
bp joins Harbour Energy in Viking CCS development
Harbour Energy PLC has farmed out a 40% interest in the Viking CCS transportation and storage project to bp PLC.
The project, sited near the industrialized Humber region, has the potential to meet one third of the UK government’s target to capture and store up to 30 million tonnes/year (tpy) of CO2 by 2030.
The agreement follows the UK government’s recent decision to launch Track 2 of its CCS cluster sequencing process to establish two new clusters for further development of CCUS in the area, and recognition that the Viking CCS project is one of two transport and storage system contenders for the process, the companies said in a release Apr. 11.
Harbour and bp share an interest in the 120 km, 36-in OD Lincolnshire Offshore Gas Gathering System (LOGGS) pipeline which will be repurposed and lengthened by 20 km to connect to depleted Viking gas fields which have 300 million tonnes of CO2 storage capacity independently verified. The pipeline is expected to provide transportation capacity up to 30 million tpy.
Viking CCS also has access to a planned new CO2 shipping terminal at Associated British Ports’ Port of Immingham, with potential for shipped CO2 from dispersed emitters elsewhere in the UK and internationally to be transported for permanent storage within Viking fields (OGJ Online, Nov. 30, 2022).
Subject to the outcome of the Track 2 cluster sequencing process, a final investment decision (FID) on the Viking CCS project is expected in 2024. The project could be operational as early as 2027, potentially storing up to 10 million tpy of CO2 by 2030.
Under the terms of the agreement, Harbour continues as operator of Viking CCS with a 60% interest, with bp acquiring a 40% non-operated share.
Exploration & Development Quick Takes
Invictus to explore eastern Cabora Bassa basin in Zimbabwe
Invictus Energy Ltd. is preparing for an appraisal and exploration campaign in Zimbabwe’s Cabora Bassa basin. Preparations for Mukuyu-2 appraisal and the Phase 2 exploration campaign are under way, with a 2D seismic campaign expected to begin in May, the company said in a release.
The seismic acquisition program, pending contract award, will cover the eastern portion of EPO 1848 and 1849. The campaign will be aimed at maturing multiple leads (Mopane, Musuma, Machabel, and Mahogany) along the proven play on trend to the east of Mukuyu and additional leads along the highly prospective Basin Margin play (Mimosa and Mukwa), the company said. Modern 2D seismic should mature a number of leads, previously identified on reprocessed vintage seismic data, to drillable prospects, Invictus continued.
The first well in the Mukuyu appraisal program, Mukuyu-2, will be spudded early in third-quarter 2023, targeting multiple hydrocarbon (gas-condensate, light oil) bearing intervals encountered in the Mukuyu-1/ST1 well in the Upper Angwa and Pebbly Arkose formations, with the aim of confirming a gas condensate discovery. It will also test the Post Dande horizon away from the major east-west fault on the southern flank and the deeper potential in the remaining Upper Angwa formation, which was not encountered in the Mukuyu-1/ST1 campaign as it was thicker than pre-drill estimates.
The Mukuyu-1/ST1 well encountered gas pay to total depth, interpreted from wireline logs and fluorescence in multiple reservoirs throughout the 1,500-m interval penetrated in the Pebbly Arkose and Upper Angwa.
Invictus Energy is operator at Cabora Bassa with 80% interest.
Indonesia tenders three exploration blocks
Indonesia’s Ministry of Energy and Mineral Resources is requesting bids for exploration and development of three oil and gas exploration blocks. The blocks, part of the first phase of bid rounds for the year, hold estimated resources of 2.5 billion bbl of oil and 9 tcf of gas.
Akia lies off the coast of North Kalimantan with an estimated resource of 2 billion bbl of oil and 9 of tcf gas. It is adjacent to Tarakan, Bunyu, and Nunukan, which have proven hydrocarbon potential, the regulator said in a release Apr. 10.
Beluga lies off the coast of West Natuna with estimated resources of 360 million bbl of oil and 50 bcf of gas. It is close to South Natuna Sea Block B, Duyung, Natuna Sea Block A, Shrimp, and Snapper.
Bengara I is sited in the North Kalimantan Plain with an estimated resource of 90 MMboe. It is close to Simenggaris.
The Indonesian government awards oil and gas contract areas through bidding processes conducted twice a year in April and September.
Chevron extends Gulf of Thailand decommissioning contract
Chevron has extended the decommissioning contract let to InterMoor, a unit of Acteon’s Engineering, Moorings and Foundations Division, for work in the Gulf of Thailand, the service provider said in a release Apr. 10.
InterMoor completed Phase 1 decommissioning work for Chevron Thailand Exploration and Production Ltd. (CTEP) in 2021.
InterMoor’s scope of work after the extension includes project management, engineering, procurement, and offshore execution; disconnection and removal of pipelines; disconnection and removal of single point mooring and associated subsea infrastructure; and topside modifications work.
As in the first phase, InterMoor will use cutting tools provided by Claxton. Aquatic will provide subsea umbilicals, risers, and flowlines recovery equipment, and UTEC plans to provide the survey spread, the service provider said.
Drilling & Production Quick Takes
BW Energy produces first oil from Hibiscus-Ruche Phase I
BW Energy produced first oil from Hibiscus-Ruche Phase 1 in the Dussafu license offshore Gabon. Installation of the gas lift compressor is ongoing on the BW Adolo FPSO with focus on commissioning and start-up following first oil.
Production from the first well is in line with expectations and is currently producing about 6,000 b/d, the company said in early April.
The Phase 1 drilling campaign targets four Hibiscus Gamba and two Ruche Gamba wells which are expected to add about 30,000 b/d total oil production when all wells are completed in early 2024. The wells will be drilled by the Borr Norve jackup rig.
The DHIBM-3H well was drilled to a depth of 3,883 m into the Gamba sandstone reservoir on Hibiscus field (OGJ Online, April. 3, 2023). Drilling operations commenced at the start of the year following installation of the production infrastructure, risers, and pipelines. Oil produced at Hibiscus-Ruche is transported by pipeline to the BW Adolo FPSO for processing and storage before offloading to oil tankers.
BW Energy Gabon is operator of the Dussafu license (73.5%) with partners Panoro Energy (17.5%) and Gabon Oil Co. (9%).
Amplify Energy begins Beta field restart following pipeline repair
Amplify Energy Corp. is working to restart production from Beta crude oil field offshore California following approvals from federal regulatory agencies.
Production and pipeline operations at the field have been shut since a ship anchor struck and ruptured the company’s 16-in. OD subsea pipeline that extends 17.5 miles from a platform to an onshore pump station, metering, and tankage at the Port of Long Beach late in 2021, resulting in an oil spill (OGJ Online, Oct. 4, 2021).
Work to resume full operations includes filling the San Pedro Bay Pipeline with production, a process the company began in early April, and is expected to take about 2-3 weeks to complete, the company said.
Following the line fill process, the pipeline will be operated in accordance with restart procedures reviewed and approved by the Pipeline and Hazardous Materials Safety Administration (PHMSA), the company said.
Beta contained 12 million bbl of estimated proved net oil reserves as of yearend 2021, according to Amplify. The company had been producing roughly 24,000 boe/d from the field before the pipeline rupture.
In September 2022, Amplify entered a no-contest plea with the State of California to resolve all criminal matters stemming from the incident, during which the pipeline’s position shifted 105 ft. The segment in question was located 5 miles offshore in 160 ft of water (OGJ Online, Sept. 9, 2022).
In March, the company reached a settlement of claims against shipping firms associated with M/V Beijing and M/V Danit in connection with the anchor strikes by the containerships that damaged the pipeline. The settlement results in a net payment to Amplify of about $85 million.
Vital Energy increases full year production guidance
Vital Energy Inc., Tulsa, Okla., has increased its 2023 full year production guidance because of strong performance in first-quarter 2023 and the Apr. 3 closing of its acquisition of Driftwood Energy Operation LLC (OGJ Online, Feb. 14, 2023).
The company now expects full year production of 76,000-80,000 boe/d, up from previous guidance of 72,000-76,000 boe/d. Oil production of 36,300-39,300 b/d is expected for the year, up from previous guidance of 34,000-37,000 b/d.
The Permian basin-focused company’s first-quarter 2023 total production averaged 80,200 boe/d, above guidance of 72,500-76,500 boe/d, the company said. Oil production for the quarter averaged 38,300 b/d, above guidance of 33,000-36,000 b/d.
Production outperformance was primarily related to earlier than expected production from new completions, less than expected production downtime related to offset completions activity, and improved uptime of wells and production infrastructure from field-level process improvements, the company said.
Total incurred capital expenditures for the quarter were about $200 million, excluding non-budgeted acquisitions and leasehold expenditures, below company guidance of $210-230 million. Lower than expected investment levels were related to moderating inflationary pressures and a 1-week deferral of completions in February related to severe weather, the company said.
Baleine field FPSO sets sail
The Firenze floating production, storage, and offloading (FPSO) vessel has set sail from Dubai to Ivory Coast to start production for Eni SPA at Baleine field, the operator said in early April.
Baleine field is the largest hydrocarbon discovery in Ivory Coast, with an estimated oil in place of 2.5 billion bbl and 3.3 tcf of associated gas. Its development will be Africa’s first net-zero emission project (Scope 1 and 2), the operator said.
The FPSO, to be renamed Baleine after its arrival, has been refurbished and upgraded to treat up to 15,000 b/d of oil and about 25,000 cfd of associated gas.
Gas will be delivered to shore via a newly built export pipeline. Installation of the subsea production system and well completion campaign are under way for a production start by June 2023.
Eni’s phased development and fast track model has enabled the project’s scheduled production to begin less than 2 years from the Baleine 1X discovery well and 1½ years after the final investment decision (FID), Eni said.
The company is progressing the project’s second phase, forecasting production start by December 2024 after having taken FID in December 2022.
Baleine field extends over Blocks CI-101 and CI-802. Eni serves as operator with partner PetroCi Holding.
PROCESSING Quick Takes
Libya lets contract for grassroots refinery
Zallaf Libya Oil and Gas Co., a subsidiary of Libya’s state-owned National Oil Corp. (NOC), has let a contract to Honeywell UOP LLC to deliver front-end engineering and design (FEED) for the operator’s proposed 30,000-b/d South Refinery to be built in Aubari City, about 25 km east of Al Sharara oil field in southwestern Libya.
As part of the late-March FEED contract, Honeywell UOP will provide initial engineering works for the refinery’s planned units, including delivery of technology licensing for approved units, Zallaf and the NOC said in separate releases.
Following completion of this first phase of the proposed refinery’s development, Zallaf and the NOC said they will negotiate and award a second contract for engineering, procurement, construction, and commissioning (EPCC) works on the project to a potential contractor that must agree to allowing Honeywell UOP to supervise the installation process.
Details regarding specific units to be installed at the refinery have yet to be released.
Scheduled to be operable within 36 months, the South Refinery project will produce a mix of low-sulfur gasoline, diesel, jet fuel, fuel oil, as well as propane and butane, for Libya’s domestic transportation and industrial sectors, according to Zallaf’s website.
Alongside awarding of the FEED contract, the NOC also has engaged Honeywell UOP to evaluate and deliver recommendations for improving performance of Libya’s existing 120,000-b/d Zawia and 220,000-b/d Ras Lanuf refineries.
The proposed South Refinery project and improvements to existing Libyan refineries come as part of the NOC’s renewed focus on shoring up Libya’s in-country refining capacity to ensure self-sufficiency in fuel production to meet domestic demand and eliminate reliance on foreign imports, said Farhat Bengdara, chairman and chief executive officer of the NOC.
Investigation ongoing into explosion, fire at Pertamina’s Dumai refinery
Indonesia’s state-owned PT Pertamina is investigating the cause of an Apr. 4 explosion and ensuing fire in the compressor area of subsidiary PT Kilang Pertamina Internasional’s (PT KPI) 170,000-b/d refinery sited across two locations in Dumai and Sungai Pakning, Riau, Sumatra.
Preliminary results of the investigation indicate the blast and subsequent fire—which was extinguished within minutes of occurring—was caused by a hydrogen gas leak along a 6-in.-long pipeline in the refinery’s compressor area 212-C-2, the operator said in a series of releases.
Still under further investigation, the incident—which caused vibrations and loud bangs felt within a 1-km radius—impacted the residential area of Tanjung Palas Dumai, or what Pertamina refers to as the buffer zone.
Pertamina said unidentified repairs to the refinery were scheduled to be completed on Apr. 7, with repairs to nearby residential housing slated for completion by Apr. 17.
With ongoing data collection related to the active investigation still under way, Pertamina said it plans to conduct metallurgical laboratory testing on material samples taken from the pipeline to determine whether strength of the pipeline material currently in use remains suitable for service or needs to be replaced.
By May 2023, the operator said it will also carry out reinforcement works on unidentified surrounding equipment and installations, as well as conduct an unidentified review of the buffer zone in July 2023.
In the wake of the incident, Taufik Aditiyawarman, president and director of PT KPI, confirmed the Dumai refinery would continue to operate to ensure fuel supplies for the northern Sumatra region are maintained during the Ramadhan and Idul Fitri holidays.
“People do not need to worry about fuel suppl[y] shortages,” Aditiyawarman said.
A joint investigation into the incident by Pertamina, Indonesia’s Directorate General of Oil and Gas, and local police is scheduled to continue through April, the operator said.
Energy Transfer to boost Nederland ethane exports by 39.5%
Energy Transfer LP’s Orbit joint venture with Satellite Petrochemical USA Corp. expects a 39.5% increase in ethane loadings from its Nederland, Tex., terminal in 2023, targeting total shipments of 60 million bbl. The export terminal provides ethane to Satellite’s crackers in China.
Energy Transfer provides Satellite with about 150,000 b/d of ethane under long-term contract. Orbit includes a 1.2-million bbl ethane storage tank and 80,000 b/d of ethane refrigeration. Ethane is supplied via a 20-in. OD pipeline from Energy Transfer’s Mont Belvieu, Tex., fractionators.
The company is planning to bring its 150,000-b/d Frac VIII fractionator into operation third-quarter 2023, raising its total Mont Belvieu fractionation capacity to more than 1.15 million b/d.
Energy Transfer also expects to put its 200-MMcfd Bear cryogenic gas processing plant in Orla, Tex., into service second-quarter 2023. Its 200-MMcfd Grey Wolf started operations in December 2022 and the company said that “significant producer demand” was causing it to evaluate the necessity and timing of adding another Permian basin plant.
TRANSPORTATION Quick Takes
Tellurian inks $1 billion sale-leaseback LOI
Tellurian Inc. agreed to sell about 800 Louisiana acres on which it is building part of the Driftwood liquefaction complex.
In a filing with the Securities and Exchange Commission, Tellurian executives said they have signed a letter of intent with an unnamed New York-based firm to have the investor buy the land in Lake Charles, La., for $1 billion and then lease it back to Houston-based Tellurian for 40 years. The signing comes a little more than 6 months after company leaders dropped a plan to sell more than $1 billion in debt as they seek continued funding to construct the 27.6-million tonne/year (tpy) Driftwood LNG plant.
The deal with the New York investor calls for a capitalization rate of 8.75% as well as annual rent increases of 3% and calls for Tellurian to post a letter of credit for a year’s worth of rent.
The proposed deal also requires Driftwood’s investors to guarantee the master lease and calls for the company to line up contingent guarantors that the investment firm will approve. Both sides have agreed to work toward finalizing the sale-leaseback by mid-July.
Tellurian and its contractor, Bechtel, began construction on Driftwood’s first phase about a year ago. Last November, executive chairman Charif Souki said Tellurian had spent nearly $1 billion on the project to date and that on-site work had slowed to account for the company’s need to raise more capital.
If built to design, Driftwood could cost $25 billion, Tellurian said in its latest annual report, and cover about 1,200 acres with up to 20 liquefaction trains, three LNG storage tanks, and three marine berths.
Vopak to acquire 50% of Eemshaven LNG terminal, eyeing expansion
Royal Vopak NV and NV Nederlandse Gasunie have agreed in principle for Vopak to acquire 50% of EemsEnergyTerminal BV, in Eemshaven, the Netherlands. Gasunie put the 8-billion cu m/year (bcmy) floating LNG terminal into service Sept. 15, 2022, in response to gas supply insecurities and a desire to reduce dependence on Russian gas.
The partners are contemplating a capacity increase and are planning further development of the Eemshaven site to import green hydrogen. EemsEnergyTerminal uses two floating storage and regasification units (FSRU), one chartered from New Fortress Energy Inc. and the other from Exmar Group (OGJ Online, May 17, 2022).
Vopak and Gasunie are targeting completion of the transaction by Oct. 1, 2023, pending conditions, including approval from competition authorities.
The companies also held an open season to increase capacity at their 16-bcmy Gate terminal in Rotterdam by 4 bcmy. They would add a fourth storage tank to accommodate the additional capacity and plan to reach final investment decision by September 2023.
Vopak has decided to no longer pursue acquisition of a 49.99% share in the 8-bcmy Hong Kong LNG terminal it has been developing with Mitsui OSK Lines Ltd. The FSRU-based terminal is expected to start commercial operations later this year, but Vopak cited project delays as having reduced its attractiveness.
The company said it will remain involved in commissioning and will provide operational support as required.