GENERAL INTEREST Quick Takes
Ring Energy to expand core Permian basin position through $75-million deal
Ring Energy Inc. will expand its operations in the southern portion of the Central Basin Platform (CBP) through a $75-million cash deal with Founders Oil & Gas IV LLC.
Founders’ CBP operations lie in the Permian basin in Ector County, Tex., and are focused on the development of about 3,600 net acres similar to Ring’s CBP assets acquired in 2022 from Stronghold Energy Operating II LLC, Ring said in a release July 11.
Production from the assets in this year’s second quarter was about 2,500 net boe/d (86% oil). Total proved SEC yearend 2022 reserves as calculated by Ring management are 9.2 MMboe (80% oil).
The low-risk inventory provides economic returns with potential upside from targeted downspacing, including about 50 low-cost, high rate-of-return undeveloped drilling locations, Ring said.
Ring has provided pro forma third- and fourth-quarter 2023 guidance to reflect the pending deal. Guidance also includes the impact of the recently completed sale of its Delaware basin assets during second-quarter 2023.
The operator is targeting total pro forma capital spending of $67-77 million this year’s second half. The development program includes a combination of drilling horizontal wells on legacy Ring acreage and vertical wells on the acquired Stronghold and Founders’ acreage, as well as performing recompletions.
The capital spending program also includes funds for targeted capital workovers, infrastructure upgrades, leasing costs, and non-operated drilling, completion, and capital workovers.
The deal to acquire the Founders’ acreage is expected to close in this year’s third quarter with an effective date of Apr. 1, 2023.
Ithaca Energy acquires remaining stake in UK North Sea Fotla discovery
Ithaca Energy signed a deal to acquire the remaining stake in the Fotla discovery, granting the company full control over pre-final investment decision work and timing.
The deal, struck with Spirit Energy Resources Ltd., includes the remaining 40% interest in the UK North Sea discovery in license P2373 plus three exploration licenses (P.213 Area C, P.345 Area A and P.2536), the operator said in a release July 12.
The Fotla discovery lies in Block 22/1b in 431 ft of water, about 10 km southwest of Ithaca-operated Alba oil field. It was discovered in August 2021 by the 22/1b-12 well and subsequently appraised by two side-tracks that also encountered hydrocarbons in the remobilized sands of the Eocene Caran formation, which also form the principal reservoir in Alba field, the company said in a fourth-quarter 2021 review (OGJ Online, Apr. 19, 2021).
A conceptual field development plan consists of a subsea tieback to existing infrastructure and is being evaluated. First production from Fotla is targeted for 2026.
While the transaction value was not disclosed, Ithaca said the deal consideration comprises two capped contingent payments divided as two thirds payment on final investment decision and a third on first production.
The deal is subject to satisfaction of certain conditions precedent including regulatory approval.
Sound Energy secures financing for Morocco gas development project
Sound Energy plc expects to advance the second development phase of the Tendrara production concession in Morocco having received a project financing offer of up to $237 million.
Loan proceeds are expected to be used for design, drilling, construction, and operation of wells, a treatment plant, and a gas pipeline to transport and sell natural gas, Sound Energy said in a release June 28.
The loan is subject to certain conditions being met by September 2023.
Sound Energy holds a 75% stake in the concession. Morocco’s National Bureau for Hydrocarbons and Minerals holds the remaining 25%.
Drilling & Production Quick Takes
TotalEnergies powers gas turbines ahead of Tyra restart
TotalEnergies has advanced the Danish North Sea Tyra redevelopment project with power up of two gas turbines at the field’s new processing module nearly 1 month ahead of schedule.
Once fully operational, Tyra natural gas field will deliver 2.8 billion cu m/year (bcmy) to Denmark and Europe through export pipelines to Nybro and Den Helder.
The two active gas turbines constitute the main means of power supply for the entire Tyra II hub including the surrounding fields, the operator said in a release July 6.
The platform is equipped with three turbines—two will run continuously, and one will be on standby. They will convert natural gas to mechanical energy enabling the production from the field. Each turbine has a power capacity of 35 Mw.
The next step for the turbines to be available for continuous operations is completion of installation of sea water lift pumps, said partner BlueNord in a separate release.
As part of the redevelopment, eight new platform topsides have been constructed onshore and were installed in the Danish North Sea. One of the new topsides is the riser platform Tyra East Echo (TEE). In late June, teams completed installation of the connection spool at TEE, reestablishing the 30-in. OD pipeline connection between Tyra field and Denmark.
Tyra field is expected to resume production in December 2023.
Redevelopment of Tyra field includes three main elements: decommissioning and recycling of old platforms; recycling and extending the current platform legs on six of the platforms, which will have new topsides; a new process module and a new accommodation platform.
TotalEnergies is operator of Tyra field on behalf of DUC – a partnership of TotalEnergies (43.2%), BlueNord (36.8%), and Nordsøfonden (20%).
Aker BP receives approval for Skarv Satellite Project
Aker BP received approval from Norwegian Ministry of Petroleum and Energy (MPE) for three plans for development and operation (PDO) under the Skarv Satellite Project (SSP) in the Norwegian Sea.
The project is being launched 10 years after Skarv field startup. Development consist of gas and condensate discoveries Alve Nord (Aker BP, Wintershall DEA, and PGNiG), Idun Nord (Aker BP, Equinor, and Wintershall DEA), and Ørn (Aker BP, Equinor, and PGNiG).
Each comprises of a four-slot template and two wells tied back subsea to the Skarv FPSO in the northern part of the Norwegian Sea.
Total recoverable resources are estimated at about 120 MMboe, predominantly gas. Total investments are estimated at about NOK 17 billion. Startup is expected in third-quarter 2027.
Skarv currently produces about 22 MMcmd of gas and about 25,000 b/d condensate.
Operator Aker BP and license partners submitted the PDOs to the Ministry in December last year (OGJ Online Dec. 16, 2022).
OMV granted Berling project development approval
OMV (Norge) AS expects to begin drilling Berling field offshore Norway in third-quarter 2026 following approval of its development plan by the Norwegian Ministry of Petroleum and Energy.
The operator submitted the plan for development and operation (PDO) of the Berling gas and condensate discoveries—made in 2018—in December 2022.
The Berling production license (PL644) lies about 175 km from Kristiansund, in a mature oil and gas province with established infrastructure. The closest hub is Equinor-operated Åsgard B platform about 23 km to the southeast.
Three production wells will be drilled at Berling field in 2026, with expected first gas and condensate production in 2028. Estimated gross recoverable resources of 45 MMboe are expected.
OMV (Norge) AS is operator for the development and operations with 30% working interest. License partners are Equinor Energy AS (40%) and DNO Norge AS (30%).
Drilling & Production Quick Takes
TotalEnergies starts Absheron production in Caspian Sea
TotalEnergies and the State Oil Co. of the Republic of Azerbaijan (SOCAR) started production from first phase development of Absheron gas and condensate field in the Caspian Sea, about 100 km southeast of Baku in in water depths of around 500 m.
This first phase connects a subsea production well to a new gas processing platform linked to SOCAR’s existing infrastructure in Oil Rocks field. It has production capacity of 4 MMcmd of gas and 12,000 b/d of condensate. Gas will be sold on the domestic market in Azerbaijan.
The project is operated by the Joint Operating Co. of Absheron Petroleum (JOCAP). TotalEnergies and SOCAR both hold 50% interest in the project (OGJ Online, Nov. 21, 2016).
A gas discovery was made in 2011 by Total E&P Absheron, operator of the Absheron exploration, development, and production sharing agreement during the exploration phase. The Absheron ABX-2 well encountered more than 150 m of cumulated net gas pay within high quality sands on the northern flank of a major 270 sq-km structure.
Two NM counties account for 29% of Permian basin crude oil production
Horizontal wells in Lea and Eddy counties in southeastern New Mexico drove much of the recent growth in Permian basin crude oil output, according to the US Energy Information Administration (EIA).
Average crude oil output of 1.7 million b/d from horizontal wells in the counties accounted for 29% of all first-quarter 2023 crude oil production in the Permian, EIA said, citing Enverus data.
Permian crude oil output increased to 5.7 million b/d in March, the most recent month for which data are available, compared with an average of 5.3 million b/d in 2022, and 4.7 million b/d in 2021, EIA said. Roughly 60% of first-quarter 2023 total growth in the region is attributed to horizontal wells in Lea and Eddy, compared with 44% for the same period last year.
In 2022, natural gas production in the Permian basin hit an annual high, averaging 21.0 bcfd, mainly from associated natural gas produced from oil-directed drilling, EIA said. Associated natural gas production in Lea and Eddy counties has almost doubled since 2021, averaging 3.7 bcfd in January 2021 and increasing to 6.5 bcfd in March 2023. The two counties accounted for 28% of all natural gas production in the Permian basin in first-quarter 2023, EIA said.
Valeura temporarily suspends Wassana production
Valeura Energy Inc., Calgary, has suspended production operations at Wassana oil field, offshore Gulf of Thailand.
On July 6, the floating storage and offloading (FSO) vessel stationed at the field deviated from its intended position and struck the field’s catenary anchor leg mooring buoy. The company said no personnel were injured, no hydrocarbons were discharged, and there was no damage to the vessel or the buoy.
The operator has opted to suspend production operations at the field as a precautionary measure. The field had been producing about 2,400 b/d of oil, representing about 10% of Valeura’s aggregate net production. Production had been restarted by Valeura on Apr. 28, 2023 after being suspended by the previous operator in May 2020.
The operator is reviewing safety and operating practices on the third-party-operated FSO before restarting production. A timeframe was not provided.
Valeura holds a 100% operated interest in license G10/48 containing Wassana oil field, which is a collection of crude oil-bearing sandstone reservoir intervals of Miocene age. The field is estimated to contain 2P reserves of 6.1 million bbl of oil as of Dec. 31, 2022..
PROCESSING Quick Takes
Pinnacle adding new gas processing plant to Midland basin operations
Pinnacle Midstream II LLC is adding a second natural gas processing plant at the Dos Picos gas gathering system and processing complex in Midland County, Tex., as part of an expansion of the operator’s Midland basin operations.
Scheduled to reach startup and full commercial operation during 2024, the new 220-MMcfd Train II will increase Pinnacle’s overall gas processing capacity in Midland basin to more than 440 MMcfd, the operator said on July 11.
Train II will complement Pinnacle’s existing processing capabilities and high-pressure, large-diameter gathering and compression infrastructure that began operating during first-quarter 2021, the company said.
Pinnacle previously commissioned a 200-MMcfd Train I at Dos Picos during second-quarter 2022, according to Saulsbury Industries Inc., which delivered engineering, procurement, and construction on the project.
Alongside announcing the Train II project, Pinnacle also confirmed it will also expand its strategically located gathering and compression infrastructure throughout Midland, Martin, and Glasscock counties to accommodate anticipated future volumes already anchored by long-term acreage dedications with active private and public Permian operators.
Calumet provides operational update on Montana Renewables’ Great Falls plant
Calumet Specialty Products Partners LP subsidiary Montana Renewables LLC (MRL) has completed construction and achieved startup of a new renewable feedstock pretreatment unit (PTU) at the operator’s renewables manufacturing plant in Great Falls, Mont.
Equipped with proprietary technology from Applied Research Associates Inc. (ARA), MRL commissioned and ramped up the PTU during second-quarter 2023, Calumet said July 10.
The new 10,000 b/d PTU is ARA’s first ever commercial Hydrothermal Cleanup (HCU) PTU to enter operation, ARA said in a May 31 release.
Designed to ready the most challenging feedstocks for further conversion into renewable fuels, the HCU PTU equips MRL with increased capability to pretreat waste fat, oil, and grease feedstocks with near 100% yield of clean organic product, allowing the producer to access a wide array of low-carbon intensity feedstocks for its production of sustainable aviation fuel (SAF) and renewable diesel, the service provider said.
With startup of the HCU PTU, MRL has entered third-quarter 2023 running 12,500 b/d of renewable feedstock, with the feedstock mix currently consisting of 8,000 b/d untreated and 4,500 b/d treated safety stock as the operator rotates from clean to dirty inventory, Calumet said.
Full commissioning follows Calumet’s confirmation June 8 that MRL’s Great Falls renewable fuels production unit achieved full-design capacity, making the plant North America’s largest producer of SAF.
All of MRL’s current SAF production—which came online in April—is delivered to Shell Aviation, while about half of the plant’s renewable diesel production is currently sold into Canada, Calumet said July 10.
First announced in February 2021 and initially known as Calumet’s Great Falls renewable diesel project, MRL’s biorefinery involved reconfiguration of the CMRL refinery’s oversized 18,000-b/d mild hydrotreater—added in 2016 as part of an expansion project—to process a mix of renewable feedstocks sourced from local farms and ranches—including camelina, canola, mustard, and other non-soybean oils—to produce an array of low-carbon.
Alongside startup of MRL’s HCU PTU and fully operational Great Falls Plant, Calumet separately confirmed on July 10 that it continues to progress work on a proposed but yet-to-be-approved expansion on which engineering has started that would, during 2024-25, enable the Great Falls biorefinery to expand SAF production at the site.
Known as MaxSAF, the planned project would expand MRL’s plant capacity by 50% to 18,000 b/d and its production of SAF to potentially 230 million gal/year—or 15,000 b/sd—using a second reactor MRL “opportunistically” acquired previously.
Calumet also said MRL completed startup of a renewable hydrogen plant that has allowed the Great Falls biorefinery’s production of renewable diesel to increase to about 12,000 b/sd from its previous 6,000 b/sd output.
Operator reveals cause Bandar Abbas refinery fire
Privately held Aftab Oil Refining Co. has identified the cause of a fire that broke out on July 10 at its more than 300,000-b/d refinery at Bandar Abbas in Persian Gulf Industrial City, Hormozgan Province, Iran (OGJ Online, July 10, 2023).
Unsafe operation of a truck transporting crude oil materials during a period of excessive traffic in the operational area of the refinery led to the fire, which subsequently spread to the manufacturing plant’s storage tanks, Aftab said in a release.
The operator confirmed the incident did not result in any casualties, and that—with the core of the fire quickly contained—“the situation returned to normal.”
Aftab did not reveal whether the fire damaged any processing or production units at the refinery, the second largest of Iran’s 11 refineries.
Located on 140 acres in southern Iran, the Bandar Abbas refinery—which processes crude oil and condensate feedstock it receives from South Pars field—was slated to reach a production capacity for finished products of 33,000 b/d during first-half 2023 following completion of unidentified expansion works, Aftab said in October 2022.
Vertex begins sales of renewable diesel from Alabama renewables plant
Vertex Energy Inc. has started commercial sales of renewable diesel from the recently completed first phase of its renewable diesel conversion project at subsidiary Vertex Refining Alabama LLC’s 75,000-b/d refining and petrochemical complex in Mobile, Ala.
In late June, Vertex Refining Alabama sold its first batch of about 110, 000 bbl of renewable diesel from the Mobile plant to Idemitsu Apollo Renewable Corp., the California-based subsidiary of Japan’s Idemitsu Kosan Co. Ltd., Vertex said.
The transaction follows a February 2022 master offtake agreement with Vertex under which Idemitsu Apollo Renewable committed to purchasing all of the Mobile refinery’s renewable diesel production up to a maximum volume of 14,000 b/d.
Vertex also said it expected renewable diesel production volumes from the plant would increase as projected to about 8,000 b/d during third-quarter 2023 from a previous output rate of 7,700 b/d.
With a planned production capacity of 8,000-10,000 b/d, the first $115-million phase of the plant—which involved the conversion of a standalone hydrocracking unit at the refinery—produces renewable diesel from a primary feedstock of locally sourced soybean oil.
The plant’s full design will enable production of renewable diesel from a range of organic, pretreated feedstocks that also includes corn oil, meat tallow, and waste vegetable oils, among others, much of which Vertex plans to secure locally.
Currently under way, a second phase of the project involves the addition of a new hydrogen plant to expand renewable diesel production to 14,000 b/d.
Slated for mechanical completion by yearend 2023, Phase 2 is due to ramp up to full production capacity by early 2024.
TRANSPORTATION Quick Takes
TotalEnergies starts Fenix pipelay work
TotalEnergies SE subsidiary Total Austral SA started installing two 35-km pipelines to transport natural gas to shore from Fénix field in the Argentine Sea. The campaign was initiated near Vega Pléyade platform in Tierra del Fuego.
Saipem SPA and Total Austral used offshore support vessel Normand Commander to install the project’s first pipeline sleeper June 27 near the platform. Concrete sleepers ensure stability of the pipelines on sandy seabed.
Total Austral said it expects to complete installation of eight remaining sleepers from the Port of Punta Quilla in early July.
Total Austral and Saipem will also install the two subsea lines: a 4-in OD line using pipe manufactured in Argentina, and a 24-in OD line, with pipe manufactured in Greece.
In August, subsea pipelay work to connect a new production platform to the Vega Pléyade platform will begin. Work will be carried out by pipelay vessel Saipem Castorone.
The $700-million Fénix project is expected to produce 10 MMcmd of gas to be used in Argentina.
Ksi Lisims LNG advances with FEED contract
The Nisga’a Nation, Rockies LNG Partners LP, and Western LNG let a front-end engineering design (FEED) contract to Black & Veatch, in collaboration with Samsung Heavy Industries (SHI) of South Korea, for the Ksi Lisims LNG nearshore floating production plant in northwest Canada.
Ksi Lisims will be hosted by the Nisga’a Nation on their wholly-owned treaty land at Wil Milit on the northern tip of Pearse Island near the Nisga’a village of Gingolx, BC. The initial project description for the proposed floating 12-million tonnes/year plant was filed in July 2021 (OGJ Online, July 20, 2021). Commercial operations are expected to begin in 2028.
Project partners expect Ksi Lisims to provide global markets with low-carbon LNG to help meet growing energy needs and reduce the need for base-load coal plant construction. The plant will use hydropower generated in British Columbia and potentially carbon capture and storage, as well as other mechanisms such as carbon offsets and efficiency monitoring. The project’s greenhouse gas emissions are expected to be 90% lower than conventional LNG plants.
QatarEnergy signs 10-year condensate supply agreement with ENOC Group
QatarEnergy signed a long-term condensate supply agreement with ENOC Group, Dubai.
The 10-year sale agreement stipulates supply of up to 120 million bbl of condensates to beginning in July 2023. Terms of the agreement allow the parties to increase condensate volumes, as additional volume is expected to be exported from Qatar once North Field East (NFE) and North Field South (NFS) expansion projects come online.
