GENERAL INTEREST Quick Takes
ExxonMobil acquires Denbury, streamlining CCS efforts
Exxon Mobil Corp. has entered into a definitive agreement to acquire Denbury Inc. The deal includes the largest owned and operated CO2 pipeline network in the US at 1,300 miles, including nearly 925 miles of CO2 pipelines in Louisiana, Texas, and Mississippi; one of the largest US markets for CO2 emissions and location of 10 onshore sequestration sites.
ExxonMobil said it expects transaction synergies to enable more than 100 million tonnes/year of emissions reductions. Denbury last month added two sequestration sites in Louisiana, bringing its total US potential storage capacity to about 2 billion tonnes (OGJ Online, June 27, 2023).
ExxonMobil’s acquisition of Denbury is an all-stock transaction valued at $4.9 billion, or $89.45/share based on ExxonMobil’s closing price on July 12, 2023. Under terms of the agreement, Denbury shareholders will receive 0.84 shares of ExxonMobil for each Denbury share.
“The deal means ExxonMobil can likely sidestep a potentially difficult process of building its own CO2 pipeline in service of its CCS ambitions, including the near-term desire to build out a blue hydrogen project at Baytown,” said investment bank TD Cowen. “Moreover, by controlling more of the value chain, ExxonMobil will most likely be able to capture additional credit value under the Inflation Reduction Act.”
ExxonMobil this year let contracts for its proposed greenfield low-carbon hydrogen production plant at its 561,000-b/d refining and petrochemical complex in Baytown, Tex.
In addition to Denbury’s carbon capture and storage assets, the deal includes Gulf Coast and Rocky Mountain oil and natural gas operations totaling more than 200 MMboe, with 47,000 boe/d production.
Jersey Oil & Gas receives extension for Verbier
Jersey Oil & Gas PLC (JOG) received approval from the North Sea Transition Authority for an extension to the second term of the P2170 Verbier license in the Greater Buchan Area (GBA) of the UK Central North Sea.
The second term has been extended by 3 years to Aug. 29, 2026, further to the recently announced extension of the P2498 Buchan license. The extension was requested to provide licensees time needed to prepare a field development plan for the Verbier discovery, as part of a phased GBA development plan.
The first phase of the GBA work program involves redevelopment of Buchan field, with production startup targeted for 2026.
Verbier is part of the GBA hub which consists of the Buchan oil discovery and the J2 and Glenn oil discoveries. In aggregate, Jersey estimates some 144 MMboe of gross recoverable resources can be commercially produced through the Buchan hub.
JOC is operator and holds 50% interest in Block P2170. On Apr. 7, JOG farmed out 50% interest in the GBA licenses to NEO Energy.
Exploration & Development Quick Takes
Deltic increases reserves at Pensacola North Sea prospect
Deltic Energy PLC increased its estimated oil and natural gas resources for the Pensacola discovery on license P2252 northwest of Breagh gas field in the Zechstein Reef play fairway, Southern North Sea.
The updated volumetric assessment was based on data collected from the 41/05a-2 well and lab testing. The discovery is now estimated to contain 342 MMboe P50 in-place gas and oil volumes (P90 to P10 range = 148-650 MMboe).
While the expected presence of oil in the south of the prospect represents highly material upside, the discovered gas volumes in the northern part of the Pensacola prospect are better constrained and therefore the gas is still likely to be the initial focus of near-term appraisal and development activity.
Based on preliminary reservoir engineering work completed by Deltic, a range of potential development scenarios have been assessed. Hydrocarbons could be exported via a new offshore installation and a pipeline to Teesside, UK.
Interpretation work by the JV team following the post-well analytical program reinforced the conclusion that thicker and better quality Hauptdolomite reservoir is present across the crest of the Pensacola Reef, which will be targeted in future appraisal and development drilling.
Hauptdolomite cores collected at the well have an average porosity of 18.8% with a maximum permeability of 40 md (average of 6 md), better than the reservoir quality initially estimated from wireline logs. Dynamic reservoir modeling by Deltic indicates that the reservoir quality encountered would support commercial flow rates from horizontal wells without requiring any improvement in reservoir quality up-dip.
Subject to JV and other regulatory approvals, drilling of an appraisal well on Pensacola is targeted for late 2024.
Shell PLC is operator of the license with 65% interest. Partners are Deltic (30%) and ONE-Dyas BV (5%).
Trinity discovers oil in Jacobin well sidetrack onshore Trinidad
Trinity Exploration & Production PLC found multiple oil-bearing sandstone reservoirs in the Lower Cruse section of the Jacobin well sidetrack onshore Trinidad.
The well spudded May 15, 2023, to test an extensive and lightly-drilled Miocene age deeper-turbidite play mapped across the southern onshore basin. It was drilled to 9,325 ft at which depth unexpected wellbore conditions prevented further progress, necessitating a sidetrack. The sidetrack is being drilled and the well will continue to drill to the planned depth of about 10,000 ft, expected to be achieved in 2 weeks.
During sidetracking, the well penetrated more than 2,000 ft into the Lower Cruse. Preliminary evaluation, using a combination of measurement while drilling (MWD) data (inclusive of MWD gamma ray) together with analysis of wellbore cuttings, point to at least three well-developed, oil-bearing sand intervals in the Lower Cruse.
Further data will be collected, including a full logging suite. The well has successfully intersected the Forest and Upper Cruse secondary targets, and analysis confirmed total net hydrocarbon pay of 228 ft across these targets.
Trinity holds 100% interest in the Palo Seco area sub-licenses.
Predator to test gas sands in Moroccan appraisal
Predator Oil & Gas Holdings PLC will perform rigless tests on multiple gas sands based on petrophysical analysis of log data from the MOU-4 well in the Guercif license onshore Morocco.
The well is part of Predator’s targeting of shallow (Tertiary) and deep (Triassic) gas. Wireline log analysis and reservoir characterization of the well show 64 m of likely gas sands, including some shallow sands that were not previously considered to be potential drilling targets, that will form the primary gas sand objectives in a rigless testing program.
The intervals of interest include 519-713 m TVD MD with 50 m of likely gas sands, including the M1 sands; 778-879 m TVD MD with 12 m of likely gas sands, including the Moulouya fan and Lower Fan; and 1,139-1,143 m TVD MD with 2 m of likely gas reservoir with 19.9% (maximum 20.6%) average porosity and 56% (maximum 73%) average gas saturation, including the top of the Jurassic carbonates.
The culmination of the Jurassic carbonate target lies 2.6 km southeast of the MOU-4 well and is significantly higher than found at the MOU-4 well. A positive rigless test result in this zone, therefore, would help to de-risk the larger Jurassic structural closure in respect to reservoir development and migration of gas. These were two of the most significant pre-drill exploration risks, the company said.
Predator is operator at Guercif (75%) with state oil company ONHYM holding the remaining 25%.
Drilling & Production Quick Takes
Tullow Oil starts JSE production offshore Ghana
Tullow Oil PLC has started production from the Jubilee South East (JSE) project offshore Ghana in the Gulf of Guinea’s Tano basin.
The first JSE production well has been brought onstream and a further two producers and one water injector are expected onstream this year to help sustain gross Jubilee production over 100,000 bo/d. Tullow and partners plan to maintain this increased level of production at Jubilee over the next few years through an ongoing infill drilling program. The partnership has identified multiple future drilling locations and is focused on high-grading the opportunities to further extend the Jubilee resource base’s plateau, the company said.
Tullow and partners have invested about $1 billion over the last 3 years on JSE to drill wells and install the infrastructure needed to bring previously undeveloped reserves to production.
The Jubilee Cretaceous turbidite reservoir straddles Deepwater Tano and West Cape Three Points licenses. Net production from Jubilee field in 2022 was 31,900 bo/d.
Tullow is operator of JSE (38.98%) with partners Kosmos Energy (38.61%), Ghana National Petroleum Corp. (19.69%), and Petro SA (2.72%).
ReconAfrica to drill additional wells in Kavango basin, Namibia
Reconnaissance Energy Africa Ltd. has received an Environmental Clearance Certificate (ECC) from the Office of the Environmental Commissioner, Ministry of Environment, Forestry and Tourism, covering the PEL 73 license over an area of about 6.3 million acres in Kavango basin, northeastern Namibia in the Kalahari Desert.
The ECC authorized ReconAfrica to begin drilling an additional 12 exploration and appraisal wells, to unrestricted depths, from July 4, 2023 to July 4, 2026. The primary objective of the drilling program is to establish commercial accumulations of oil or natural gas and natural gas liquids which were identified in the first three stratigraphic test wells.
The company plans to develop and prioritize its prospect inventory in third- and fourth-quarter 2023 to execute a multi-well drilling program targeting Damara Fold Belt and Karoo Rift basin primary plays, with initial focus on the Damara Fold Belt. This belt, initially identified southwest of Karoo Rift basin, consists of a prominent and clearly imaged series of Whaleback anticlines, which are often faulted, and have a consistent linear trend in a NW-to-SE direction.
ReconAfrica is operator of PEL 73 (90%) with Namibia’s state oil company NAMCOR holding the remaining 10%.
Invictus completes plans for Mukuyu-2, Cabora Bassa basin
Invictus Energy Ltd. has completed drilling plans for the Mukuyu-2 well in Cabora Bassa basin, Zimbabwe.
Selection of the Mukuyu-2 appraisal well location, refinement of the well trajectory, and drilling plans have been completed. The Mukuyu-2 well will be about 6.8 km northeast of Mukuyu-1 ST1 which had confirmed the presence of light oil, gas, and helium, de-risking drilling in the frontier Cabora Bassa basin.
Mukuyu-2 will be over a 400 m updip at the primary Triassic Upper Angwa formation target, providing the potential to prove up a material discovery upon success. Mukuyu-2 will be a near vertical well to provide optimal penetration of multiple targets including the Dande (Jurassic-Cretaceous), Forest, and Pebbly Arkose (both Triassic) formations within the Mukuyu anticline in the central horst structure. The well has a planned total depth of about 3,700 m which will also penetrate the untested Lower Angwa reservoirs.
Given the early-stage exploration of the hydrocarbon habitat in Cabora Bassa basin, a comprehensive formation evaluation program is planned which, in addition to formation pressure testing and fluid sampling, includes wireline logs, sidewall cores and a vertical seismic profile.
In the event of a successful appraisal result, the drilling program will suspend Mukuyu-2 for a future well test to confirm reservoir productivity.
Wellpad construction is progressing. The well is expected to spud in third-quarter 2023. Drilling and logging operations are expected to take 50-60 days.
Cabora Bassa basin lies onshore in the Zambezi Valley in Muzarabani, 300 km northeast of Harare. The 250,000-acre SG 4571 license is in the second exploration period which runs to June 2024. Prospective resources are 20 tcf of gas and 845 million bbl of condensate.
Invictus is operator with 80% interest.
PROCESSING Quick Takes
Angola’s Cabinda refinery secures funding to proceed
State-owned Sonangol EP and partner Gemcorp Holdings Ltd. received necessary funding to proceed with the previously announced plan to build a grassroots modular refinery on Angola’s Malembo plain, 30 km north of Cabinda.
On July 13, 2023, the proposed Cabinda oil refinery project received a $335-million project financing facility led by Africa Finance Corp. and African Export-Import Bank, as well as a consortium of lenders including the Industrial Development Corp. of South Africa, the Arab Bank for the Economic Development in Africa, and Banco de Fomento Angola, Gemcorp said in a release.
The funding covers and paves the way for construction of the first 30,000-b/d phase of the $473-million project, for which project sponsors Gemcorp (90%) and Sonangol (10%) have already provided $138 million of equity.
Gemcorp also confirmed it will proceed with the planned Cabinda refinery’s second phase, which will boost crude processing capacity another 30,000 b/d to 60,000 b/d. Completion of Phase 1 will satisfy about 10% of Angola’s total demand for refined oil products, increasing to 20% with Phase 2.
In an update on the project’s status, the Cabinda refinery project partners said that, to date, there have been 300,000 hours of training completed for upskilling of local employees, with 1 million injury-free hours worked on building activities.
Commencing initial construction in 2020, the Cabinda refinery’s first phase will include a crude distillation unit (CDU), desalinator, kerosine treating unit, and auxiliary infrastructure, as well as a conventional float anchoring system, pipelines, and a more than 1.2-million bbl storage terminal. Alongside another CDU, Phase 2 of the project will add units for catalytic reforming, hydrotreating, and catalytic cracking that will transform the site into a full-conversion refinery.
As of early 2023, Phase 1 construction—including work on the CDU, which will be Africa’s first not to burn gas during operation—had reached 30% completion, with initial test runs at the site slated for mid-December 2023.
The first private investment of its kind in Angola, the Cabinda refinery aligns with the Angolan government’s main strategic objectives of increasing domestic crude processing capacity for Angolan-produced oil to help reduce the country’s dependence on imports of refined products, encourage increased foreign investment, create employment opportunities for Angolans, and ensure long-term energy security, said Atanas Bostandjiev, Gemcorp’s chief executive officer.
IOC lets contract for new unit at Panipat refinery
Indian Oil Corp. Ltd. (IOC) has let a contract to thyssenkrupp AG’s thyssenkrupp Industrial Solutions (India) Private Ltd. (tkIS) to deliver engineering, procurement, and construction (EPC) services for a new unit to be installed at the operator’s 15-million tonne/year (tpy) integrated Panipat refining and chemical complex in Haryana, India, north of New Delhi.
As part of the lump-sum turnkey contract awarded in July, tkIS will provide residual process engineering, detailed engineering, project management, procurement, construction, and commissioning of a 60,000-tpy polybutadiene rubber (PBR) plant to be equipped with butadiene polymerization technology from an unidentified licensor, thyssenkrupp said in a release.
PBR produced by the new unit will be used in applications that include manufacturing of tires and additives.
The service provider valued the EPC contract at more than $100 million.
Award of the contract follows IOC’s notification to investors on Sept. 21, 2020, that the company would be increasing its focus on diversifying its businesses, which included entering new segments such as PBR, polyester filament yarn, polyester staple fiber, ammonium thiosulphate, and other materials.
Neither thyssenkrupp nor IOC have revealed a timeframe for commissioning of the proposed PBR plant.
Alongside supporting IOC’s ongoing program of establishing a more robust petrochemical presence, the planned PBR unit complements the operator’s ongoing project to increase crude processing capacity at the site by 10 million tpy to 25 million tpy.
The Panipat capacity expansion project—which includes installation of a polypropylene unit—would also increase production of petrochemicals and value-added specialty products to elevate margins and derisk IOC’s companywide exposure to its conventional fuel business via addition of new units at the integrated olefins and aromatics complex.
Budgeted at an estimated cost of 329.46-billion rupees, the Panipat capacity expansion remains scheduled for commissioning by September 2024.
TRANSPORTATION Quick Takes
Germany begins 2024 LNG regasification capacity allocation process
Deutsche Energy Terminal GMBH, responsible for operating and marketing the capacities of the four floating storage and regasification units (FSRU) on the German North Sea coast, is conducting a market survey to gauge regasification demand from the Brunsbüttel, Stade, Wilhelmshaven 1 and Wilhelmshaven 2 LNG terminals. Responses to the survey are due July 31, 2023, and will help shape proposals for 2024 capacity utilization to be determined via an October 2023 digital auction.
Planned capacities and the timing of their availability are:
- Brunsbüttel, 3.5-5 billion cu m/year (bcmy), April 2024.
- Stade, 6 bcmy, first-quarter 2024.
- Wilhelmshaven 1, 6 bcmy, April 2024.
- Wilhelmshaven 2, 4 bcmy, first-quarter 2024.
According to Germany’s LNG ordinance, offers will include both long-term (more than 1 year) and short-term options and are expected to be allocated in 175,000-cu m increments. Long-term capacity will be offered first. Duration of long-term bookings has yet to be defined and will be based on survey responses.
Offers will include terminal regasification capacity, the ability to book firm, freely allocatable capacities for send-out to the German grid, and marketing of the gas at the country’s virtual trading point. At Wilhelmshaven 1 and 2, 20% of offered capacity will include the possibility of booking dynamic allocatable capacity, allowing for injection of gas for intermediate storage at the Etzel underground site.
Last month INEOS Energy Trading chartered two 174,000-cu m newbuild LNG carriers from Mitsui OSK Lines to transport LNG to Germany from the US. The company has a contract in place for long-term regasification capacity at NV Nederlandse Gasunie subsidiary CS Gas North SA’s planned land-based 8-bcmy German LNG terminal in Brunsbüttel. The companies plan to complete construction in 2026. The 170,000-cu m FSRU Hoegh Gannet currently provides regasification.
Earlier this year Hanseatic Energy Hub GMBH commissioned a consortium led by Técnicas Reunidas SA to develop its 13.3-bcmy land-based LNG terminal at Stade, expected to enter service in 2027. The 174,000-cu m FSRU Transgas Force is currently stationed at the site.
Hoegh Esperanza (170,000-cu m) and Excelerate Excelsior (138,000-cu m) are stationed at Wilhelmshaven. Esperanza received its first cargo earlier in 2023. Excelerate last year chartered Excelsior to the German government for a 5-year term starting first-quarter 2023.
Tejas, Howard Energy launch 2-bcfd Eagle Ford gas system expansion
Kinder Morgan Tejas Pipeline LLC (Tejas), a subsidiary of Kinder Morgan Inc. and Howard Energy Partners (HEP), through its joint venture Dos Caminos LLC, have received sufficient binding commercial agreements for a 2-bcfd expansion of their respective Eagle Ford natural gas transportation systems. The projects are planned to be completed in fourth-quarter 2023 and will deliver to US Gulf Coast markets.
Tejas is building a 67 mile, 42-in. OD pipeline from the existing Kinder Morgan Texas Pipeline (KMTP) compressor station near Freer, Tex., to the Tejas pipeline system near Sinton, Tex. Dos Caminos is building a 62 mile, 36-in. OD pipeline—as well as compression, treating, and dehydration—starting near HEP’s existing infrastructure in Webb County, Tex., and running to the KMTP compressor station in Freer.
The expansion will cost $251 million.
Dos Caminos is a joint venture between HEP and an affiliate of Eagle Ford Midstream LP.
Qatargas awards subsea pipeline contract to McDermott
Qatargas Operating Co. Ltd. has awarded McDermott an engineering, procurement, construction, and installation contract for the operator’s North Field Production Sustainability (NFPS) Offshore Fuel Gas Pipeline and Subsea Cables Project (COMP1).
The contract includes installation of 118 miles (190 km) of 32-in. OD subsea pipeline, 11 miles of subsea composite cable, 116 miles of fiber optic cable, and 6 miles of onshore pipeline. The project will be managed and engineered entirely from McDermott’s Doha office with fabrication taking place at McDermott’s Qatar Fabrication Co. joint venture with Nakilat.
COMP1 is part of the NFPS offshore compression project involving installation of seven new compression complexes to sustain natural gas supply to Qatar’s LNG plants. Qatar plans to expand its LNG production to 126 million tonnes/year (tpy) by 2027 from 77 million tpy currently.
McDermott last year won the North Field expansion project contract, currently under execution.
The Qatargas award follows one mid-July from Sarawak Shell Berhad for offshore transportation, heavy lift, and pipelay at its F22, F27, and Selasih fields offshore Sarawak, East Malaysia. McDermott will perform transportation and installation services for two pipeline segments and one section of flexible pipelay. McDermott will also provide pre-commissioning works on all infield pipelines and structural installation of three jackets and topsides.
Offshore installation will be performed by McDermott’s DLV2000 heavy lift and pipelay vessel
