GENERAL INTEREST Quick Takes
TC Energy sells 40% equity in Columbia Gas, Columbia Gulf
TC Energy Corp., Calgary, has entered into an agreement whereby Global Infrastructure Partners will acquire a 40% interest in Columbia Gas Transmission LLC and Columbia Gulf Transmission LLC for $3.9 billion.
Columbia Gas and Columbia Gulf will be held in a new joint venture partnership. TC Energy will continue to operate the systems. The parties will jointly invest in annual maintenance, modernization, and sanctioned growth capital to further enhance system capacity and reliability, the operator said in a release July 24.
GIP will fund its 40% share of gross capital expenditures, which are expected to average more than $1 billion annually over the next 3 years.
The Columbia Gas and Columbia Gulf pipelines span more than 15,000 miles across North America. TC Energy acquired the assets in 2016.
The Columbia Gas Transmission system extends from New York state to the Midwest and Southeast. The network includes 11,899 miles (18,768 km) of pipeline and about 630 bcf of natural gas storage. The Columbia Gulf Pipeline stretches across 3,367 miles (5,419 km) and connects to virtually every major pipeline in the US Gulf Coast and to additional Midwestern lines.
In connection with the transaction, Columbia Pipeline Group Inc. (CPG) will contribute all of its equity interests in its wholly owned subsidiaries, Columbia Gas and Columbia Gulf, to a newly formed wholly owned entity, Columbia Pipelines Operating Co. LLC (CPOC), which will be directly held by a newly formed wholly owned entity, Columbia Pipelines Holding Co. LLC (CPHC). CPHC represents the entity through which TC Energy and GIP will each hold their equity interest.
The transaction is expected to close in this year’s fourth quarter, subject to customary closing conditions.
Chevron increases Permian basin production 11% y-o-y
Chevron Corp. increased its Permian basin production 11% year-over-year to 772,000 boe/d in this year’s second quarter. The operator updated investors on its Permian basin production—a new quarterly record—as well as another upstream asset, the affiliate TengizChevroil LLP (TCO), in an earnings preview July 24.
Early 2023 Permian well performance in company-operated assets is on track with full year guidance, the company continued. In April, the company said it was allocating more than $4 billion to its Permian basin development.
The TCO project in Kazakhstan remains on schedule, on budget, and major projects are 98% complete with about 66% progress on pre-startup commissioning activities, Chevron said.
TCO’s expansion, the integrated Future Growth Project-Wellhead Pressure Management Project (FGP-WPMP), is designed to increase crude oil production from Tengiz by 260,000 b/d. The FGP will use sour gas injection technology, developed during TCO’s previous expansion in 2008, to increase daily crude oil production while the WPMP will extend the field’s production plateau and keep existing plants producing at full capacity.
Estimated oil in place in Tengiz field is 25.5 billion bbl, with 1.6 billion bbl in Korolev field. Total recoverable crude oil between the two fields is estimated at 7.1-10.9 billion bbl.
Chevron holds 50% interest in TCO. Partners are KazMunayGas, ExxonMobil Kazakhstan, and LukArco.
For the quarter, Chevron had earnings of $6 billion and adjusted earnings of $5.8 billion, driven by international upstream and US downstream.
The quarter’s earnings are down from first-quarter 2023 when the company reported earnings of $6.6 billion and adjusted earnings of $6.7 billion.
1PointFive signs oxygen supply contract for DAC plant
Occidental Petroleum Corp. subsidiary 1PointFive signed an oxygen supply contract with Nippon Sanso Holdings Corp.’s US operating company Matheson Tri-Gas Inc. for the carbon capture, utilization, and sequestration company’s first direct air capture (DAC) plant in Texas’ Permian basin.
Matheson will invest in and establish an air separation unit to supply oxygen to Stratos, the plant under construction in Ector County. The oxygen is used to produce a pure stream of CO2 which is then sequestered in geologic reservoirs, the service provider said.
Stratos is expected to begin operations in mid-2025 and capture up to 500,000 tonnes/year of CO2 when fully operational. The first stage of construction, which includes site preparation and road work, has begun. Stratos will be scalable to 1 million tpy if demand warrants.
The technology that 1PointFive will utilize is one developed by Carbon Engineering of Canada, which absorbs CO2 from the air using potassium hydroxide (KOH) solution.
The company has advanced product sales for the plant, including carbon removal credit purchases from Airbus, Shopify, and ThermoFisher.
Exploration & Development Quick Takes
Wellesley Petroleum discovers hydrocarbons offshore Norway
Wellesley Petroleum AS has discovered gas and condensate in the Carmen prospect in Norwegian North Sea license PL1148, partner DNO ASA said in a release July 10.
Preliminary evaluation of comprehensive data, including cores and fluid samples, acquired from the discovery well and a follow-on extended sidetrack indicates gross recoverable resources of 120-230 MMboe on a P90-P10 basis, DNO said. At the midpoint of 175 MMboe, the discovery is potentially the largest on the Norwegian Continental Shelf since 2013.
The two wells have established a deeper hydrocarbon-water contact, tripling the mid-point of DNO’s pre-drill expected range.
Carmen, a Middle to Lower Jurassic structural trap, was de-risked by Toppand and Røver Nord discoveries, and lies in the Troll-Gjøa area close to both Kvitebjørn and FANTA area development infrastructure.
Wellesley operates the license with 50% interest. Partners are DNO (30%), Equinor Energy AS (10%), and Aker BP ASA (10%).
Woodside increases Sangomar development cost, moves first-oil to 2024
Woodside has increased the total cost of its initial Sangomar development project and moved the date of expected first oil from the field offshore Senegal after identifying remedial work required on the project’s floating production, storage, and offloading (FPSO) vessel.
First oil for Sangomar Field Development Phase 1 has moved to mid-2024, the company said in a July 18 release. Production was previously expected to begin later this year.
Project costs have increased 7-13% to $4.9-5.2 billion from the previous estimate of $4.6 billion.
Safe completion of activities is the team’s priority, said Woodside chief executive officer Meg O’Neill, and conducting the unexpected remedial work at the shipyard in Singapore “minimizes the impact to the project schedule as it is safer, more efficient, and more cost effective” than undertaking the work offshore Senegal.
As of June 30, the overall project was 88% complete. The subsea installation campaign was 76% complete, with the subsea work scope 95% complete. Development drilling continues with 12 of 23 wells drilled and completed.
The Léopold Sédar Senghor FPSO is expected to have production capacity of about 100,000 b/d of crude oil. Construction is comprised of conversion of a very large crude carrier oil tanker and fabrication of the topsides, turret and mooring systems. Conversion and construction activities begin in first-half 2021 in China. The FPSO was moved in November 2022 to the Keppel Shipyard in Singapore to complete topside integration and commissioning.
Sangomar oil and gas field lies 100 km south of Dakar and will be Senegal’s first offshore oil development. The 400-sq km field lies in water depths of 700-1,400 m. First-phase development will target about 230 million bbl of oil.
Woodside operates the Sangomar exploitation development area with 82% interest. Petrosen holds the remaining 18%.
Drilling & Production Quick Takes
Norway production down in June, NPD says
Norway’s production averaged 1.990 million bbl in June, the Norwegian Petroleum Directorate (NPD) reported. The figure is down from the 1.991 million bbl produced in May.
Average daily liquids production in June consists of 1.810 million b/o, 173,000 bbl of NGL, and 8,000 bbl of condensate.
Oil production in June is 0.6% more than the NPD’s forecast and 0.5% lower than the forecast so far this year.
ConocoPhillips secures rig for Otway exploration
ConocoPhillips Australia issued a letter of award securing the Transocean Equinox rig to drill two firm wells in exploration Otway basin permits VIC/P79 and T/49P in Commonwealth waters offshore Victoria and King Island, Tasmania, partner 3D Oil Ltd. said in a release July 12.
ConocoPhillips prepared an environmental plan that proposes seabed surveys and drilling of up to six exploration wells in the permits. Drilling is dependent on regulatory approvals from the National Offshore Petroleum Safety and Environmental Management Authority, which will receive the plan this year. The latest finish date for the proposed exploration drilling campaign is Dec. 31, 2028.
The award has an option for an additional 120 drilling days.
ConocoPhillips Australia is operator of the permits with 80% interest. 3D Oil holds the remaining 20%.
Novatek increases quarterly hydrocarbon production 1.5% y-o-y
PAO Novatek increased hydrocarbons production by 1.5% year-on-year (2.3 MMboe) to 158.9 MMboe in this year’s second quarter.
In a preliminary report July 12, the operator said production included 20.35 billion cu m (bcm) of natural gas, and 3.0 million tons of liquids (gas condensate and crude oil).
Hydrocarbon production for first-half 2023 totaled 321.9 MMboe, including 41.23 bcm of natural gas and 6.1 million tons of liquids—a total increase of 5.3 million boe, or 1.7% compared with first-half 2022.
In second-quarter 2023, preliminary total natural gas sales volumes, including volumes of LNG sold, aggregated 18.31 bcm—an increase of 7.7% compared with the corresponding volumes in second-quarter 2022. Natural gas volumes sold in the Russian Federation were 15.06 bcm—an increase of 1.8% compared with the prior year period, whereas LNG volumes sold on international markets amounted to 3.24 bcm, representing a growth of 47.3%, the operator said.
In second-quarter 2023 and first-half 2023, Novatek processed 3.3 and 6.8 million tons, respectively, of unstable gas condensate at the Purovsky processing plant, representing an increase in processed volumes of 5.5% and 3.8% compared with the corresponding periods in 2022.
In second-quarter 2023 and first-half 2023, the operator processed 1.7 and 3.4 million tons, respectively, of stable gas condensate at the Ust-Luga complex, which was 1.5% and 0.6% higher compared with the corresponding periods in 2022.
Preliminary data for the year’s second quarter show petroleum product sales volumes aggregated 1.8 million tons, including 1.1 million tons of naphtha, 0.3 million tons of jet fuel, and 0.4 million tons of fuel oil and gasoil. NOVATEK sold 0.6 million tons of crude oil and 0.7 million tons of stable gas condensate.
As of June 30, Novatek had 0.8 bcm of natural gas, including LNG, and 1.3 million tons of stable gas condensate and petroleum products in storage or transit and recognized as inventory, the operator continued.
PROCESSING Quick Takes
EPP commissions new gas processing plant in Midland basin
Enterprise Products Partners LP has started up a new cryogenic natural gas processing plant in Glassock County, Tex., in the Midland basin of the West Texas Permian basin.
With a nameplate capacity of 300 MMcfd, the newly operating Poseidon plant is also equipped to extract more than 40,000 b/d of NGLs, EPP said on July 18.
Startup of Poseidon—the operator’s sixth gas plant in the Midland basin—boosts EPP’s total gas processing and NGL extraction capacities within the basin to 1.3 bcfd and more than 185,000 b/d, respectively, the company said.
The Poseidon gas plant is one of several major growth projects by EPP scheduled to begin service and generate new sources of cash flow by yearend 2023 as part of an overall $3.8-billion investment.
During first-quarter 2024, EPP said it will commission the Leonidas gas plant—its seventh in the Midland basin—which is also supported by long-term acreage dedication agreements.
Currently under construction in Midland County, Tex., the Leonidas plant will also have a gas processing capacity of 300 MMcfd and NGL-extraction capacity of more than 40,000 b/d, according to the operator.
Both the Poseidon and Leonidas plants represent EPP’s expansion of assets the operator acquired under its purchase of Navitas Midstream Partners LLC in February 2022.
EPP also confirmed work remains under way on the expansion of its Mentone gas processing complex in Loving County, Tex., with the site’s Mentone II and Mentone III plants scheduled for startup in fourth-quarter 2023 and first-quarter 2024, respectively.
Once in operation, the Mentone II and Mentone III plants will increase EPP’s nameplate gas processing capacity at the complex by 600 MMcfd, as well as enable an incremental NGL-extraction capacity of 80,000 b/d.
When completed, EPP said the gas plants now under construction in the Midland and Delaware basins will lift the company’s total gas processing and NGL-extraction capacities across the Permian basin to 3.8 bcfd and more than 520,000 b/d, respectively.
Construction resumes on Corpus Christi PTA-PET plant
Corpus Christi Polymers LLC (CCP)—a partnership of Indorama Ventures PCL (IVL) subsidiary Indorama Ventures Corpus Christi Holdings LLC, Alpek SAB de CV subsidiary DAK Americas LLC, and Far Eastern New Century subsidiary APG Polytech USA Holdings—has resumed construction of its integrated purified terephthalic acid-polyethylene terephthalate (PTA-PET) plant in Corpus Christi, Tex.
CCP has enlisted Sarens USA Inc. to assist with lifting ultra-heavy loads during a 16-month construction period on site via its supply of a range of high-lifting capacity cranes to assist in plant assembly, the service provider said on July 19.
Construction on the PTA-PET plant—which remains scheduled for commissioning in 2025—officially restarted as planned in 2022 following a previous halt to development activities amid pandemic-related disruptions, Sarens said.
CCP’s plant will use a feedstock of paraxylene and monoethylene glycol to produce 1.1 million tonnes/year (tpy) and 1.3 million tpy of PET and PTA, respectively.
Upon startup, the plant is slated to become the world’s largest vertically integrated PTA-PET manufacturing site and will also produce its own industrial water via desalination, CCP said in 2022.
Production technologies to be implemented at the plant include the following:
- For solid-state PET, former M&G Chemicals’ Easy-Up PET technology, or horizontal continuous inclined reactor.
- For PET melt, an unspecified process technology from Koch Industries Inc. subsidiary Invista Performance Technologies.
- For PTA, Grupo Petrotemex SA de CV’s IntegRex PTA, a process that allows oxidation at milder conditions to reduce the plant’s overall consumption of raw materials, limit generation of by-product, and reduce the site’s environmental impact.
Formed in 2018, the CCP partnership purchased now-defunct M&G USA Corp.’s partially constructed PET-PTA plant, certain M&G intellectual property, and a desalination-boiler plant as part of a stated strategy to revive the project to meet rising global demand for polymers.
Sited in Port Corpus Christi, the CCP PET-PTA plant sits on 410 acres along the port’s north bank of the Inner Harbor, within a couple of miles of refineries from which the plant is to receive its feedstock.
ADNOC, OMV discuss merging petrochemical businesses
Abu Dhabi National Oil Co. (ADNOC) and OMV Group have entered formal negotiations to potentially form a new jointly owned petrochemicals company via the proposed merger of the operators’ existing individual interests in their Borealis AG and Borouge PLC ventures.
If approved, the potential transaction would result in the combination of the Borealis and Borouge businesses under a jointly controlled entity to be held equally by the partners.
ADNOC and OMV confirmed negotiations are still preliminary and remain subject to a host of conditions.
Neither ADNOC nor OMV revealed a timeframe for when negotiations regarding the possible merger would conclude.
OMV holds a 75% majority interest in Borealis, with ADNOC holding the remaining 25% stake.
Following initial public offering of 10% of its total shared capital to global investors on the Abu Dhabi Securities Exchange in June 2022, Borouge—the strategic joint venture founded by Borealis and ADNOC in 1998—is now owned by ADNOC (54%) and OMV (36%), according to Borealis’ 2022 annual report to investors.
Borouge currently is undertaking a fourth expansion of its integrated 5-million tonne/year (tpy) polyolefins complex in Ruwais, UAE, with Borouge 4 LLC’s $6.2-billion construction of a more than 1.5-million tpy ethane cracker project that will also include addition of two polyethylene plants, as well as a 100,000-tpy cross-linked polyethylene plant, that together will produce 1.4 million tpy of polyethylene.
Construction on the Borouge 4 project broke ground in February 2022 alongside startup of the Ruwais complex’s fifth polypropylene plant (PP5), which is designed to produce 480,000 tpy of PP.
Bayport Polymers LLC (Baystar)—a 50-50 joint venture of Borealis and TotalEnergies SE—in 2022 also commissioned its 1-million tpy ethane steam cracker at TotalEnergies Petrochemical & Refining USA’s 200,000-b/d integrated refining complex in Port Arthur, Tex.
Operated by TotalEnergies, the nearly $2-billion cracker project supplies ethylene feedstock to Baystar’s existing 400,000-tpy polyethylene (PE) production site in Bayport, Tex. Ethylene produced by the cracker also will provide feedstock to a 625,000-tpy Borstar PE unit currently under construction in Pasadena, Tex.
TRANSPORTATION Quick Takes
CFE reaches 20-year gas supply agreement with Saguaro Energía LNG
Mexico’s state Comisión Federal de Electricidad (CFE) has agreed to supply Mexico Pacific Ltd. LLC with natural gas for 20 years as feed for its 14.1-million tonne/year (tpy) Saguaro Energía LNG plant under development in Puerto Libertad, Sonora. CFE International, the company’s trading division, will supply Mexico Pacific with roughly 40% of its required supply via gas delivered from the Permian basin through CFE’s pipelines in Mexico.
Saguaro Energía will use three 4.7-million tpy trains. Mexico Pacific says the combination of low-cost US gas and a 60% shorter shipping distance to Asia (vs. cargoes leaving the US Gulf Coast) will allow it to deliver the lowest landed price of LNG into Asia from North America.
“Mexico Pacific will position Mexico as the fourth largest LNG exporting country…,” commented Mexico Pacific chief executive officer Ivan Van der Walt. “We will make an investment of $14 billion in Mexico, the largest foreign direct investment into Mexico to date, creating over 13,000 direct and 21,000 indirect jobs, without using Mexican natural resources.”
Oneok Inc. is targeting an early second-half 2023 final investment decision (FID) on its 2.8-bcfd Saguaro Connector pipeline. The 155-mile, 48-in. OD pipeline would run from the Waha hub to a border crossing in Hudspeth County, Tex., connecting there with a new pipeline under development in Mexico for gas delivery to Saguaro Energia.
Mexico Pacific expects to start receiving gas in 2026 and is targeting first LNG exports in 2027. It has signed two 20-year sales agreements with ExxonMobil LNG Asia Pacific for a combined 2 million tpy. The company also has deals in place with Shell PLC for 3.7 million tpy and Guangzhou Development Group Inc. for 2 million tpy. Mexico Pacific said earlier this year that it had “reached a critical point on contract volumes required for FID” on its first two trains.
LNG Canada construction advances, project 85% complete
LNG Canada, Vancouver, has advanced construction of its 14-million tonne/year (tpy) liquefaction plant in Kitimat, BC, Canada.
With the arrival of the last module by ship from its fabrication yard in Zhuhai, China, Fluor Corp. has completed the module fabrication program. Fluor, with joint venture partner JGC Corp., is delivering multiple aspects of the project, including engineering, procurement, fabrication and delivery of modules, and construction of the project’s infrastructure and utilities, marine structures and LNG storage tank.
The first major module, measuring 145 ft tall and weighing more than 5,000 tons, was received in March 2022. A total of 215 modules of varying sizes have been received.
In a July 6 update, LNG Canada said construction of the project is about 85% complete, and that first shipment of LNG is on track for mid-decade. A timeline and scope for a second phase expansion are being evaluated, along with opportunities to advance electrification.
Shell Canada Energy owns 40% of LNG Canada. Partners are Petronas subsidiary North Montney LNG LP, PetroChina Canada Ltd., Mitsubishi Corp. subsidiary Diamond LNG Canada Ltd., and Kogas Canada LNG Ltd. It is operated through LNG Canada Development Inc.