GENERAL INTEREST Quick Takes
W&T Offshore acquires Gulf of Mexico properties
W&T Offshore Inc. closed a deal Sept. 20 to acquire working interests in eight shallow water oil and gas producing assets in the central and eastern shelf region of the Gulf of Mexico from an undisclosed private seller for $32 million.
The assets include 30,646 gross acres (22,079 net acres), adding producing properties within W&T Offshore’s existing area of operations in water depths of 25-265 ft with an average working interest of about 72%, the company said in a release Sept. 21.
Estimated production as of Sept. 12, 2023, is about 2,400 boe/d (42% oil). About two-thirds of the production is operated. The acquisition adds proved reserves of 3.2 MMboe.
Shell farms out partial stake in Block 3 offshore Egypt
Shell plc subsidiary BG International Ltd. agreed to farm out a 40% interest in the North East El-Amriya offshore area (Block 3) in the Egyptian Mediterranean Sea to Kuwait Foreign Petroleum Exploration Co. (KUFPEC) subsidiary KUFPEC (Egypt) Ltd. (KEL).
Shell will remain as block operator, a position gained through its 100% acquisition of the asset from ExxonMobil in 2022 (OGJ Online, May 19, 2022).
The agreement is subject to government and regulatory approvals, without prejudice to pre-emption rights, KEL said in a release Sept. 20.
Khaled Kacem, Shell’s vice-president and country chair for Egypt, said the new partnership in the Nile Delta Block 3 will enable the companies to leverage their joint expertise to progress the opportunity.
In August, Shell Egypt and partners began drilling activities in the Nile Delta Blocks 3 and 4. The exploration project envisages three wells to be drilled consecutively.
Western Midstream to expand in Powder River basin
An operating subsidiary of Western Midstream Partners LP (WES) has agreed to acquire privately held Meritage Midstream Services II LLC, Denver, in an $885 million, all-cash deal that is expected to expand WES’s existing Powder River basin asset base and increase total natural gas processing capacity to 440 MMcfd.
Meritage owns and operates a large-scale natural gas gathering and processing business in the Powder River basin of Wyoming in Converse, Campbell, and Johnson counties, which include about 1,500 miles of high- and low-pressure natural gas gathering pipelines, about 380 MMcfd natural gas processing capacity, and the Thunder Creek NGL pipeline; a 120-mile, 38,000 b/d FERC-regulated NGL pipeline that connects to Meritage’s processing infrastructure.
Currently, Western Midstream operates the Hilight complex in northeast Wyoming, processing gas from coal-bed methane in the Powder River basin and producing fields in Johnson, Campbell, Natrona, and Converse counties. It also operates two complexes in southwest Wyoming—the Granger Complex, which processes gas from Moxa Arch and Jonah and Pinedale Anticline fields; and Red Desert, which processes natural gas and fractionates NGLs produced in the eastern Greater Green River Basin.
The Meritage assets are supported by more than 1.4 million dedicated acres with an average remaining contract life of about 8 years.
Exploration & Development Quick Takes
DNO considers North Sea gas condensate discovery a play-opener
Norwegian oil and gas operator DNO ASA made a gas condensate discovery on the Norma prospect in the Norwegian North Sea license PL984 that it considers a play-opener for the deep turbiditic sands in the area.
Within the license, the operator has identified additional exploration prospects that have been considerably de-risked by the Norma results, the company said in a release Sept. 19.
Plans are under way to further delineate the discovery and the upside potential in the license, but prior to further appraisal drilling, improved seismic imaging and remapping will be undertaken to identify an optimal location for the next well, the company said.
Preliminary evaluation of the discovery indicates gross recoverable resources of 25-130 MMboe on a P90-P10 basis, with a mean of 70 MMboe, in a Jurassic reservoir zone with high quality sandstones, the company said.
The discovery lies 20 km northwest of the Balder hub and 30 km south of the Alvheim hub near existing infrastructure in the central part of the North Sea, offering tie-back potential.
Drilled to a vertical depth of 4,800 m with the Deepsea Yantai drilling rig, Norma is DNO’s first operated high-pressure, high-temperature exploration well. At 4,650 m the discovery well encountered a 16-m hydrocarbon column in a 20-m gross reservoir section in Jurassic sandstones.
Several gas condensate samples were collected in the reservoir and a water sample was acquired. A bypass core of 33.7 m was secured, and an extensive data and sampling program conducted, DNO said.
DNO is operator of the license with 30% interest. Partners are Source Energy AS, Equinor Energy AS, Vår Energi ASA (20% each), and Aker BP ASA (10%).
Pampa Energía to begin developing Vaca Muerta shale oil
Argentine company Pampa Energía is set to invest $200 million to develop a pilot shale oil project in Vaca Muerta, the natural gas and electricity company’s first foray into the petroleum sector. The company acquired the entire Rincón de Aranda block in June 2023 through an asset swap with Total Energies SE.
Rincón de Aranda is part of the promising shale oil window of Vaca Muerta—near areas already under development such as Aguada Federal (Vista Energy SAB de CV) and Aguada del Chañar and La Amarga Chica (YPF SA)—and Pampa Energía plans to achieve a production plateau of 20,000 b/d.
The company will develop the 240-sq km block in phases, with Phase 1 expected to be completed in 2 years. Planning includes building two sets of four wells each, along with the necessary plants and infrastructure for processing and transportation.
Horacio Turri, executive director of exploration and production at Pampa, said the company will begin the pilot project in first-quarter 2024. The company’s chief executive officer, Gustavo Mariani, said the company aims to become a “significant player” in the oil sector.
The block was jointly owned by Pampa Energía (55%) and Total Energies SE (45%). In June, the companies agreed to an asset exchange through which Pampa acquired the entire area while the French company’s subsidiary received a wind farm.
Gazprom begins receiving equipment for Russian field development
Gazprom Neft-Zapolyarye LLC has begun receiving equipment manufactured by JSC Uralkhimmash for development of Bovanenkovskoye oil and gas condensate field in Russia, the service provider said in a release Sept. 18.
The Gazprom subsidiary contracted the chemical engineering plant to manufacture modular equipment at centers in Yekaterinburg and Glazov for three process lines of a low temperature condensation unit. Gazprom plans to treat and process gas produced at the field, the largest on the Yamal Peninsula by proven reserves, where the company estimates output could reach 140 billion cu m/year.
Each line of the unit includes heat exchange equipment, degassers, and separators.
Due to the equipment size, delivery is organized in parts, by water and land transport, said Roman Zaripov, director of project management at Uralkhimmash JSC.
Degassers and light gas separators, shipped by sea, have arrived at the construction site, he said. The first set of heat exchangers, separators, and heavy condensate separators are expected to ship soon. Most of the equipment will be sent in September, he said.
Marigold field to undergo joint development
Anasuria Hibiscus UK Ltd. (AHUK), Ithaca Oil and Gas Ltd., and Caldera Petroleum UK Ltd. have entered into a unitization and unit operating agreement (UUOA) to jointly develop Marigold field in the UK Central North Sea about 250 km northeast of Aberdeen in 140 m of water.
Marigold West and Marigold East fields will be combined to allow optimal field development.
An integrated project team led by AHUK, comprising AHUK personnel and Ithaca secondees will develop the Marigold Field Development Plan (FDP). FDP submission is targeted by early calendar year 2024.
AHUK holds 87.5% interest in license P198 Block 15/13a, which contains Marigold West field, with Caldera holding the remaining 12.5%. Ithaca holds 100% in license P2158 Block 15/18b, adjacent to Marigold West field and containing Marigold East field. Pursuant to the UUOA, the respective unit participations in the unitized Marigold field (Marigold West and Marigold East) will be AHUK (61.25%), Caldera (8.75%), and Ithaca (30.00%).
Sunflower field, in Block 15/13b and part of license P198, will be developed by AHUK and Caldera as a subsea tie-in to the Marigold project, and the FDP will be submitted separately from Marigold and does not form part of the UUOA. As per license P198 interests, AHUK holds 87.5% and is the operator of Sunflower field while Caldera holds 12.5%
Anasuria Hibiscus UK Ltd. is a wholly owned subsidiary of Hibiscus Petroleum Berhad, and Ithaca Oil and Gas Ltd. is a subsidiary of Ithaca Energy Ltd.
Evolution Petroleum, PEDEVCO to jointly develop Permian basin Chaveroo oil field
Evolution Petroleum Corp., Houston, and PEDEVCO Corp. agreed to jointly develop PEDEVCO’s Chaveroo oil field in the Northwest Shelf of southeastern New Mexico, a conventional oil-bearing San Andres field in the Permian basin in Chaves and Roosevelt counties, the companies said in a joint release Sept. 13.
Chaveroo field was originally developed with vertical wells on 40-acre spacing. PEDEVCO has drilled 10 horizontal infill wells on 20-acre spacing which yields most of the field’s current production, the companies said.
The agreement covers about 16,000 acres with average working interest and net revenue interest of 100% and 82%, respectively, all currently owned by PEDEVCO.
Evolution will farm-in for an average 50% working interest in future horizontal drilling locations on a block-by-block basis with PEDEVCO remaining as operator, the companies said.
Estimated original oil in place at Chaveroo field is about 700 million bbl with less than 5% recovered to date.
Drilling & Production Quick Takes
Strike Energy starts exporting gas from Walyering field
Strike Energy Ltd. has started exporting sales gas into the Parmelia gas pipeline from the Walyering gas field development onshore North Perth basin of Western Australia, said partner Talon Energy Ltd. in a Sept. 26 release.
Gas is being sold into the Santos Ltd. gas sales agreement under the commissioning provisions. Production ramp up toward nameplate capacity is ongoing, and firm gas sales are expected to begin in October.
Walyering wet gas field permit EP447 was originally deemed sub-commercial. Strike took over the permit and farmed-out a 45% non-operated interest to Talon in 2020 in exchange for a $6 million (Aus.) carry in a new appraisal well. The JV drilled a successful appraisal with Walyering-5 in December 2021 and followed up with a secondary gas find in Walyering-6 in May 2022.
Both wells were successfully flow tested and results used to design gas processing and condensate storage at the field.
Strike is operator with 55% interest. Talon Energy holds 45% interest.
YPF, CGC begin drilling at Argentina’s Palermo Aike
Argentina’s YPF SA and Compañía General de Combustibles SA (CGC) have started drilling the first exploration well, MAYPA x1, in the Palermo Aike unconventional formation in Argentine Patagonia. Palermo Aike, in Austral basin, is the second-largest reserve of unconventional hydrocarbons in Argentina following Vaca Muerta.
The drilling rig is sited in Fracción II-El Cerrito block—which is part of the unconventional concession owned by CGC, a unit of holding company Corporación América—situated 80 km from El Calafate, Argentina. In the event of positive results, YPF said in a statement, both companies will develop a portion of the formation, investing in additional wells and associated infrastructure.
With an area extending more than 12,600 sq km, Palermo Aike holds an estimated 10 billion boe, roughly one-third of the reserves found in Neuquén basin’s Vaca Muerta formation. Palermo Aike is geologically similar to Vaca Muerta, with parallel spatial extension, target depth (3,000-3,500 m), marine origin, and potential.
“Given the volume to be investigated, this exploratory project represents a strategic opportunity to expand the exploitation of unconventional resources to other regions of our country, leveraging the experience gained by YPF in Vaca Muerta,” the company said.
Hugo Eurnekian, CGC president, said the project is significant, “a milestone in the exploration of the Austral basin, which holds immense potential.”
MOL resumes production from Yumna field offshore Oman
Masirah Oil Ltd. (MOL) has resumed production from Yumna field, offshore Oman.
Production had been halted beginning Aug. 9, 2023, due to a confirmed leak on the flexible flowline from the mobile offshore production unit (MOPU) to the floating, storage and offloading unit (FSO).
A larger flowline has been installed and production resumed on Sept. 3, the company said in a release Sept. 11. Maintenance work on the MOPU, originally scheduled for November 2023, was carried out while production was stopped.
The company is currently executing gas-lift operations expected to increase production from the Yumna-3 well.
MOL is operator of Yumna field through 100% interest in Block 50.
PROCESSING Quick Takes
Louisiana approves permit for Strategic Biofuels’ renewable fuels project
The Louisiana Department of Environmental Quality (LDEQ) has issued a key permit to Strategic Biofuels LLC allowing the operator to proceed with development of subsidiary Louisiana Green Fuels LLC’s (LGF) proposed grassroots renewable fuels project to be built on a 171-acre tract of land at the port of Columbia, in Caldwell Parish, La., about 25 miles south of Monroe.
DEQ approved LGF’s application for an air permit—a first of its kind in the state—on Sept. 21 upon finding the project will not have an adverse impact on local air resources, Strategic Biofuels said.
Once operable, the project will include:
- A biorefinery capable of producing nearly 32 million gal/year of renewable fuel with a carbon intensity of -294 from a feedstock of wood waste made up of timber byproducts supplied by responsibly managed, sustainable plantation forests within Louisiana.
- A carbon capture and storage (CCS) complex that will be sited on and around the biorefinery.
- An adjacent bioenergy with CCS (BECCS) power plant able to generate more than 85 Mw of electric power.
State approval of the air permit follows Strategic Biofuels’ June contract award to SLB for provision of site derisking and front-end engineering and design (FEED) services—as well as future injection operations and long-term CO2 monitoring services—for the project’s CCS complex.
The LGF project is awaiting EPA approval of an application for a Class VI permit for CCS at the site.
Strategic Biofuels previously estimated LGF’s integrated biorefinery-CCS-BECCS project will have a combined offsetting of up to 1.36 million tonnes/year of CO2 emissions.
Based on its most recent timeline, Strategic Biofuels said it plans to reach mechanical completion of the LGF and BECCS plants in 2027.
bp to provide solar power to ExxonMobil-SABIC JV’s Texas olefins complex
Gulf Coast Growth Ventures LLC (GCGV)—a 50-50 joint venture of Saudi Arabian Basic Industries Corp. (SABIC) and ExxonMobil Corp.—has entered a deal to receive renewable power supplies for its Texas Gulf Coast ethane cracker and derivatives complex from bp PLC’s nearby Peacock solar project in San Patricio County, Tex., about 10 miles north of Corpus Christi.
Under construction as of Sept. 26, the 187-Mwdc Peacock solar project will supply all electricity it generates directly to GCGV’s petrochemical complex under a long-term power purchase agreement, bp said in a release.
The Peacock solar project is under development by bp’s 50-50 partner Lightsource bp Renewable Energy Investments Ltd. (LSbp)—which is also managing construction on behalf of bp.
Scheduled for startup in second-half 2024, the Peacock solar project will generate enough renewable energy annually to power the equivalent of 34,000 homes, and once at full capacity, will generate enough renewable power that could avoid more than 256,000 tonnes/year (tpy) of greenhouse gas emissions.
Commercially operating as of January 2022, GCGV’s complex includes its 1.8-million tpy ethane cracker, 1.1 million-tpy monoethylene glycol (MEG) unit, and two polyethylene units with combined capacity of 1.3 million tpy.
bp confirmed PCL Constructors Inc.—which serves as main engineering, procurement, and construction (EPC) contractor for the Peacock project—will install ultralow-carbon solar panels and trackers supplied by First Solar Inc. and GameChange Solar LLC, respectively.
TRANSPORTATION Quick Takes
FERC approves Port Arthur LNG Phase 2, other natural gas projects
Sempra Infrastructure has received US Federal Energy Regulatory Commission (FERC) authorization to proceed with its 13.5-million tonne/year (tpy) Port Arthur LNG Phase 2 expansion project in Jefferson County, Tex. The permit covers Port Arthur LNG Trains 3 and 4 and will roughly double the plant’s capacity. FERC also approved projects at Venture Global LNG Inc.’s Calcasieu Pass LNG plant, Berkshire Hathaway’s Northern Natural Gas pipeline, and Enbridge Inc.’s Texas Eastern Transmission pipeline.
Port Arthur Trains 1 and 2 (Phase 1) are under construction and expected to be completed in 2027 and 2028, respectively. Phase 2 will include an additional LNG storage tank and marine berth.
Sempra in mid-September completed the sale of a 42% non-controlling interest in Port Arthur LNG to KKR & Co. It is also developing the proposed 2-bcfd Port Arthur Texas Connector and Port Arthur Louisiana Connector pipelines, and natural gas storage, all of which would serve Port Arthur LNG.
Additionally, Sempra recently acquired 38,000 acres of pore space and relevant surface rights to support the proposed Titan Carbon Sequestration project, under development to capture carbon from the LNG plant.
FERC also approved a 400,000-tpy capacity expansion at Venture Global’s Calcasieu Pass LNG under development in Cameron Parish, La.—increasing output to 12.4 million tpy— and Texas Eastern’s Venice Extension project, which would supply 1.3 bcfd of natural gas to Venture Global’s 20-million tpy Plaquemines LNG plant, expected to begin operations in 2024-25. Venice Extension will involve 63,800 hp of compression and 3 miles of pipeline.
Finally, the agency authorized Northern Natural’s 51-MMcfd Northern Lights 2023 expansion, consisting of 9.8 miles of assorted-diameter pipe to provide incremental winter service in Minnesota and Wisconsin.
German LNG terminals holding regasification capacity auctions
Deutsche Energy Terminal GMBH (DET)—responsible for operating and marketing the capacities of the four floating LNG terminals on the German North Sea coast—is holding its first auction for regasification capacities (including storage and send-out) at the terminals it operates.
In two digital auction rounds starting on Oct. 16, 2023, and Oct. 23, 2023, market players will be able to acquire rights for short-term capacities in 2024 at the Brunsbüttel (3.5 billion cu m/year (bcmy) initial send-out capacity) and Wilhelmshaven 1 (6 bcmy) terminals, respectively. Further auctions for short-term capacities at the Stade (6 bcmy) and Wilhelmshaven 2 terminals (4 bcmy) are planned for December 2023. The marketing of long-term capacities (more than 1 year) is planned for April 2024.
Phases 1 and 2 at Brunsbüttel will be constrained to 3.5 bcmy by infrastructural bottlenecks. Phase 3—the timing of which is still evolving—will expand send out to 7.5 bcmy.
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 (OGJ Online, July 18, 2023).