GENERAL INTEREST — Quick Takes
OGUK: Industry at 'critical juncture' after EU vote
Responding to the UK vote to leave the European Union, Oil & Gas UK said the offshore oil and gas industry is "at a critical juncture." In a statement issued June 24, the trade association said, "We need to ensure the UK Continental Shelf continues to attract investment and be seen as a great place to do business."
OGUK said it had been neutral throughout the referendum campaign and respects the democratic decision of the UK people. "We hope that all those involved will now come together and work constructively to make this transition as smooth as possible and we ask that the UK government clearly outlines the process which will follow to minimize any potential period of uncertainty. We will be consulting closely with our members in the coming weeks and look forward to engaging with all governments to play our part in this process," OGUK said.
Oil, gas penalties lifted to adjust for inflation
The US Bureau of Land Management and Bureau of Safety and Environmental Enforcement separately increased penalties for oil and gas operators to adjust for inflation. BLM's interim final rule more than doubles fines for not taking corrective action and for major violations. BSEE's interim final rule increases the maximum daily civil fine by $2,017 to $42,017.
Both US Department of the Interior agencies acted to comply with the 2015 Federal Civil Penalties Inflation Adjustment Improvements Act. BSEE also made its adjustment for inflation under the 1953 Outer Continental Shelf Lands Act. The changes are effective 30 days after the notices appear in the Federal Register on June 28. Comments will be accepted for 60 days following the publications.
Total awarded 30% interest in Qatar's Al-Shaheen field
Total SA has been awarded 30% interest by Qatar Petroleum (QP) in the concession covering the offshore Al-Shaheen oil field.
The agreement is for a 25-year term beginning July 14, 2017, when the current 25-year production-sharing agreement with operator Maersk Oil AS expires. The concession will be operated by a new company held 70% by QP and 30% by Total.
Located in Qatari waters 80 km north of Ras Laffan, Al-Shaheen began production in 1994 and currently flows 300,000 b/d of oil. The existing development consists of 30 platforms and 300 wells, and production from the field represents about half of Qatar's oil output. QP and Maersk Oil produced the 1 billionth bbl from the field in 2010 (OGJ Online, July 20, 2010).
QP in July 2015 invited several international oil companies to participate in a tender process for future development of Al-Shaheen. Maersk Oil earlier this year submitted its bid in the tender, but the firm says a minority stake in the new joint venture under the terms offered by QP would have created a marginal impact on Maersk Group's earnings in the years ahead.
Total has been present in Qatar since 1936, and currently holds 20% interest in the upstream portion of Qatargas 1, 10% in the Qatargas 1 liquefaction plant JV, 24.5% in Dolphin Energy Ltd., and 16.7% in the Qatargas 2 Train 5 JV. Total's Qatari production averaged 134,000 boe/d in 2015.
Total also is a partner in the Laffan refinery with 10% interest and in the Qapco 20% and Qatofin 48.6% petrochemical plants. Outside the country, the firm's strategic partnership with Qatar extends to Africa, where QP International holds 15% stake in Total E&P Congo (OGJ Online, May 22, 2013).
Exploration & Development — Quick Takes
Egdon, Union Jack sign farmout for UK onshore license
Egdon Resources PLC has farmed out 8.33% of its onshore UK license PEDL182 to Union Jack Oil PLC. The license is in Lincolnshire to the immediate north of PEDL180, where Union Jack farmed into the Wressle-1 exploration well (8.33%).
Under the terms of the farmout, Union Jack will earn 8.33% interest in the remainder of PEDL182 beyond the Wressle discovery in return for covering 12.495% of the cost of a future exploration well to evaluate the Broughton North prospect.
Partners for PEDL180 and PEDL182 include operator Egdon Resources UK Ltd. with 25% interest, Celtique Energie Petroleum Ltd. 33.33%, Europa Oil & Gas Ltd. 33.34%, and Union Jack 8.33%.
Egdon participated in drilling the Keddington-5 sidetrack and the Laughton-1 exploration wells this year, and the operator has plans for two more-Biscathrope and North Kelsey-in PEDL253 and PEDL241, respectively (OGJ Online, Feb. 12, 2016).
Due to the conventional nature of the targeted reservoirs, hydraulic fracturing has not been deployed in the company's completion strategy. Lincolnshire has been associated with UK's shale potential in the Carboniferous Pendleian, which is 2,000 m deep and has been identified as prospective in the nearby Bowland basin in northwest England (OGJ Online, Jan. 16, 2013).
Finder Exploration awarded Timor Sea permit
Finder Exploration Pty. Ltd., Perth, has been awarded a permit in the Vulcan subbasin in the western Timor Sea.
Designated AC/P61, the permit lies in 125-340 m of water and 250 km offshore northwestern Western Australia, 650 km from Darwin. The permit contains the Gem prospect, which has been delineated as a horst block, 190 m of vertical relief, and is a look-alike to the structure that contains the now depleted Jabiru-Challis oil fields to the south.
There are also numerous oil discoveries in the surrounding area, including Tenacious oil field immediately to the west, Audacious oil field to the east, and Oliver oil and gas field to the north. All of these are yet to be developed.
In addition, the Cash-Maple gas field complex lies 30 km west of the new permit.
Finder, which has 100% ownership of AC/P61, plans to reprocess existing 3D seismic data to include the adjacent offset well ties from Oliver, Tenacious, and Audacious fields.
Apart from Gem, other leads in the permit include the Douglad up-dip lead and a potential extension of Tenacious into the permit.
Morocco lets tender for Gharb basin acreage
Morocco's Office National des Hydrocorbures et des Mines (ONHYM) has set an Aug. 19 deadline for acreage in the Gharb Centre area of the greater Gharb basin in the northern portion of the country. The tender includes 1,362 sq km of acreage, excluding three zones where ONHYM fields and infrastructure exist.
Exploration in the region has increased since the early 2000s. ONHYM retains 1,620 km of 2D seismic and 527 sq km of 3D seismic acquired from 18 wells drilled in the area within the last 15 years.
Gulfsands Petroleum PLC completed its Dardara Southeast 1 well in the area in January 2015. The well tested at an average of 7.1 MMcfd through a 32⁄64-in. choke with a stable wellhead pressure of 1,230 psi (OGJ Online, Jan. 12, 2015).
ONHYM will operate its data room July 1-29 and will open sealed bids on prospective acreage on Aug. 25, the company said.
Drilling & Production — Quick Takes
IHS: Oil sands output to rise 1 million bbl in 2016-25
Oil sands production is forecast to increase nearly 1 million b/d by 2025, driven primarily by the expansion of existing facilities with more attractive economics, according to IHS. Although that pace is below historical levels, it will keep Canada among the largest sources of global oil supply growth, IHS notes.
Construction of projects that started before the fall in oil prices-and where significant capital has already been invested-will be complete by 2018, after which construction could cease.
The subsequent completion and then ramp up of these facilities will drive growth to 2020. IHS expects more than 75% of future activity to come from the expansion of existing facilities.
"As we saw with tight oil producers, when prices collapsed, they focused their activity on the most productive areas," said Kevin Birn, director for IHS Energy. "We expect a similar experience to play out in the Canadian oil sands. However, given the nature of the long lead times, we expect this will play out over the coming decade."
An additional factor supporting future oil sands growth is the lack of production declines from existing oil sands projects. If oil sands facilities are maintained, their production levels do not decline, which is unique compared with other types of oil production globally. This means that each investment in new oil production results in net growth, IHS says.
Rystad: US DUC inventory dropping by yearend
Rystad Energy expects US unconventional oil well completions to outpace drilling activity during the second half, resulting in 800 fewer drilled but uncompleted (DUC) horizontal wells.
These completions are expected to provide an additional 300,000-350,000 b/d by Dec. 31. The additional output will be more than sufficient to balance the base production decline, Rystad Energy said. The existing inventory of 4,000 DUCs is estimated to hold close to 2 billion bbl of oil reserves.
"Research shows that operators are now starting to complete wells that have previously been put on hold deliberately," said Artem Abramov, Rystad Energy senior analyst and product manager. "This comes as more than 90% of the accumulated oil DUC inventory can be commercially completed at a [West Texas Intermediate price] of $50/bbl."
Pemex lets contract for Abkatun-A2 platform
Pemex Exploracion y Produccion has let a $454-million con-tract to McDermott International Inc. for the engineering, procurement, construction, and installation of the Abkatun-A2 platform. The platform will be installed in 124 ft of water in the Bay of Campeche and will provide replacement and expansion capabilities to the existing Ku-Maloob-Zaap, Cantarell, and Ayatsil facilities (OGJ Online, Jan. 5, 2015).
McDermott will manufacture the structures at its facility in Altamira, Tamaulipas state, Mexico. Engineering and procurement activities will begin immediately, with fabrication scheduled to begin late this year. Offshore activities are scheduled for 2018, with handover to Pemex in fourth-quarter 2018.
McDermott is expected to use the Derrick Barge 50 and the Intermac 650 float-over installation vessel.
Contract let for third Peregrino platform
South Atlantic Holding, a joint venture of Statoil ASA and Sinochem, is proceeding with the second phase of development of Peregrino heavy oil field offshore Brazil (OGJ Online, Feb. 27, 2015). Working for Kiewit Offshore Services, Wood Group Mustang will provide detailed engineering and design as well as procurement services for Wellhead Platform C, which Statoil estimates will access 250 million boe of reserves.
Wood Group Mustang completed front-end engineering and design for Platform C last year and designed wellhead platforms A and B in the first phase of development.
The field is in about 100 m of water 85 km offshore in the Campos basin. Production began in April 2011 and reached its plateau rate of 100,000 b/d in 2013. The 13° gravity, 1.89 wt % sulfur crude flows into a floating production, storage, and offload vessel.
Greater Enfield oil field development advances
The Woodside Petroleum Ltd.-Mitsui E&P Australia Pty. Ltd. joint venture has given final approval for the $1.9-billion Greater Enfield oil development offshore Western Australia.
Located in the Carnarvon basin about 60 km off Exmouth, the project will involve development of the Laverda Canyon, Norton-over-Laverda, and Cimatti oil accumulations (OGJ Online, Sept. 17, 2015).
The first two are in production licence WA-59-L, while Cimatti lies in WA-28-L.
The oil reserves will be developed and produced via a 31-km subsea tie-back to the Ngujima-Yin floating production, stor-age, and offloading vessel.
Woodside CEO Peter Coleman said the development has been made possible by recent advances in technology and the use of the existing FPSO infrastructure.
Greater Enfield will comprise six subsea production wells and six water-injection wells, supported by subsea multiphase booster pumps in the Laverda area and gas lift in the Cimatti area. Total 2P reserves in the three accumulations are thought to be 69 million boe. First oil is scheduled for mid-2019.
Woodside has 60% and operatorship of the project, with Mitsui holding the remaining 40%.
PROCESSING — Quick Takes
Braskem fully commissions Mexican petchem complex
Braskem Idesa SAPI, a 75-25 joint venture of Braskem SA, Sao Paulo, and Groupo Idesa SA de CV, Mexico City, has fully commissioned its long-planned Etileno XXI petrochemical complex in the Coatzacoalcos-Nanchital region of the Mexican state of Veracruz (OGJ, July 7, 2014, p. 90). The company inaugurated the complex on June 22.
Initially entering precommissioning and testing phases of equipment and systems in early 2015, the $5.2-billion Etileno XXI project features an ethane cracker that now produces a combined 1.05 million tonnes/year of ethylene and polyethylene for clients primarily in Mexico, the US, Europe, Asia, and Central and South America.
Alongside the gas cracker, which uses Technip SA's process technology and receives 66,000 b/d of ethane feedstock under a 20-year supply agreement with state-owned Petroleos Mexicanos, the complex houses the following installations:
• Two high-density polyethylene (HDPE) plants with capacities of 400,000 tpy and 350,000 tpy, respectively, both based on technology from Ineos.
• A 300,000-tpy low-density polyethylene (LDPE) plant that uses technology from LyondellBassell.
• Storage, waste treatment, and utilities.
• A logistics platform for shipment of 1 million tpy of poly-ethylene via rail, truck, or bagged.
• Administrative, maintenance, control room, and other buildings.
Utility installations at the complex include a 175-Mw com-bined-cycle power and steam cogeneration plant initially planned as a 150-Mw plant, Braskem said.
Braskem, a subsidiary of Odebrecht SA, said Etileno XXI aligns with the company's strategy to expand operations in the Americas as well as increase its access to more competitively priced North American gas-based feedstock supplies.
Braskem Idesa's full commissioning of the complex follows the start of HDPE production at the site in early April (OGJ Online, Apr. 8, 2016).
Rosneft, Sinopec plan petchem complex for East Siberia
Russia's OJSC Rosneft and China Petrochemical Corp. (Sinopec) have entered a framework agreement to jointly develop a grassroots natural gas processing and petrochemical complex in East Siberia.
Signed on June 25, the agreement furthers a December 2015 memorandum of understanding signed by the companies to cooperate on petrochemical projects, Rosneft said.
Alongside providing for a prefeasibility study on construction and operation of the joint project, the agreement stipulates for selection of processing technology to be used at the complex and for selection of a project management consultant (PMC).
The companies additionally agreed to identify potential competitive challenges as well as a timeframe to address them before moving forward on front-end engineering design, Rosneft said.
Pending favorable results of preliminary activities to be completed as part of the framework agreement, Rosneft and Sinopec will establish a joint venture to advance the project sometime in 2017.
Details regarding selection of technology licensing, PMC, and FEED were not disclosed.
Designed to help meet the growing demand for polyethylene and polypropylene in Russia and China, the proposed complex would have a capacity to process 5 billion cu m/year to produce 3 million tonnes/year of polymers and petrochemical products primarily for Russian and Chinese markets.
To be located in Boguchany district of Russia's Krasnoyarsk Territory, the complex would use feedstock supplied from Rosneft's oil and gas fields in eastern Siberia's Yurubcheno-Takhomsky cluster, Rosneft said.
Under the original MOU for the project, the firms planned to execute a detailed prefeasibility and concept-design study for an integrated 10 billion-cu m/year complex to be built in Boguchany and Angarsk that would produce 3 million tpy of ethylene and about 6 million tpy of polymers and other petrochemicals, according to a Dec. 17, 2015, news release from Rosneft.
Aramco, SABIC plan crude-to-chemicals complex study
Saudi Aramco and Saudi Arabian Basic Industries Corp. plan to conduct a joint feasibility study for development of a fully integrated crude oil-to-chemicals complex in Saudi Arabia.
The proposed plant would use a crude oil-to-chemicals process derived from improved refining technology that mixes configurations with conversion technologies to create a petrochemical complex capable of maximizing chemical yield, transforming and recycling byproducts, driving efficiencies of scale and resource optimization, and diversifying Saudi Arabia's petrochemical feedstock mix, they said.
Pending a positive outcome of the study, Aramco and SABIC plan to establish a joint venture to advance the project, which if approved, would fulfill Saudi Vision 2030 goals for the downstream sector (OGJ Online, June 1, 2016).
The companies did not disclose further details regarding the proposed project.
Announcement of the joint study follows a May 21 joint release from Aramco and SABIC quashing speculative news reports that the companies were planning to merge their petrochemicals businesses.
While the companies clarified they had no intention to pursue a merger, they did confirm they would continue to explore partnership opportunities that would help to expand and diversify Saudi Arabia's economy.
TRANSPORTATION — Quick Takes
Energy Transfer declares Williams deal dead
Energy Transfer Equity LP (ETE), Dallas, declared the death of its merger agreement with Williams Cos. Inc., Tulsa, after Williams shareholders approved the deal.
ETE has been trying to cancel the $37.7-billion transaction, announced last September, over continuing objections of the company that once resisted its overtures (OGJ Online, Sept. 28, 2015).
In the announcement of its shareholders' vote on June 27, Williams said it was appealing to the Delaware Supreme Court a June 24 Delaware Court of Chancery opinion upholding ETE's right to escape the deal.
The contested opinion said ETE was contractually entitled to end the merger if its legal advisers couldn't deliver a required tax opinion by June 28. The opinion wasn't delivered.
ETE acknowledged the Williams appeal in its June 29 announce-ment that it was ending the merger agreement, which called for Williams to become part of ETE affiliate Energy Transfer Corp. LP.
Williams rejected ETE's first, unsolicited takeover bid in June 2015, an all-equity transaction valued at $53.1 billion. The later proposal gave Williams shareholders options to receive shares or cash.
Williams issued a statement disputing ETE's right to end the merger, saying it will seek monetary damages. It said ETE breached the agreement "by, among other reasons, failing to cooperate and use necessary efforts to satisfy the conditions to closing." Williams said it "recognizes the practical fact that ETE has refused to close the merger" and will focus on operations.
Obama signs 2016 pipeline safety reauthorization bill
US President Barack Obama signed S. 2276, the 2016 pipeline safety reauthorization bill, on June 21. The bill became law more than a week after the US Senate approved a version with House amendments and sent it to the White House (OGJ Online, June 14, 2016).
The measure requires the US Pipeline & Hazardous Materials Safety Administration to set federal minimum safety standards for underground natural gas storage facilities, and allows states to go above those standards for intrastate requirements.
It also authorizes emergency order authority that is tailored for pipelines, updates regulations for certain LNG facilities to better match changing technology and markets, and increases inspection requirements for certain underwater oil pipelines.
The law also creates a working group of PHMSA, states, industry stakeholders, and safety groups to develop recommendations on how to create an information sharing system to improve safety outcomes, and gives PHMSA authority to study the feasibility of a national integrated pipeline safety database to have a clearer picture of federal and state safety oversight efforts.
Interstate Natural Gas Association of America Pres. Donald F. Santa expressed appreciation for Congress and the administration's work on the new law. "Members of the of the interstate natural gas pipeline industry are already hard at work building on Congress's efforts to enhance the nation's pipeline through an aggressive safety program, anchored with an over-arching goal of zero pipeline incidents," he said.
Riverstone to acquire 50% stake in Utopia project
Riverstone Investment Group LLC will become a 50-50 partner with Kinder Morgan Inc. in the $500-million Utopia pipeline project in Ohio. To acquire its stake, Riverstone agreed to an upfront cash payment reimbursing KMI for its 50% share of prior capital expenditures related to the project. Riverstone also agreed to fund its share of future capital expenditures necessary to complete construction and commissioning.
The common carrier project, supported by a long-term contract with Nova Chemicals Corp., will include 215 miles of 12-in. pipeline constructed entirely within Ohio from Harrison County to Fulton County (OGJ Online, Sept. 4, 2014). The pipeline will connect with an existing KMI pipeline and associated facilities to transport ethane and ethane-propane mixtures to petrochemical companies in Ontario.
