COMPANY NEWS: Repsol YPF buys interest in deepwater gulf field

July 17, 2006
Repsol YPF SA agreed to pay BP PLC $2.15 billion for a 28% interest in Shenzi oil field in the deepwater Green Canyon area of the Gulf of Mexico.

Repsol YPF SA agreed to pay BP PLC $2.15 billion for a 28% interest in Shenzi oil field in the deepwater Green Canyon area of the Gulf of Mexico.

In other recent company news:

  • Provident Energy Trust, Calgary, plans to acquire $476 million in gas producing assets in the Rainbow and Peace River arch areas of northwestern Alberta with “strong future development potential” from an undisclosed seller.
  • Stone Energy Corp. exercised its preferential rights with BP PLC to acquire additional working interests in Mississippi Canyon Blocks 108 and 109 in the Gulf of Mexico for $190.5 million.
  • Private equity firm US Venture Energy is buying Anadarko Petroleum Corp.’s wholly owned subsidiary Bear Head LNG Corp. for $125 million.
  • ConocoPhillips has exercised an option to acquire a 24% interest in the proposed $4.4 billion Rockies Express gas pipeline now and an additional 1% when construction of the system is completed in June 2009.
  • Vermilion Rep’s acquisition of Esso Rep, Esso SAF’s French exploration and production unit, has been completed (OGJ Online, Mar. 6, 2006).

Repsol YPF’s Shenzi stake

Shenzi field has estimated proved and probable reserves of 350-400 million bbl for the initial development phase. Production is expected to start in mid-2009 at a gross rate of 100,000 b/d.

Repsol YPF has identified possible reserves that could be developed through shallower reservoirs, improved performance, and water injection. These reserves could boost reserves of the field’s south flank to 500 million boe, the company said.

Additional exploration of the northern flank is expected in the fourth quarter.

BHP Billiton is the operator with 44% interest. Another partner, besides Repsol YPF, is Amerada Hess Corp. with 28% interest.

Provident in Alberta

The assets being acquired by Provident produce 33 MMcfd of gas equivalent, 90% gas, from 22.2 million boe of proved and probable reserves. The production is mainly sweet gas from shallow reservoirs in the Rainbow, Haro, Boyer, and Rainbow South areas and from multiple zones in the Pouce Coupe and Gordondale areas in the Peace River arch.

The transaction is to close by the end of August.

Provident will operate 97% of the assets with an average 75% working interest. The acquisition includes large ownership interests in four gas processing plants. More than 200 drilling locations are identified on the properties that will allow the company to maintain production through 2010 with $25-30 million/year in capital investment.

The acquisition includes more than 280,000 net acres of land, of which more than 80,000 net acres is undeveloped.

Anadarko divests LNG unit

Bear Head LNG is developing a receiving terminal at Point Tupper, NS.

Anadarko is slated to receive an 18-month option to secure as much as 350 MMcfd of throughput gas capacity at competitive rates.

Anadarko Senior Vice-Pres. Karl Kurz said the company is recovering its investment and a reasonable premium while retaining the ability to supply LNG to the Canadian Maritimes and US Northeast regions.

The sale includes all assets, rights, and obligations associated with the Bear Head project, excluding long-term pipeline transportation agreements. Closing is expected within a few weeks.

ConocoPhillips-Rockies Express

The 1,663-mile, 42-in. Rockies Express system-one of the longest in the US-will have the capacity to transport 1.8 bcfd of gas from Wyoming and Colorado to the upper Midwest and eastern US (OGJ, Mar. 20, 2006, p. 32).

Kinder Morgan Energy Partners LP, which will operate the line, currently owns a 51% equity interest that will become 50% when the project is completed and ConocoPhillips assumes its additional 1%. KMP said it has secured binding firm commitments for most of the line’s capacity.

Sempra Pipelines & Storage holds the remaining 25% interest. No additional ownership changes are anticipated.

Stone’s GOM blocks

Stone anticipates closing the deal by early third quarter. Afterwards, Stone would hold a 100% working interest in MC Block 109 (up from 33%) and a 24.8% working interest in MC Block 108 (up from 16.5%), and would become operator of the field.

Currently, production from both blocks is shut awaiting repairs to an oil pipeline that was damaged during Hurricane Katrina. The pipeline transports oil from the Amberjack platform on MC Block 109. The repair is expected before yearend.

Vermilion Rep-Esso Rep

Vermilion Rep’s acquisition of Esso Rep raises its E&P production in France to about 10,000 b/d of oil. The company has acquired seven fields in the Aquitaine and Paris basins and a field discovered in the Aquitaine basin, all of which it will operate.

The fields are next to or complementary to nine fields Vermilion Rep already owned in France.

Separately, Vermilion Rep has acquired shares in two fields in the Paris basin operated by Total SA.

Previously, Vermilion Rep had acquired a number of Esso Rep fields, including the mature Parentis field in Aquitaine.