GENERAL INTEREST — Quick Takes
Olson reintroduces bill to reform ESA process
US Rep. Pete Olson (R-Tex.) reintroduced legislation to reform listings under the Endangered Species Act by eliminating arbitrary deadlines that he said limit the US Department of the Interior's ability to prioritize listing petitions properly.
"The [ESA] was enacted to protect truly endangered species, not to be used as a political weapon for extreme environmentalists," Olson said on Jan. 30. "Protecting endangered species can and should be done in a practical way.
"The government should have the flexibility to act quickly and practically on listing and delisting petitions," he maintained. "A triage system much like a hospital emergency room will ensure that the most endangered species get to the front of the line. I look forward to working with President Trump to provide protections for truly endangered species."
Olson, whose bill, HR 717, was referred to the Natural Resources Committee after he reintroduced it on Jan. 27, said that under ESA, any organization can petition for a species to be added to or removed from the federal threatened or endangered species listings.
The current process does not allow federal agencies to prioritize these listings by targeting the most endangered species first, he explained. Federal, state, and local entities responsible for implementing ESA provisions have limited resources and should have flexibility in the listing process, Olson said.
Hawkwood acquiring Halcon's E. Texas assets
Hawkwood Energy LLC, Denver, has reached a definitive agreement for a wholly owned subsidiary to acquire oil and gas properties in East Texas from subsidiaries of Halcon Resources Corp. for $500 million as the seller shifts its focus to the Delaware basin of West Texas.
Hawkwood Energy East Texas LLC will acquire 81,000 net acres, mostly in Burleson and Brazos counties. Gross production is 9,200 boe/d, 80% oil, from 170 wells completed in the Cretaceous Eagle Ford formation. The leases are 80% held by production and 90% operated, generally contiguous and adjacent to Hawkwood's existing East Texas acreage.
Gross production from the combined assets will be 14,500 boe/d, 83% oil, from 260 wells completed in the Eagle Ford and Cretaceous Woodbine, Austin Chalk, and Buda formations.
Hawkwood will hold more than 180,000 net acres and 1,000 drilling locations with Eagle Ford and Woodbine targets.
Halcon Resources, which reorganized under voluntary bankruptcy last year, recently signed two Delaware basin deals (OGJ Online, July 29, 2016).
It agreed to acquire 20,748 net acres in Pecos and Reeves counties from a private operator for $705 million. And it entered an option agreement to acquire up to 15,040 net acres in Ward County from a private operator for $11,000/acre.
In Pecos and Reeves counties, net production is 2,600 net boe/d. The acquired acreage includes 495 gross locations in the Permian Upper Wolfcamp A and B and 771 gross locations in the Permian Lower Wolfcamp; First, Second, and Third Bone Springs; and Avalon.
In Ward County, Halcon is drilling a commitment well on the southern of two tracts and has until June 15 to exercise the option on that tract, covering 6,720 net acres, or on the entire option area.
If Halcon exercises the option only on the southern tract, it will be required to pay $5 million and drill a commitment well on the northern tract by Sept. 1 to earn an option to acquire the acreage by Dec. 31.
Oneok to acquire remaining stake in Oneok Partners
Tulsa-based Oneok Inc. will acquire all of the outstanding common units of Oneok Partners LP not already owned by Oneok for $9.3 billion in Oneok common stock.
Under the agreement, each outstanding common unit of Oneok Partners that Oneok does not already own will be converted into .985 shares of Oneok common stock, representing a 22.4% premium to the Oneok Partners closing price on Jan. 27.
The deal is expected to close in the second quarter. Upon completion, Oneok does not expect to pay cash income taxes through at least 2021.
The deal is expected to assign Oneok a more than $30-billion enterprise value. The firm will continue to operate as a diversified midstream service provider with an integrated 37,000-mile network of natural gas liquids and natural gas pipelines, processing plants, fractionators, and storage facilities in the Williston basin, Mid-Continent region, Permian basin, Midwest, and Gulf Coast.
"The transaction will not impact our employees or their day-to-day responsibilities," said Terry K. Spencer, president and chief executive officer of Oneok and Oneok Partners. "The merger of our companies will enhance future opportunities for our businesses and employees, allowing us to continue growing as one of North America's largest midstream service providers."
Exploration & Development — Quick Takes
Lebanon reopens offshore licensing round
Lebanon has reopened its first offshore licensing round after a 3-year delay, including in its offering three blocks along the disputed boundary with Israel.
Energy Minister Cesar Abi Khalil announced a new prequalification round for 5 of the country's 10 offshore blocks. Blocks 8, 9, and 10 include area claimed by Israel. Also part of the offering are Blocks 1 and 4 to the north.
The licensing round stalled in 2013. It cleared important hurdles in early January with enactment of two key decrees (OGJ Online, Jan. 5, 2017).
Although Lebanon has no oil or gas production, interest in its offshore prospects has been elevated by large deepwater gas discoveries off Israel, Cyprus, and Egypt.
A prequalification stage in the stalled licensing round drew applications by 52 companies from 25 countries. The Lebanese Petroleum Administration prequalified 12 applicants as operators and 34 as nonoperators.
Companies prequalified earlier don't have to reapply in the new prequalification round if they still meet prequalification criteria.
The new round opens Feb. 2 and closes Mar. 31.
Results will be announced Apr. 13. Qualified companies will submit bids for open blocks on Sept. 15. Exploration and production agreements, based on production-sharing, are to be signed Nov. 15.
In a related move, the Lebanese cabinet issued a decree to join the Extractive Industries Transparency Initiative, members of which agree to require companies to disclose payments to host-country officials.
Oman Oil unit to explore Omani Block 48
State-owned Oman Oil Co. Exploration & Production will drill a well and perform seismic work on 2,995-sq-km Block 48 under an exploration and production-sharing agreement it has signed with the Omani Ministry of Oil and Gas.
The company, a subsidiary of Oman Oil Co., will reprocess seismic data and shoot new 2D and 3D surveys over the area in northwestern Oman.
PGNiG awarded production license in Pakistan
Pakistan's Directorate General of Petroleum Concessions has awarded Poland state-owned PGNiG SA its first production license for Kirthar block in southern Pakistan. PGNiG has owned the license since 2005 and will develop Rehman and Rizq natural gas fields, which are currently producing 500,000 cu m/day.
The company plans to drill 10 additional exploration wells, which will bring production to 2.5 million cu m/day. Exploration in the remainder of the block continues, the company said.
PGNiG operates Kirthar block with 70% interest. Pakistan Petroleum Co. holds the remaining interest.
Drilling & Production — Quick Takes
W&T Offshore brings well on stream at Mahogany field
W&T Offshore Inc., Houston, started production on Jan. 17 from the Ship Shoal 349 A-18 well at Mahogany field in the Gulf of Mexico.
The well is ramping up to full rates and thus far has achieved a production rate of 3,275 b/d of oil and 5.6 MMcfd of natural gas for a total of 4,200 boe/d at a flowing tubing pressure of more than 9,000 psi. The company expects to increase the A-18 production rate to more than 5,000 boe/d consistent with its reservoir management plan.
W&T earlier this month reported that the SS 349 A-18 well logged 149 ft of net oil pay in five zones and extended the size and depth of Mahogany field (OGJ Online, Jan. 6, 2017). The well was completed in the main objective "T" sand, with future recompletion opportunities to additional pay zones available in the well.
The deep shelf subsalt well was drilled to a TVD of 20,000 ft in 372 ft of water on the western side of the field.
"With its high-quality rock properties, including very high porosity and permeability, we anticipate strong production rates from this well for years into the future," commented Tracy Krohn, W&T's chairman and chief executive officer. "Our SS 349 A-14 well that originally discovered the 'T' sand in July 2013 has produced a total of 3.8 [million] boe gross from the 'T' sand to date."
W&T's 2017 capital budget includes the drilling and completion of three additional wells at Mahogany. "We have multiple 'P' sand, 'T' sand, and 'Q' sand targets, and the thick stacked pay sands that will offer drilling and recompletion opportunities for years to come," Krohn added.
Tom Murphy, W&T's chief operating officer, said, "The A-18 well has exceeded our pre-drill production rate expectations. Initial indications are that the A-18 well is located in the same large reservoir as the original 'T' sand discovery well, the A-14. This provides excellent encouragement for our expansion plans in this reservoir including exploitation of the newly discovered 'U' sand." W&T holds 100% working interest in Mahogany.
Appraisal set for field off Philippines
A subsidiary of Nido Petroleum Ltd., Perth, will drill an appraisal well aimed at extending the productive life of Galoc oil field on Block C1 of Service Contract 14 offshore the Philippines.
The subsidiary, Galoc Production Co. WLL, has signed a contract with Golden Close Maritime Corp. Ltd. for the Deepsea Metro I drillship to drill the Galoc-7/7ST well. Odfjell Drilling manages the vessel.
Target depth of the well is 2,660 MD below the rotary table. Water depth at the drilling location is 540 m.
The contract, with a commencement window of Mar. 1-31, is for 4-5 weeks and includes a firm well and an optional sidetrack.
Galoc produces about 4,700 b/d of 35° gravity crude with 1.6% sulfur content from a gross oil column more than 57 m thick in early Miocene turbidite sandstone.
Subsea wells drilled in two development phases produce into the Rubicon Intrepid floating production, storage, and offtake vessel.
The new well will assess potential of a third development phase.
Beach increases drilling activity for 2017
Adelaide company Beach Energy Ltd. has expanded its proposed drilling program for financial-year 2017 to 16 operated wells and up to 42 nonoperated wells following record half-year production plus success in the field and cost efficiencies.
Operated well numbers have increased by three and nonoperated by five wells.
The company says the cost savings and efficiencies will deliver the expanded program at a reduced overall cost with financial-year 2017 capital expenditure now expected to be within the range of $170-185 million (Aus.). Previous estimates were $180-200 million.
Around two thirds of the revised program is discretionary expenditure. The remaining one third will be stay-in-business and committed expenditure on existing assets for maintenance purposes, regulatory commitments, and contractual obligations.
Some of the additional discretionary projects to be undertaken before the end of financial-year 2017 include installation and production facilities in permit ex PEL 91 Western Flank Cooper basin of South Australia to bring the Kangaroo-1 oil discovery on line and provide capacity for future exploration success.
There will also be two follow-up exploration wells in ex PEL 91 for further evaluation of the Birkhead Formation oil play near the kangaroo discovery.
Overall there will be nine Beach-operated exploration wells planned for the financial year.
There will be two development wells drilled in Pennington field also in ex PEL 91 to optimize field commerciality and accelerate production. In total, seven Beach-operated appraisal-development wells are planned.
Up to 42 wells could be drilled in nonoperated areas of the Western Flank along with other nonoperated areas of the company's South Australian Cooper basin and Southwest Queensland joint ventures.
PROCESSING — Quick Takes
Enterprise to build isobutane unit at Texas Gulf Coast
Enterprise Products Partners LP (EPP), Houston, will build a new isobutane dehydrogenation (iBDH) unit at the US Gulf Coast as part of a strategy to boost utilization capacity at the company's existing downstream octane-enhancement and petrochemical operations in the region.
To be built in Mont Belvieu, Tex., the iBDH unit will be able to produce 425,000 tonnes/year of both high and low-purity isobutylene for use primarily as feedstock at EPP's olefins assets to expand production of lubricants, rubber products, alkylate for gasoline blendstock, and methyl tertiary butyl ether (MTBE) for export, the operator said on Jan. 30.
Supported by long-term contracts with investment-grade customers, the iBDH unit is scheduled to complete construction during fourth-quarter 2019, according to EPP.
The new iBDH project comes as part of EPP's $6.7 billion capital investment in growth projects planned for startup between now and 2019, including the previously announced propane dehydrogenation unit (PDH) at Mont Belvieu (OGJ Online, Mar. 18, 2014).
The new Mont Belvieu PDH unit, which is the largest of these capital-growth projects, is slated to begin commercial operations in second-quarter 2017, EPP told investors on Jan. 30 in reporting financial results for fourth-quarter and yearend 2016.
The new PDH plant at Mont Belvieu will have a propane processing capacity of 30,000 b/d instead of its initially planned 35,000 b/d capacity, EPP said in the presentation.
Sinopec's Tianjin refinery due new alkylation unit
China Petrochemical Corp. (Sinopec) has let a contract to a division of E.I. DuPont de Nemours & Co. to provide process technology and engineering for a new alkylation unit to be built at subsidiary Tianjin Petroleum & Chemical Corp.'s (TPCC) 15.5-million tonne/year integrated refining and petrochemical complex at Tianjin Binhai New Area, Tianjin, in northern China.
As part of the contract, DuPont Clean Technologies, Overland Park, Kan., will deliver licensing and engineering design for its proprietary STRATCO sulfuric acid alkylation unit, the service provider said.
Alongside technology licensing and engineering, DuPont also will provide proprietary equipment, operator training, and commissioning assistance for the new unit, which will be designed to meet TPCC's requirements for improving quality of the refinery's existing gasoline pool to ensure compliance with China 5-quality standards for cleaner fuels.
Equivalent to Euro 5-quality fuel standards, China 5 emission standards cap the maximum sulfur content of gasoline and diesel at 10 ppm, according to China's Ministry of Environmental Protection.
With project construction scheduled to begin in early 2017, TPCC currently is planning to commission the 7,700-b/sd STRATCO alkylation unit by late 2017 or early 2018, DuPont said.
A value of the contract was not disclosed.
Algeria lets contract for revamp of Skikda ethylene plant
State-owned Sonatrach SPA has let a contract to Engineers India Ltd. to perform studies and provide project management consultancy (PMC) services for rehabilitation of an ethylene unit at its petrochemical complex in Skikda, Algeria.
Valued at more than €7 million, the contract stipulates a project schedule of 23 months, EIL said in a Jan. 27 filing to India's BSE Ltd.
The service company did not disclose further details regarding either the scope of PMC services it would deliver or the nature of studies it would execute as part of the agreement.
The contract announcement follows the Algerian government's confirmation in late 2016 of Sonatrach's project to restore production of Skikda's 120,000-tonne/year ethylene unit, as well as plans for construction of several other major grassroots petrochemical projects, including a grassroots 100,000-tpy benzene linear alkyl complex, 1-million tpy ethylene cracker, 600,000-tpy propane dehydrogenation and polypropylene complex, and 1-million tpy methanol and derivatives complex (OGJ Online, Dec. 201, 2016).
Alongside expanding its petrochemical operations, Sonatrach also previously let a contract for construction of two grassroots units at its 16.5-million tpy refinery in Skikda, as well as contracts for front-end engineering and design services for three 5-million tpy greenfield refineries to be located at Biskra, Tiaret, and Hassi Messaoud, all of which are intended to help meet energy demand of Algeria's domestic market by 2040 (OGJ Online, Mar. 8, 2016).
TRANSPORTATION — Quick Takes
Executive orders seek to continue KXL, DAPL projects
US President Donald J. Trump has signed executive orders aimed at reviving the Keystone XL and Dakota Access crude oil pipeline projects.
"We're going to renegotiate some of the terms, and if they are satisfactory, we're going to see if we can get this pipeline built," Trump said at the White House on Jan. 24 before signing the executive order covering KXL. On Jan. 26, KXL sponsor TransCanada Corp. submitted a presidential permit application for the project.
The second order, covering Dakota Access, is "again, subject to terms and conditions negotiated by us," Trump said. Sunoco Logistics Partners LP, which acquired Dakota Access sponsor Energy Transfer Partners LP in November, did not comment immediately on the president's moves (OGJ Online, Nov. 21, 2016).
A third required that US-manufactured steel be used in such projects. "This is going to be difficult because a lot of companies will need time to gear up," Trump said. "But it will put thousands of steelworkers back to work. We will build our own pipeline. We will build our own pipes like we used to in the old days."
His actions were intended to reverse decisions made by the Obama administration to deny TransCanada a cross-border permit for KXL after years of delays, and to order the US Army Corps of Engineers (ACE) to withdraw a permit it issued for an unconstructed Dakota Access segment following protests by the Standing Rock Sioux Indian tribe (OGJ Online, Nov. 6, 2015; Dec. 5, 2016).
BridgeTex adding Permian crude capacity
BridgeTex Pipeline Co. LLC, owned 50-50 by Magellan Midstream Partners LP and Plains All American Pipeline LP (PAA), is expanding the BridgeTex crude oil pipeline's capacity from the Permian basin to 400,000 b/d from 300,000 b/d. The expanded capacity is expected to be available second-quarter 2017 following enhancements to existing pumps and related equipment.
The 20-in. OD BridgeTex pipeline system transports Permian basin crude from Colorado City, Tex., to the Houston gulf coast area. A newly built origin point at Bryan, Tex., 100 miles northwest of Houston, will also begin operations second-quarter 2017, shipping Eaglebine-sourced crude to Houston.
Magellan is also building a high-capacity marine terminal along the Houston Ship Channel in Pasadena, Tex., to handle refined products. Initial planned capacity is 1 million bbl of products and ethanol storage. Subject to regulatory approvals, Magellan expects the Pasadena terminal to be operational early 2019 (OGJ Online, July 18, 2016).
Velocity to build second SCOOP crude pipeline
Velocity Midstream Partners LLC wholly owned subsidiary Velocity Central Oklahoma Pipeline LLC will build a second oil pipeline through the South Central Oklahoma Oil Province (SCOOP), delivering to storage at Cushing, Okla., and CVR Refining LP's Wynnewood, Okla., refinery.
Velocity has secured long-term anchor customers for the 41-mile 8-in. OD pipeline that will deliver as much as 100,000 b/d of truck-injected or pipeline-gathered oil. The new pipeline will directly connect to Velocity's previously announced 26-mile 12-in. OD Wynnewood Pipeline project, set to enter service April 2017 at an initial capacity of 45,000 b/d and a maximum capacity of 120,000 b/d.
The new pipeline runs parallel to Velocity's existing SCOOP system that is fully contracted and has a current capacity of 100,000 b/d. The new pipeline and planned gathering lines, coupled with four new-build truck injection terminals, will enable producers throughout the SCOOP to segregate heavier crude barrels, produced from the Springer and Woodford oil formations, from lighter barrels produced from the Woodford condensate formation.
Velocity expects to put the new line in service mid-2017, supporting increased SCOOP development activity and associated increases in crude oil and light oil production. Velocity says its multi-pipeline corridor through SCOOP allows it to reach more than 400,000 proved gross acres of the Woodford formation and more than 200,000 proved gross acres of the Springer formation, most of which is less than 10 miles from Velocity's main pipeline corridor.
