OGJ Newsletter

Jan. 29, 2018
International news for oil and gas professionals


GOP senators introduce bill to reform energy policies

Five Republican US senators introduced legislation aimed at reforming federal onshore oil and gas policies by giving states authority to manage permitting and regulatory responsibilities on federal land within their borders.

"Punishing regulations and permitting delays have plagued the federal oil and gas permitting process for years," said John A. Barrasso (Wyo.), the bill's main sponsor. "Our bill also eliminates unnecessary regulations and increases mineral revenue for states."

Cosponsors include Sens. John Hoeven (ND), Orrin G. Hatch (Utah), Mike Enzi (Wyo.), and Mike Lee (Utah). Their bill also would exempt oil and gas operations on nonfederal land from federal permitting and environmental review if the federal government holds less than a 50% mineral ownership interest. It also would give states and Indian tribes primacy over regulations, guidance, and permitting for hydraulic fracturing.

The measure, which they call the Opportunities for the Nation and States to Harness Onshore Resources for Energy (ONSHORE) Act, contains onshore provisions similar to those in H.R. 4239, which Rep. Steve Scalise (R-La.) and three cosponsors introduced on Nov. 3, 2017, and the House Natural Resources Committee approved 5 days later.

Group repeats threat against Nigerian oil

A militant group whose attacks slashed Nigerian oil production in 2016 has repeated a threat it made last November to renew and expand the violence (OGJ Online, Nov. 3, 2017).

On its web site, the group, Niger Delta Avengers, said deepwater production equipment would be targeted.

Its attacks on pipelines and other oil installations cut Nigerian production to 1 million b/d from 1.65 million b/d in 2016.

Production mostly recovered after the group suspended hostilities in January last year.

In November, the group declared the amnesty to be over and said it would attack not only equipment but also oil company workers.

According to the latest announcement, "Some overzealous and over-patriotic elders intervened and appealed as they have done twice before then for us to avail them some more time to attend to the demands of the Niger Delta as championed by the Niger Delta Avengers."

It said the pause hasn't produced "any meaningful results" toward its goal of greater distribution of wealth from oil production to residents of the Niger Delta region.

The group said violence disrupting several areas of Nigeria "makes this the perfect time to restructure this country."

Samson Oil & Gas to sell Foreman Butte project

Samson Oil & Gas Ltd., Perth, has executed a nonbinding letter of intent to sell its Foreman Butte project, consisting of substantially all of its assets, to Firehawk Oil & Gas LLC, Denver, for $41.5 million.

Samson holds an 87% average operated working interest in the project, which is in McKenzie and Williams counties, ND; Richland, Roosevelt, and Sheridan counties, Mont.; and the Mississippian Madison formation in the Williston basin.

Firehawk, a private equity funded exploration and production company, has conducted technical and financial analysis of the project and continues due diligence work on the properties. The deal, subject to Samson shareholder approval, is expected to close by Mar. 1.

SandRidge cancels Bonanza Creek takeover

SandRidge Energy Inc., Oklahoma City, has canceled its agreement to acquire Bonanza Creek Energy Inc., Denver (OGJ Online, Nov. 15, 2017). The cash-and-stock deal had an implied value of $746 million.

Activist investor Carl Icahn, a major SandRidge shareholder, opposed the takeover.

Gerard to step down after 10 years as API president

American Petroleum Institute Pres. Jack N. Gerard reported that he will step down in August after 10 years when his contract expires and not make another long-term commitment to the nation's largest oil and gas trade association. Until that time, he will continue as API's president and assist in the search for his successor, he said.

"Serving the oil and gas industry during this historic time, when an American energy renaissance has made the US the world's leading producer and refiner of oil and gas, has been among the most fulfilling professional experiences of my career," he said.

"We have accomplished what few would have imagined: important public policy victories at all levels of government, and a revitalized association that has expanded globally and added significant strength to its advocacy capabilities," Gerard said.

API said that since Gerard took the helm in 2008, its membership has grown by almost 50% and it has added members from every sector of the industry.

Gerard joined API after being president of the National Mining Association and the American Chemistry Council. He worked earlier in the US Senate and House.

Exploration & DevelopmentQuick Takes

Total furthers gulf interest with Anchor discovery

Total SA is furthering its interest in the US Gulf of Mexico through the acquisition of Samson Offshore Anchor LLC and its 12.5% interest in four deepwater blocks covering the Anchor discovery. The Lower Tertiary Wilcox play was discovered in 2014 about 225 km offshore Louisiana in more than 1,500 m of water. Total also acquired Samson's 12.5% interest in nearby Green Canyon Block 761 where it already has a 25% interest.

Total has entered seven exploration prospects in Gulf of Mexico including the Wilcox play in the central gulf and the Jurassic Norphlet play in the eastern gulf, where it signed an agreement with Chevron Corp. in September 2017.

Total also has picked up 25% interest in Jack field through its acquisition of Maersk Oil & Gas AS, announced in August 2017 (OGJ Online, Aug. 21, 2017).

Chevron operates Anchor with 55% interest with partners Cobalt International Energy, 20%, and Venari Resources LLC, 12.5%. Anchor is operated by Chevron, 55%, alongside Cobalt, 20%, and Venari, 12.5%.

ExxonMobil acquires exploration license off Ghana

ExxonMobil Corp. will pursue seismic acquisition and analysis later in 2018 on its recent Deepwater Cape Three Points Block license offshore Ghana.

The 1,482-sq-km block lies in 1,550-2,850 m of water 92 km offshore. ExxonMobil will carry out the work program as operator with 80% interest.

Ghana National Petroleum Corp. holds 15% interest and ExxonMobil said it will work with the government to identify a Ghanian company to hold the remaining 5%.

Norwegian APA 2017 round offers 75 licenses

A total of 75 new production licenses were offered to 34 companies on the Norwegian Continental Shelf in an expanded Awards in Predefined Areas (APA) bid round Jan. 16.

The offering marks the most production licenses ever awarded as well as the most applications ever submitted, the Norwegian Petroleum Directorate said.

New licenses are being awarded in both the Norwegian and Barents seas. Of the 75 production licenses, 45 are in the North Sea, 22 in the Norwegian Sea, and 8 in the Barents Sea. Twenty-two of the production licenses are additional acreage for existing production licenses. Three of the new licenses are divided stratigraphically, and only relate to levels below and above a defined stratigraphic border.

Of the 39 companies that submitted applications, 34 will be offered ownership interests in at least one production license.

India opens first open-acreage bid round

India's government will accept bids through Apr. 3 on 55 blocks covering 59,282 sq km nominated by oil and gas operators.

The bid round, which opened Jan. 18, is India's first under open-acreage licensing (OGJ Online, June 29, 2017).

The Directorate General of Hydrocarbons will base bid evaluation on work commitment and revenue share to the government. The directorate received expressions of interest on 57 blocks and rejected one because of overlap. The other one was withdrawn. Of the blocks open for bid, 46 are onshore, 8 are in shallow water, and 1 is in deep water.

The directorate expects to award blocks in June or July.

Under the new Hydrocarbons Exploration Licensing Policy, the directorate accepts expressions of interest in unlicensed acreage twice per year in preparation for bid rounds.

PGNiG to advance Polish exploration after gas find

PGNiG SA plans intensification of exploratory work in southeastern Poland after discovering industrial gas flows from wells in the Debica and Ropczyce-Sedziszow districts in unconventional Miocene formations in Podkarpackie, Poland.

Gas flows from the methane-rich Sedziszow-38K and Korzeniowek-1K wells will reach 68,000 cu m/day and 22,000 cu m/day, respectively, after connection to production systems, PGNiG said.

Sedziszow-38K was drilled in the Nosowka license area. Korzeniowek-1K was drilled in the Mielec-Bojanow license area. PGNiG SA owns 100% interest in both licenses and conducts exploration independently.

Following geological data analysis, PGNiG will decide about further drilling in the license area. PGNiG subsidiary Geofizyka Torun is performing the largest 3D seismic visualization in Europe to date, comprising 350 sq km, to aid in exploring unconventional Miocene formations. The project will be completed in June.

Robertson named Endeavor Energy Resources COO

Lance Robertson has joined Endeavor Energy Resources LP, Midland, as chief operating officer and senior vice-president of development.

He most recently was senior vice-president for US unconventional resources at Marathon Oil Co. Earlier, he was vice-president for engineering and exploitation at Pioneer Natural Resources.

Drilling & ProductionQuick Takes

ADNOC plans sixfold hike in CO2 injection

Abu Dhabi National Oil Co. plans a sixfold increase in injection of carbon dioxide for enhanced oil recovery during the next 10 years as it expands capacity for CO2 capture and storage.

In a program it calls carbon capture, use, and storage (CCUS), the company will extend gas collection to its own operations.

Through Al Reyadah, until this month a partnership with Masdar, Abu Dhabi Future Energy Co., it has injected into reservoirs at Rumaitha and Bab oil fields about 240,000 tonnes of CO2 captured from Emirates Steel Industries (OGJ Online, Nov. 7, 2016).

Al Reyadah moves CO2 from the steel facility to the fields through a 43-km pipeline. It can sequester 800,000 tonnes/year of CO2.

With CO2 from its gas processing plants, ADNOC will begin increasing the oil-field injection rate in 2021 to an expected 250 MMscfd by 2027, freeing for other uses natural gas now reinjected for EOR.

ADNOC claims to have become, in 2009, the first national oil company to conduct pilot tests of CO2 injection for EOR. It teamed with Masdar to develop Al Reyadah in 2016 and this month announced its purchase of Masdar's 49% of the CCUS business.

The oil company will integrate its 100% interest in Al Reyadah into ADNOC Onshore.

ADNOC has a longstanding goal of increasing ultimate recovery to 70% of oil originally in place (OGJ Online, May 29, 2012).

Explosion rocks Oklahoma gas well

Five people were killed after an explosion and fire on a drilling rig at a natural gas well in Pittsburg County, Okla., west of Quinton. The blast happened about 9 a.m. Jan. 22.

Red Mountain Energy of Oklahoma City operated the well and Patterson-UTI Energy Inc. of Houston owned the rig, emergency officials said.

The Pittsburg County sheriff said more than 20 people were working on the rig when it exploded. The derrick collapsed from the fire's heat, responders said.

The cause of the explosion remains under investigation.

ONGC lets contract for Ratna field platforms

Oil & Natural Gas Corp. of India has let an engineering, procurement, and construction contract to National Petroleum Construction Co. of Abu Dhabi for platforms to develop Ratna and nearby oil fields offshore western India.

The $327-million contract covers survey, design, engineering, procurement, fabrication, loadout, transportation, installation, and commissioning of five well platforms and associated pipelines and cables.

ONGC plans to invest $657 million to redevelop Ratna and develop "R-Series" fields in 40-50 m of water about 130 km southwest of Mumbai.

Ratna field, discovered in 1979, produced oil and natural gas during 1983-94. ONGC determined that 8 of 37 structures in the area hold hydrocarbons but brought only Ratna online.

It now plans to drill 22 production wells and 9 water injectors in the Ratna and R-Series fields. The five new well platforms, including a riser and wellhead structure, will join an existing platform to be rehabilitated.

ONGC plans also to use a jack up mobile offshore production unit with oil and gas processing facilities.

Production will move to the existing Heera process complex 41 km away.

ONGC expects production to begin by next year and to peak at 14,583 b/d of oil by 2020. It expects production to total 61.2 million bbl of oil and 60 bcf of gas over the life of the project.

Husky Energy suspends SeaRose operations

Husky Energy Inc. will shut down 27,000 b/d of oil production through its wholly owned and operated SeaRose floating production, storage, and offloading vessel offshore Newfoundland and Labrador. The operator said its action was in undertaken to comply with an order received Jan. 17 from the Canada-Newfoundland and Labrador Offshore Petroleum Board related to an iceberg management incident that occurred in March 2017.

Husky Chief Executive Officer Rob Peabody said the company "will work with the C-NLOPB and take the actions necessary to satisfy the regulator."

In August 2017, Husky let an engineering, procurement, construction, and installation contract to TechnipFMC to connect the West White Rose platform with the SeaRose FPSO. White Rose field is more than 200 miles east of St. John's on the eastern edge of the Jeanne d'Arc basin in 393 ft of water (OGJ Online, Aug. 30, 2017).

In May 2017, Husky expected to start oil production from its West White Rose project in 2022 with peak production of 75,000 b/d in 2025.

Husky said it will provide updates as available but did not disclose a projected date to restart SeaRose production.


Dangote lets contract for Lekki refining complex

Nigerian conglomerate Dangote Industries Ltd. (DIL) has let a contract to Mammoet Holding BV, Utrecht, the Netherlands, to deliver construction-related services for subsidiary Dangote Oil Refining Co.'s (DORC) 650,000-b/d grassroots integrated refining complex now under construction in southwestern Nigeria's Lekki Free Trade Zone (OGJ Online, Nov. 25, 2013).

As part of the contract, signed in Lagos on Jan. 16, Mammoet and Nigerian partner Northridge Engineering Ltd. will provide transporting, lifting, and installation services on all over-dimensional cargo for the refinery project, the service provider said.

To become the world's largest single-train refinery upon commissioning, DORC's $12-billion Lekki integrated complex will include a 650,000-b/d crude distillation unit, a 3.6 million-tonne/year polypropylene plant, a 3 million-tpy urea plant, and gas processing installations to accommodate 3 bcfd of natural gas that will be transported through 1,100 km of subsea pipeline to be built by DIL (OGJ Online, Nov. 9, 2017).

The complex will be equipped to produce 33 million tpy of petroleum products, including gasoline, diesel, kerosine, aviation fuel, and other petrochemicals.

On schedule for startup in 2019, DORC's integrated complex joins a series of other projects under way by the Nigerian government to modernize and expand capacities of refineries operated by state-owned Nigerian National Petroleum Corp. as part of a strategy to meet Nigeria's domestic demand for refined products and reduce its reliance on foreign imports (OGJ Online, June 22, 2017).

Albania seeks investors for shuttered refineries

The Albanian government said it is willing to lend its full support to any private initiative that would redevelop Ionian Refining & Trading Co.'s (IRTC) recently shuttered 20,000-b/d Ballsh and 10,000-b/d Fier refineries in eastern Albania.

Albania's government remains committed to detail to support any serious investor who will come up with a project for business development in Ballsh and Fier refineries, or a bid from an investor to develop a business plan in the sector, involving restart of both refineries, Arben Ahmetaj, Albania's minister of finance and economy (MOEI) said in a release.

The statement follows in the wake of the shutdown of both refineries in late 2017 due to a lack of crude supplies and IRTC's outstanding $60-million tax debt to the government, according to reports from local Albanian media.

As of May 2017, with the cooperation of MOEI and Bankers Petroleum Ltd.-Albania's main crude oil producer-the Ballsh refinery was operating at 100% capacity, according to a Dec. 29, 2017, release from GOMG Holdings Ltd. announcing the sale of its minority interest in the Ballsh refinery to Delvina Investment Partners Ltd.

According to an Aug. 31, 2016, release from Bankers Petroleum, the outfit agreed to sell up to 65% of its crude oil production to IRTC to process at the Ballsh and Fier refineries from Oct. 1, 2016, through Dec. 31, 2017, with the balance of production to be sold to the export market.

The crude supply contract, however, was not renewed, with Bankers Petroleum now exporting the totality of its Albanian crude production to buyers abroad, media reports said.

Coffman joins Motiva as president, CEO

Brian Coffman has joined Motiva Enterprises LLC as president and chief executive officer, replacing Dan Romasko.

Coffman has been senior vice-president of refining for Andeavor Corp., which he joined in December 2013 while the company was still Tesoro Corp. Before that he worked 30 years in refining, transportation, pipeline, marketing, and strategy and planning with the former Conoco Inc.


Cove Point LNG export construction complete

Dominion Energy is commissioning equipment at its Cove Point natural gas liquefaction plant at Lusby, Md., and has begun processing gas (OGJ Online, Oct. 30, 2014).

The facility, integrated with Dominion's LNG import terminal on Chesapeake Bay, is designed to handle an average 750 MMcfd of inlet gas, mostly from the Marcellus and Utica shale plays.

Pacific Summit Energy LLC, which is a US affiliate of Sumitomo Corp., and GAIL (India) Ltd. have 20-year terminal service agreements covering half the marketed capacity each.

IHI/Kiewit Cove Point, a joint venture of IHI E&C International Corp. and Kiewit Corp., handled engineering, procurement, and construction.

NextDecade promotes Schatzman to CEO

Matthew K. Schatzman will succeed Kathleen M. Eisbrenner as chief executive officer of NextDecade Corp., The Woodlands, Tex., effective Feb. 1. Schatzman currently serves as president of the LNG producer. Eisbrenner, who founded NextDecade in 2010, will remain chairman.

Schatzman has 30 years of experience in the industry. He was previously executive vice-president, global energy marketing and shipping, and a member of the group executive committee at BG Group.

The company is moving forward with LNG export projects and associated pipelines in Texas. In April 2017 the company let a contract to General Electric International Inc.'s oil and gas division to serve as exclusive equipment supplier for liquefaction trains and associated pipelines to be built as part of subsidiary Rio Grande LNG LLC's proposed 27 million-tonne/year LNG export terminal in Brownsville, Tex. (OGJ Online, Apr. 25, 2017).

PennEast gas pipeline gets FERC approval

PennEast Pipeline has received US Federal Energy Regulatory Commission construction approval 3 years after filing with the agency. The roughly 120-mile natural gas pipeline begins in the Marcellus Shale near Dallas, Pa., and connects with Williams Co.'s Transco Pipeline near Pennington, NJ.

PennEast expects to put the 36-in. OD line in service in 2019 moving 1 bcfd, with construction beginning this year.

FERC issued its draft environmental impact statement in July 2016 and finalized its recommendations in April 2017, affirming that construction and operation of the PennEast Pipeline would have minimal environmental impact, which would be reduced to "less than significant levels" with PennEast's and FERC's mitigation measures.

About 90% of PennEast's capacity is contracted with area gas utility companies and electric power generators.