General Interest - Quick Takes
China confirms sending warships to E. China Sea
The Chinese government confirmed it sent warships to a disputed area of the East China Sea on Sept. 29, a day ahead of talks with Japan over territorial claims to waters in which both sides want to drill (OGJ Online, Sept. 27, 2005).
“I can now confirm that in the East China Sea, a Chinese reserve vessel squadron has been established,” said Foreign Ministry spokesman Qin Gang. “The establishment of this vessel squadron is aimed at handling emergency situations like rapid mobilization and assistance at sea during peacetime, while also raising the ability of the navy.”
Chinese state media earlier said the warships would be ready for combat if necessary, being equipped to “eliminate obstacles at sea” in war or peace.
It said creation of the squadron came after China’s decision in May to deploy two naval groups off the mainland’s northern coast in the Bohai Sea and Yellow Sea.
There was no immediate reaction from the Japanese government to the new move by China. The two met during Sept. 30-Oct. 1. Ahead of these meetings, Japanese Foreign Minister Nobutaka Machimura said his country’s negotiators would ask China “to stop gas development on their own, and stop drilling if they are going ahead with drilling, without giving us any information.”
Under the United Nations Convention on the Law of the Sea, which Japan and China have signed, countries can claim economic zones extending 200 nautical miles from their coastlines. In the case of the East China Sea, however, the disputed site lies within the 200-mile area claimed by both countries.
The UN has until May 2009 to rule on the matter.
Japan seeks more talks in dispute with China
Japan has proposed to China to hold further talks on Oct. 19 in an effort to resolve their dispute over oil and gas drilling in the East China Sea. China has not yet confirmed the proposal.
Japan has urged China to stop its development of the disputed gas fields and called for joint exploitation of natural resources in the area. China said it would respond to Japan’s proposals at the next meeting, the fourth round of talks since last fall.
Japanese officials said their proposed joint development plan covers four Chinese gas fields near what Tokyo says is the median line in the East China Sea. The fields include Chunxiao, Tianwaitian, Duanqiao, and Longjing.
FERC cancels Port Arthur LNG meetings
Citing damage from Hurricane Rita, the US Federal Energy Regulatory Commission canceled its planned public comment meetings on the environmental impact statement draft for the proposed Port Arthur LNG Project.
But it extended the public comment period on the EIS draft by 60 days. Comments now are due by Dec. 16. More information is available on FERC’s web site at www.ferc.gov.
Units of Sempra Energy propose to build the LNG import terminal near the Texas-Louisiana border in two stages of 1.5 bcfd each. ✦
Exploration & Development - Industry Scoreboard
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Exploration & Development - Quick Takes
Lundin to plug Aje-3 appraisal in Nigeria
Lundin Petroleum AB will plug and abandon its Aje-3 appraisal well in 3,100 ft of water on Block OML 113 in the Benin basin off Nigeria (OGJ, May 2, 2005, p. 58).
Aje-3 was drilled to its target depth of 8,482 ft and encountered Turonian and Cenomanian reservoirs that tested hydrocarbon in Aje-1 and Aje-2 (OGJ Online, Sept. 3, 2004). The reservoirs were downdip from the discovery well and below the oil-water contact defined in Aje-2 in the Cenomanian. The Turonian interval in Aje-3 was above the gas-water contact encountered in Aje-1 and Aje-2, but the presence of gas in the reservoir could not be tested due to poor reservoir properties.
Evaluation continues of the Aje structure and Block OML 113. All three Aje wells have proved the existence of an active petroleum system and the presence of a well-developed reservoir and seal. The block remains prospective for exploration and development.
Yinka Folawiyo Petroleum Co. Ltd., a private Lagos independent, is operator of the block. Lundin Petroleum acts as technical advisor to Yinka. Other participants are Palace Exploration Co., Challenger Minerals (Nigeria) Ltd., Providence Resources PLC, Howard Energy Co. Inc., and Syntroleum Corp.
BG Tunisia to develop Hasdrubal field
BG Tunisia Ltd. let a contract to Petrofac Ltd., Woking, UK, for front-end engineering and design for development of Hasdrubal oil and condensate field off Tunisia.
It plans to develop the field with a normally unattended installation and to produce hydrocarbons through a new multiphase export pipeline to onshore processing facilities that will be built next to the existing BG Tunisia Hannibal plant, Petrofac said. Hasdrubal facilities will move sales gas to the Tunisian gas grid and condensate to a storage facility along the coast at La Skhira via a new pipeline.
The field, a 1975 Elf discovery initially considered noncommercial, is in the Amilcar exploration permit off Sfax in the Gulf of Gabes, 25 km south of Miskar field, where BG has produced as much as 216 MMscfd of gas and 5,554 b/d of condensate.
BG Tunisia operates the Amilcar permit in partnership with state-owned ETAP. It submitted a development plan for Hasdrubal field last April after drilling a series of appraisal wells.
The first, Hasdrubal-3 drilled in June 1997, flowed 21 MMscfd of gas. Hasdrubal-4, drilled in June 1998, flowed 4.6 MMscfd of gas and 1,800 b/d of oil on a single drillstem test.
Hasdrubal-SW1 in 2002 tested light oil from the Tertiary El Garia formation, confirming an extension of Hasdrubal field to the southwest.
Japanese operators to enter Libyan exploration
Libya’s National Oil Co. (NOC) has awarded exploration rights through an international tender to five Japanese companies. They are the first oil concessions won in Libya by Japanese corporations.
Nippon Oil Group’s wholly owned subsidiary Nippon Oil Exploration, in a venture with Mitsubishi Corp., won a ¥6 billion contract to drill on the 2-1/2 Block, covering 4,905 sq km. Nippon Oil will hold a 90% stake in the block, with Mitsubishi holding the remaining 10%.
Japan Petroleum Exploration, together with Nippon and Mitsubishi, won a ¥4 billion drilling rights contract for the 4,571-sq km 40-3/4 Block. Japan Petroleum holds a 42% stake in the block, while Nippon has 38%, and Mitsubishi 20%.
Japan Petroleum independently won a ¥3.5 billion drilling rights contract for the 176-4 Block, occupying 2,828 sq km.
Teikoku Oil and Mitsubishi jointly won a ¥3.4 billion contract for the 81-2 Block, covering 2,708 sq km, and a ¥4.1 billion contract for the 82-3 Block, totaling 2,687 sq km. Teikoku holds a 73% stake in both blocks, while Mitsubishi holds 27%.
Inpex Corp. and France’s Total SA jointly won drilling rights for the 42-2 and 42-4 Blocks, which cover 3,419 sq km. Total holds a 60% stake in the two blocks, and Inpex holds 40%.
The Japanese companies said they will spend 5 years assessing the blocks. If the blocks are commercially viable, production is likely to start as early as 2012-13.
According to the International Energy Agency, Libya produced 1.6 million b/d of oil in 2004, with some 1.34 million b/d exported. The country has announced plans to increase production to 2 million b/d by 2008-10 and 3 million b/d by 2015.
In this latest bidding round, NOC awarded 44 oil exploration permits to predominantly Asian and European companies, with a total of 51 firms taking part.
In January, NOC, in its first licensing round since US sanctions were lifted in 2004, awarded 15 exploration permits to 12 non-European companies out of a field of 56 international operators that prequalified to participate in the auction (OGJ Online, Feb. 7, 2005).
In September, Occidental Petroleum Corp.-the first US oil and gas producer to resume operations in the North African country-lifted its first Libyan crude oil for shipment to the US since leaving its operations in the prolific Sirte basin in 1986 due to the US economic sanctions.
BG, Statoil win Libyan onshore licenses
BG Group and Statoil ASA, bidding together and separately in Libya’s recent licensing round, won exploration and production sharing agreements (EPSAs) to several onshore areas.
Together, they are to receive an EPSA, subject to government ratification, for Area 171 in the Kufra basin. The license involves Blocks 1-4, in which BG and Statoil each has a 50% interest.
Statoil will be operator of Area 171, which covers 11,000 sq km. The work obligation includes a 2,000-km seismic survey and two exploratory wells.
Separately, Statoil received an EPSA to Area 94 in the Cyrenaica basin. It holds a 100% interest and will be operator. It is to shoot 3,000 km of seismic survey and drill one well.
And BG will assume 100% interest in and operate EPSAs for Area 123 (Blocks 1-2). It is to shoot a seismic survey and drill a wildcat on each block. Area 123 is in the Sirte basin and covers 4,750 sq km.
Repsol YPF group notches Libya Murzuk oil find
A group led by Repsol YPF SA discovered its fifth oil field on 4,300 sq km Block NC 186 in the Murzuk basin in the Sahara Desert 800 km south of Tripoli, Libya.
The I1 well flowed 2,060 b/d of 40° gravity oil from the Ordovician Memuniyat sandstone at 1,717 m. Repsol YPF said the oil is “amongst the best quality on the market.”
Repsol YPF is operator with 32% interest. Total SA has 24%. Other participants are Norsk Hydro AS and Libya’s NOC.
It’s the third well drilled in the block’s second exploration phase, which began in May 2003. The group’s four previous discoveries on the block have a combined 400 million bbl of light oil recoverable. A and D fields went on production in the past 2 years and reached a combined 45,000 b/d, and B and H are to be developed shortly.
The group initiated Murzuk basin production in December 1996 with giant El Sharara field, which now produces 200,000 b/d of light, sweet oil. Repsol YPF’s net Libyan production averaged 21,308 b/d in 2004, and its net proved oil reserves were 86.9 million bbl at yearend. OMV AG, a member of the Murzuk basin production group, said its Libyan production is 27,500 b/d.
Kurdistan, Heritage plan Iraq field study
The government of the autonomous region of Kurdistan in northern Iraq has entered into a memorandum of understanding (MOU) with K Petroleum Co. (KPC) for field studies over an area adjacent to Taq Taq oil field in northeastern Iraq. KPC is a wholly owned subsidiary of Heritage Erbil Oil Ltd., a 50-50 joint venture of Heritage Oil Corp., Calgary, and the Kurdistan firm Eagle Group.
The area is considered prospective for hydrocarbons. Over 100 prospects have been identified in this zone, the majority being long anticlinal surface structures of different prospectivity separated by wide synclines (OGJ, July 29, 1996, p. 108). There are 49 structures over 20 km long reaching up to 74 km at Chemchemal field. Taq Taq, which borders the MOU area, is among the successfully tested and proven fields.
Drilled in 1960, Taq Taq was declared a discovery with a second exploration well in 1978. Two additional appraisal and development wells were drilled in the 1990s. IHS Energy estimates that the field has reserves of 130 million bbl of oil and expects it to be capable of producing 60,000 b/d. The field currently produces 3,600 b/d of 20-40° gravity crude oil. Prospects similar to the Taq Taq structure could be present in the area covered by the MOU.
KPC has preparatory work under way, and fieldwork is expected to begin shortly on regional studies, geological field mapping, a geochemical field survey, and a gravity survey. The government’s Oil, Gas, and Petrochemical Establishment will provide all available data, logistical support, and security.
Negotiations to formalize the MOU into a production-sharing agreement are expected to begin while the work program is being carried out, Heritage said.
ONGC to explore block off central Vietnam
ONGC Videsh Ltd. (OVL), the overseas arm of India’s state-owned Oil & Natural Gas Corp., expects to sign in November a contract for 100% interest in Block 127 in the Phu Khanh basin off central Vietnam.
The block is in more than 400 m of water and covers 9,264 sq km. OVL holds a 45% interest in the producing Lan Do and Lan Tay gas fields in the Nam Con Son project (OGJ Online, Jan. 20, 2003).
On Block 127, OVL plans to invest $70 million in the first phase of exploration, during which it will drill two wells.
ConocoPhillips well taps gas off Australia
ConocoPhillips reported the Caldita-1 exploration well encountered natural gas in the NT/P 61 license in the Timor Sea off Australia’s Northern Territory.
The well reached 4,037 m TD in 137 m of water. During a drillstem test, gas flowed at a rate of 33 MMscfd through a 1-in. choke. The well will be plugged pending technical evaluation.
A ConocoPhillips unit operates the NT/P 61 license with 60% interest. Santos Offshore Pty. Ltd. holds 40% interest.
Devon plans first Beaufort Sea well in years
Devon Energy Corp., Oklahoma City, plans to drill during the 2005-06 winter the first well in the Canadian Beaufort Sea in 15 years.
Devon has completed a multiyear 3D seismic survey that has identified several preliminary drilling targets and is in the process of applying for a drilling program and a drilling permit from the Canadian National Energy Board (OGJ, Nov. 3, 2003, p. 42).
The planned Paktoa well, which will cost $55-60 million (Can.), is the first of four wells Devon is obligated to drill by August 2009.
Paktoa will be drilled to 2,500 m in about 40 ft of water starting late December. It will test the Tertiary Kugmallit and Taglu 1 through 3 sands.
Gas from a sizable find could supplement supply to the proposed Mackenzie Valley Pipeline, which will run from Inuvik to Norman Wells in the Northwest Territories. The Mackenzie line, at a cost of $5.6 billion, could bring up to 1.9 bcfd of arctic gas to market by 2010. ✦
Drilling & Production - Quick Takes
Suncor plans Fort McMurray delayed coker
Suncor Energy Inc., Calgary, will use ConocoPhillips technology for a large, grassroots delayed coking unit to be installed at its Fort McMurray oil sands upgrader in northern Alberta. The terms of the agreement were not disclosed.
The unit will increase the upgrader’s production capacity of 225,000 b/d to 500,000-550,000 b/d in 2010-12.
The unit will use ConocoPhillips’s ThruPlus technology to upgrade Athabasca bitumen.
Australia seeks CO2 sequestration program
Australia wants to become a world leader in reducing greenhouse gas emissions through the capture and long-term geological storage of carbon dioxide, according to Ian Macfarlane, Australia’s Minister for Industry, Tourism, and Resources.
Speaking at the fourth multinational Carbon Sequestration Leadership Forum in Berlin, he said 50% of Australia’s CO2 emissions came from stationary sources and were therefore suitable for geosequestration. The government agency Geoscience Australia has identified 65 viable CO2 storage sites in Australia, he added.
“Australia has the geology, the scientific expertise, the industry enthusiasm, and the political will to capitalize on the carbon capture opportunity,” Macfarlane said. “But it is an opportunity that will take an international effort to realize.”
The forum discussed a recent United Nations report that recommends using existing technology developed by the petroleum industry to capture CO2 underground. It estimates the risks are similar to those of the current practice of storing natural gas. Ninety-nine percent of properly stored CO2 will not leak in the next 1,000 years.
The report added that the capture process requires extra energy, which may mean increased consumption of fossil fuels. ✦
Processing - Quick Takes
Marathon completes Detroit refinery upgrade
Marathon Oil Corp. will shut down normal refining operations for 50 days at its 74,000 b/d Detroit refinery, which is in the final stage of a $300 million expansion and clean fuels project expected to be completed by mid-November.
The expansion project, announced in late 2003, will increase crude capacity to 100,000 b/d and fuels production by 23,000 b/d.
The project will allow the refinery to produce low-sulfur gasoline and ultralow-sulfur diesel fuel.
Petrobras’s REPAR facility due delayed coker
Petroleo Brasileiro SA (Petrobras) has selected ConocoPhillips’s ThruPlus delayed coking technology for a grassroots 31,450 b/d delayed coking unit at its 196,000 b/d Pres. Getúlio Vargas Refinery (REPAR) in Araucaria, Paraná, Brazil. The terms of the agreement were not disclosed.
Projected start-up of the unit is slated for 2009.
REPAR supplies about 12% of Brazil’s petroleum byproducts, selling 85% of its output in the states of Paraná, Santa Catarina, and Mato Grosso do Sul and southern Sao Paulo.
Sabic lets contracts for Sharq III expansion
Saudi Basic Industries Corp. (Sabic) affiliate Eastern Petrochemical Co. (Sharq) has let three contracts for the Sharq III expansion of its petrochemical complex in Jubail Industrial City, Saudi Arabia (OGJ Online, Feb. 24, 2005).
Stone & Webster received a contract to engineer, supply, and build a 1.3 million tonne/year ethylene plant. Foster Wheeler Energy Ltd., UK, will build the utilities and offsite facilities. Linde-KCA-Dresden GMBH will engineer, supply, and build the 400,000 tonne/year linear low-density and 400,000 tonne/year high-density polyethylene plants.
The project also will expand ethylene glycol capacity by 700,000 tonnes/year and push total output of all products by the complex to more than 5 million tonnes/year.
Sharq is a 50-50 joint venture of Sabic and SPDC Ltd, a Japanese consortium led by the government of Japan and the Mitsubishi group of companies.
Russian-Uzbek venture plans small refinery
Dzharkurganneftepererabotka, a joint venture of Russia’s Petromaruz and Uzbekistan’s Dzharkurganneft, plans a 2,600 b/d refinery in Dharkurgan in southern Uzbekistan.
The refinery will produce asphalt and diesel from heavy crude from eight fields Dzharkurganneft is developing in the Surkhandarya region.
Thai Oil picks ABB for refinery upgrade
Thai Oil Public Co. Ltd. let a contract worth more than $100 million to ABB of Switzerland to expand and revamp its 220,000-b/d Sriracha refinery on the Gulf of Thailand.
ABB will refurbish a crude distillation unit to increase its capacity to 175,200 b/d from 116,800 b/d and revamp related equipment.
In addition, ABB will install units for sulfur removal from flue gases and purification of kerosine. ✦
Transportation - Quick Takes
ONGC, RasGas working on equity swap
India’s state-run Oil & Natural Gas Corp. and Ras Laffan Liquefied Natural Gas Co. Ltd. of Qatar are arranging an equity swap as part of the LNG supply arrangements.
ONGC, a shareholder in Petronet LNG Ltd. of India, plans to exchange interest in Petronet for a stake in the RasGas liquefaction facilities.
India is negotiating on the price of potential additional LNG purchases from Qatar. India Petroleum and Natural Gas Minister Mani Shankar Aiyar plans to visit Qatar in November.
Qatar’s Energy Minister Abdullah bin Hamad Al-Attiyah said Qatar is open to helping India fulfill its LNG needs.
RasGas, a joint venture of Qatar Petroleum and ExxonMobil RasGas Inc., produces LNG and other products from gas from North field, which has estimated reserves of over 900 tscf. It is the world’s largest offshore nonassociated gas field.
YLNG lets Yemen gas pipeline contract
Yemen LNG Co., a subsidiary of Total SA, let a gas pipeline engineering, procurement, and construction contract to AMEC SPIE Capag, a UK-based international project management and services company, and its Yemeni partner Hawk International.
The 2-year contract is worth more than $200 million, and covers the laying of 320 km of 38-in. pipeline, 25 km of 20-in. pipeline, and development of ancillary structures. Work is expected to start immediately.
The pipeline will carry gas from a field near Marib, 180 km east of Yemen’s capital Sana’a, to an LNG terminal being built near Bal Haf in the Gulf of Aden (OGJ Online, Sept. 19, 2005).
Framework set for Kazakhstan to join BTC line
Kazakhstan and Azerbaijan have prepared a framework agreement for Kazakhstan to join the Baku-Tbilisi-Ceyhan (BTC) Pipeline project, according to Kazakh Energy and Mineral Resource Minister Vladimir Shkolnik.
“At the level of experts from profile ministries and negotiation groups from Kazakhstan and Azerbaijan a framework agreement has now been initialed,” Shkolnik said Oct. 4 in Almaty.
The agreement will enable the development of other documents for the construction of the Aktau-Baku link to the trunk pipeline, Shkolnik said.
He said the agreement should now be submitted to the governments of both countries for consideration. If they sign a resolution approving the framework agreement, they will work on signing an intergovernmental agreement soon.
The agreement would involve shipping Kazakh crude oil by tanker from Aktau to Baku, where it would enter the BTC pipeline. Plans call initially for 7.5 million tonnes/year of Kazakh crude oil through the pipeline, eventually rising to 20 million tonnes/year.
In August, Shkolnik said Kazakhstan would construct an oil export terminal about 76 km south of Aktau at Kuryk. Pipelines connecting Kuryk with the Aktau extension also will be built, he said (OGJ Online, Aug. 4, 2005).
Officials last May began BTC line fill at the Sangachal terminal near Baku. The pipeline will move crude oil mainly from Azerbaijan’s Caspian Sea region to the Mediterranean (OGJ, June 27, 2005, p. 61). ✦