GENERAL INTEREST — Quick Takes
BSEE to establish Ocean Energy Safety Institute
The US Bureau of Safety and Environmental Enforcement is establishing an independent Ocean Energy Safety Institute, BSEE Director James A. Watson announced. Its purpose will be to further enhance safe and responsible operations across the offshore oil and gas industry, he said.
OESI will provide a forum for dialogue, shared learning, and cooperative research among academic, government, industry, and other nongovernment organizations in offshore-related technologies and activities that ensure safe operations with limited impact to the environment, according to Watson.
"The institute will help federal regulators keep pace with new processes employed by the industry as they move into deeper water and deeper geologic plays that require technological innovation to bring projects into production," he said on May 29.
BSEE said it is forming OESI following a recommendation from the Ocean Energy Safety Advisory Committee (OESC), a federal advisory group comprised of representatives from industry, federal government agencies, nongovernmental organizations and the academic community.
The recommendation called for establishing a body which will provide a research, technical assistance, and education program, and become a center of offshore oil and gas exploration, development, and production technology expertise, it indicated.
OESI will be an important source of unbiased, independent information and will not have any regulatory authority over the offshore industry, the US Department of the Interior agency said.
"As offshore energy development becomes more complex, every effort should be made to make sure it is done ever more safely," said Thomas O. Hunter, who chairs the OESC and is a former Sandia National Laboratory director.
"The institute provides a unique opportunity for all engaged parties to work together to identify and deploy technology that will make a real and enduring difference," he observed. "The time is right and the opportunity is clear."
Sinochem acquires Wolfcamp stake from PNR
Sinochem Group has closed its previously announced $1.7 billion purchase of Wolfcamp assets in Texas from Pioneer Natural Resources Co.
PNR of Dallas sold 40% of its interest in 207,000 net acres in the horizontal Wolfcamp shale in the southern portion of the Spraberry trend.
At closing, Sinochem paid $631 million in cash of which $109 million was Sinochem's 40% share of net expenditures in the joint interest area.
Sinochem will pay the remaining $1.2 billion by carrying 75% of PNR's share of future drilling costs until the drilling carry is fully utilized.
Production from the joint interest area is approaching 10,000 boe/d, and Sinochem will commence receiving its share effective immediately, PNR said, adding it retains 60% interest in the Wolfcamp assets and will continue as operator.
The assets are in portions of Upton, Reagan, Irion, Crockett, and Tom Green counties in Texas. Pioneer retains its current working interests in all horizons shallower than the Wolfcamp horizon.
Sinochem is a Chinese business conglomerate that spans globally over energy, agriculture, chemicals, real estate, and financial services.
Summit Midstream Partners to buy Marcellus assets
Summit Midstream Partners LP agreed to buy certain gas gathering assets from MarkWest Energy Partners LP in Doddridge County, W.Va., for $210 million.
Closing is expected by June 30. The transaction involves more than 40 miles of high-pressure gas gathering pipelines, certain rights-of-way associated with the pipeline, and two compressor stations totaling more than 21,000 hp of combined compression.
The rich-gas gathering and compression system is supported by a long-term, fee-based contract with an affiliate of Antero Resources Corp., the anchor producer at MarkWest's Sherwood processing complex.
Antero holds more than 312,000 net acres in the southwestern Marcellus. The company has 14 drilling rigs running in northern West Virginia, and it has access to 400 MMcfd of cryogenic processing capacity at the Sherwood complex.
Proceeds from this transaction will provide MarkWest with financial flexibility to help finance more than 18 previously announced major midstream infrastructure projects primarily in the Marcellus and Utica shales.
By the end of 2014, MarkWest is expected to have more than 4 bcfd of processing capacity and 275,000 b/d of fractionation capacity in those two plays. MarkWest is a master limited partnership having gathering, processing, and transportation assets in the Marcellus, Utica, Huron-Berea, Haynesville, and Woodford shales.
Exploration & Development — Quick Takes
Tecpetrol, PetroNova extend Llanos oil discovery
Tecpetrol Colombia and PetroNova Inc., Calgary, have tested oil at a stepout from a 2012 oil discovery on the CPO-7 block in the Llanos basin in Colombia.
The companies ran the test at Atarraya-4, drilled directionally from the Atarraya-1 surface pad to a bottomhole location 2,625 ft southwest from Atarraya-1, where they made a hydrocarbon discovery last year (OGJ Online, May 9, 2012).
Atarraya-4 went to a total depth of 4,841 ft true vertical depth, 5,640 ft measured depth, and mud and electric logs indicated the presence of 25 ft of net oil sand at the top of the C7 Carbonera unit. Production casing was cemented and the well tested on hydraulic jet pump and electric submersible pumps.
Production tests of a gravel-packed interval at 5,204-21 ft at the top of the Carbonera unit yielded 1,000 b/d of fluid with an 11.2% water cut. Net production was 880 b/d of 21.4° gravity oil at a relatively low ESP frequency of 32 Hz, PetroNova said.
The companies completed Atarraya-4 in the upper C7 Carbonera and expect to run an extended production test after obtaining permits.
Atarraya-4 is the fifth well in the drilling campaign on CPO-7, in which PetroNova has a 20% working interest. Next the companies will directionally drill Atarraya-3 from the same pad to a bottomhole location 2,296 ft northeast from the Atarraya-1 location.
Jubilant gauges two-zone Tripura gas find
Jubilant Energy NV said a subsidiary has submitted two notices of discovery to Indian authorities for the Lower and Middle Bhuban formations at its North Atharamura-1 well on Tripura Block AA-ONN-2002/1 in northeastern India.
The Middle Bhuban sand package perforated at 610-625 m flowed 1.7 MMscfd on a 24/64-in. choke, and a multibean study for flow rate and reservoir limit tests are being conducted.
Previously on May 31, the company submitted a notice of discovery after Lower Bhuban perforations at 2,186-91 m flowed at 3,240-3,777 scfd of gas and 445-918 b/d of water on a 32/64-in. choke. Thtal depth is 3,400 m measured depth.
Jubilant holds a 20% participating interest in the block through Jubilant Oil & Gas Pvt. Ltd., and GAIL India Ltd. has 80%.
Development okayed for oil finds off Ghana
Tullow Oil PLC and partners will install a floating production, storage, and offloading vessel and drill as many as 24 wells to develop the Tweneboa, Enyenra, and Ntomme oil discoveries in the Deepwater Tano Contract Area 60 km offshore Ghana (OGJ Online, Feb. 4, 2013).
The group has received government approval to proceed with the development, which Tullow calls TEN, about 30 km west of Tullow-operated Jubilee oil field.
Tullow expects production to begin in 2016 and reach a plateau rate of 80,000 b/d. The FPSO will be moored in 1,500 m of water.
Tullow, operator, has an equity interest of 47.175%. Other interests are Kosmos Energy and Anadarko Petroleum, 17% each; Ghana National Petroleum Corp., 15%; and Sabre Oil & Gas Holdings Ltd., a wholly owned subsidiary of Petro SA, 3.825%.
Drilling & Production — Quick Takes
BSEE, USCG agree to regulate MODUs on OCS
US Bureau of Safety and Environmental Enforcement Director James A. Watson and US Coast Guard Rear Adm. Joseph Servidio signed a memorandum of agreement for regulating mobile offshore drilling units on the US Outer Continental Shelf.
BSEE and USCG will work together to identify and coordinate responsibilities for the inspection and oversight of MODUs in federal offshore waters, the agency's leaders said.
"MODUs are unique and dynamic vessels that are an important part of the offshore oil and gas industry's exploration efforts, but as we learned from the Deepwater Horizon tragedy, these highly complex drilling units with their state-of-the-art equipment and ultradeepwater drilling capabilities must be closely monitored," Watson said.
"This agreement between BSEE and the Coast Guard serves as a significant milestone in achieving coordinated oversight of MODUs while continuing our joint effort to improve offshore safety," he maintained.
Under the current regulatory system, both USCG and BSEE share jurisdiction over regulation of MODU activities on the OCS, the agency leaders said.
This MOA ensures a comprehensive joint approach by clearly outlining each agency's inspection and oversight responsibilities for the systems and subsystems associated with MODUs drilling offshore.
BSEE and USCG will use this MOA to better align policies and procedures while also collaborating on future regulatory projects, they indicated.
Servidio, who is assistant commandant for prevention policy for the US Department of Homeland Security division, said USCG and BSEE said the agencies share the goal of keeping US oceans clean and offshore workers safe.
"This agreement solidifies the commitment of each regulatory agency to work across boundaries to promote safety through the clear delineation of each agency's oversight and inspection responsibilities for MODU activities," Servidio said.
The MOA was executed under a Nov. 29, 2012, MOU that the agencies previously reached.
ExxonMobil lets contract for Julia field
ExxonMobil Corp. has let what it calls a "substantial" lump-sum contract to Technip for its Julia oil field project in the Gulf of Mexico. The contract covers management, engineering, fabrication, installation, and precommissioning of more than 48 km of 10¾-in. OD insulated flowlines, steel catenary risers, and flowline end terminations. Although the exact amount of the award was not announced, Technip says that substantial subsea awards range €100-250 million.
Julia field was discovered in 2008 with the first well drilled under a 2005 exploration agreement between StatoilHydro and ExxonMobil in the deepwater gulf (OGJ Online, Jan. 8, 2008).
The initial development phase includes six wells with subsea tiebacks to the Chevron Corp.-operated Jack and St. Malo production facility and is expected to produce 34,000 b/d of oil starting in 2016 (OGJ Online May 8, 2013). The field covers Walker Ridge Blocks 584, 627, 628, 540, and 583 in 7,200 ft of water. ExxonMobil operates Julia field with 50% interest. Statoil holds the remaining interest.
Sverdrup appraisal well pleases Lundin group
Lundin Petroleum AB, Stockholm, said its 16/2-21 appraisal well in the North Sea offshore Norway provided another important data point for the Johan Sverdrup discovery and that it is moving the Bredford Dolphin semisubmersible to drill the 16/3-6 well to appraise Sverdrup's northeastern flank.
Both the 16/2-21 and 16/3-6 wellsites are in PL501.
The 16/2-21 well found a 12-m net oil column in a 30-m gross Jurassic reservoir sequence that has excellent reservoir quality with a high net-to-gross ratio. The wellsite is 3.8 km north of the 16/5-2S well and 2.5 km west of the 16/2-7 well. The oil-water contact was established at 1,922 m below mean sea level. Total depth is 2,045 m.
Ashley Heppenstall, president and CEO of Lundin Petroleum, said, "The well again encountered Volgian reservoir of excellent quality and high net to gross above the oil-water contact. The top reservoir was encountered within our range of predrill estimates."
Lundin Norway is operator of PL501 with 40% interest. Statoil Petroleum has 40% and Maersk Oil Norway has 20%.
WPX Energy increases Piceance basin drilling
WPX Energy Inc. plans to add two drilling rigs in western Colorado's Piceance basin for the rest of 2013, making a total of seven compared with earlier plans for a five-rig drilling plan.
The additional drilling this year will target the Williams Fork formation where WPX has developed more than 4,100 tight sands wells. The company has drilled a Williams Fork well in 3.7 days.
"Natural gas prices are stronger, and this helps lay the groundwork for our 2014 development," said Ralph A. Hill, WPX president and chief executive officer.
WPX plans to spend $60 million to add two rigs this year. The increase falls within WPX's 2013 budget of $1-1.2 billion.
"We have everything in place to be among the first and fastest to increase our production," in the Piceance, Hill said. "We have the permits, favorable processing contracts, take-away transportation capacity," and large-scale, efficient operations.
As previously announced, WPX continues to plan to drill four horizontal Niobrara wells in the Piceance formation during 2013 to begin delineation of the company's Niobrara discovery (OGJ Online, Jan. 23, 2013).
Over its first 150 days, WPX's Niobrara discovery well has produced 1.25 bcf. The well currently produces 5.5 MMcfd at a flowing tubing pressure of about 3,000 psi.
PROCESSING — Quick Takes
Tesoro closes purchase of Carson refinery
Tesoro Corp. has closed its purchase of BP PLC's 266,000-b/d Carson refinery near Los Angeles and related marketing and logistics businesses (OGJ Online, May 17, 2013).
It paid $1.075 billion for the refining and marketing assets and $1.35 billion for inventory and other working capital.
Tesoro and Tesoro Logistics LP also paid $640 million for the initial purchase of integrated Carson logistics assets including six marketing and storage terminal facilities. Those assets have total throughput capacity of about 225,000 b/d and storage capacity of 6.4 million bbl.
The consideration included $550 million cash and Tesoro Logistics equity worth $96 million.
Tesoro Logistics expects to be offered other Carson logistics assets, including dedicated storage capacity, pipelines, and marine terminals within 12 months. It expects market value of the assets to be $450-550 million.
Saudi Aramco building plant for Midyan gas
Saudi Aramco has begun construction of a gas plant in an industrial region of northern Saudi Arabia to handle production from Midyan gas-condensate field under development in the Red Sea (OGJ Online, Nov. 16, 2012).
The company let a contract for engineering, procurement, and construction to Larsen & Toubro Arabia, Dammam, for a plant able to produce and process 75 MMcfd of nonassociated gas and 4,500 b/d of condensate. The plant will be about 195 km west of Tabuk and 135 km north of Duba.
Two 98-km pipelines will deliver sales gas and stabilized hydrocarbon liquids to a power plant near Duba.
Iraq lets contract for Karbala refinery
Iraq's Oil Projects Co. has let a contract to Technip for project management consultancy for the engineering, procurement, and construction of the Karbala refinery.
In July 2011, Iraq's ministry of oil signed an agreement with Karbala Refinery Corp. Ltd. for the construction of a 200,000-b/d refinery in the Karbala region (OGJ Online, Aug. 1, 2011).
The Karbala project is part of Iraq's longer-term plan to construct four new refineries in an effort to add 750,000 b/d of refining capacity. The other three new refineries are to be at Nassiriya, Maysan, and Kirkuk.
The award to Technip follows completion of front-end engineering and design by the engineering firm completed in 2010.
Current scope of the work will cover two phases; Technip will complete the first phase in this year's second half.
Tesoro agrees to settle air pollution charges
Tesoro Corp. and two subsidiaries agreed to pay $1.1 million to resolve claims that they violated the federal Clean Air Act, the US Environmental Protection Agency said on May 30.
It alleged in its complaint that Tesoro and subsidiaries Tesoro Refining & Marketing Co. LLC and Tesoro Alaska Co. did not meet record-keeping, reporting, sampling, and testing requirements at refineries in Salt Lake City, Utah; Mandan, ND; Anacortes, Wash.; and Kenai, Alas.
EPA said Tesoro will be required to implement an environmental compliance and auditing plan which is designed to prevent future violations and ensure compliance with EPA's fuels regulations under the settlement.
The consent decree is subject to a 30-day public comment period and final court approval, it noted.
TRANSPORTATION — Quick Takes
KMEP to expand Eagle Ford crude pipeline
Kinder Morgan Energy Partners LP will expand its Kinder Morgan crude and condensate pipeline system (KMCC) deeper into the Eagle Ford shale play in Karnes County, Tex. The expansion, supported by a long-term contract with ConocoPhillips, will extend the 178-mile pipeline 31 miles from the KMCC DeWitt Station in DeWitt County, Tex., to ConocoPhillips's central delivery facility near Helena in Karnes County.
KMEP also will build receipt tanks and a truck unloading facility adjacent to ConocoPhillips's Helena site. KMEP expects to begin construction on the project next month for completion in third-quarter 2014. The company has committed to deliver as much as 300,000 b/d of Eagle Ford crude and condensate.
KMCC entered service in June 2012. Its expansion will cost $107 million.
EPP launches Marcellus-US Gulf open season
Enterprise Products Partners LP (EPP) has launched a binding open season for transporting propane to Mont Belvieu, Tex., on its Appalachia-to-Texas (ATEX) pipeline. ATEX already secured long-term contracts in place for ethane transportation to Mont Belvieu as of January 2012.
To accommodate shipments of propane, EPP would loop a portion of ATEX, add pumping capacity as needed, and install additional equipment for delivery of specification ethane and propane at destination points. Aggregate commitment volumes will determine ATEX's eventual scope, but propane transportation would begin first-quarter 2015.
EPP described the project as providing US Northeast producers a reliable alternative to exporting propane, instead supplying Gulf Coast petrochemical and dehydrogenation projects.
Originating in Washington County, Pa., ATEX's first leg will involve building about 595 miles of pipeline extending to Cape Girardeau, Mo., closely paralleling an existing Enterprise pipeline. At Cape Girardeau, EPP will reverse a 16-in. OD pipeline and place it into NGL service. At the southern terminus of the ATEX Express pipeline, EPP will build a 55-mile, 16-in. OD pipeline to provide shippers with access to its NGL storage at Mont Belvieu, Tex (OGJ, Feb. 4, 2013, p. 88).
The open season will end July 11.
EPP to move diluent from Mont Belvieu to Chicago
Enterprise Products Partners LP (EPP) will proceed with development of a project to transport diluent-quality natural gasoline from its Mont Belvieu, Tex., liquids storage complex via its 20-in. OD TE Products Pipeline to several potential Chicago-area delivery points. The decision followed an open season during which EPP secured long-term commitments supporting plans to provide access to both Enbridge Inc.'s Southern Lights and Kinder Morgan Energy Partners LP's Cochin pipelines.
EPP expects connections to Southern Lights and Cochin to begin service during the fourth-quarter 2013 and second-quarter 2014, respectively.
Southern Lights entered service July 2010 and carries diluent 1,588 miles from the Chicago area to Edmonton.
KMEP last year began offering service to move light condensate on Cochin from Kankakee County, Ill., to terminals near Fort Saskatchewan, Alta., receiving more than 100,000 b/d of binding 10-year commitments in an initial open season (OGJ Online, June 6, 2012).
Millennium expands capacity with compressor station
Millennium Pipeline Co.'s Minisink compressor station went online June 1 following May 15 approval by the US Federal Energy Regulatory Commission of Millennium's request for Authorization to Commence Service. Key shippers on the project are Southwestern Energy Services Co., WPX Energy, and MMGS Inc. (Mitsui E&P).
The station and maintenance building occupy 4-5 acres of a 70-acre rural parcel purchased by Millennium for the project in the town of Minisink, NY. The addition of the Minisink station is part of Millennium's plans to increase its capacity to 825 MMcfd by late this year from 525 MMcfd in mid-2011.
DTE Energy, which owns 26.25% of Millennium, announced plans in mid-2011 to spend $250 million over 5 years on a Marcellus shale gathering system delivering to Millennium in Broome County, NY, and to Tennessee Gas Pipeline in Susquehanna, Pa. (OGJ Online, July 6, 2011).