Chevron to develop Chuandongbei gas project, gives green light for Angola LNG project

Feb. 1, 2008
Chevron Corp. is moving forward with various natural gas projects.

Chevron Corp. is moving forward with various natural gas projects. The company’s main Chinese subsidiary has signed a 30-year production-sharing contract with China National Petroleum Corp. (CNPC) for the joint development of the Chuandongbei natural gas area in central China. Chevron will take over the role of operator and hold a 49% participating interest and CNPC will hold a 51% interest in the project.

“The signing of this contract demonstrates our worldwide focus on large-scale exploration and production projects, and our long-term strategy to grow our business in China,” said Dave O’Reilly, chairman and CEO of Chevron, during a signing ceremony in Beijing.

Added Isikeli Taureka, Chevron’s country manager for China: “This partnership is a milestone for future cooperation between CNPC and Chevron. We look forward to working with CNPC to find solutions to meet China’s rapidly growing demand for energy. We also plan to undertake a multiphase work program with CNPC’s subsidiary PetroChina Southwest Oil and Gas Field Company to evaluate additional reserves in the contract area and commence front end engineering and design work.”

The Chuandongbei gas development area covers nearly 2,000 square kilometers in the Sichuan province. Chuandongbei has an estimated resource base of 5 tcf of natural gas. Design capacity at the proposed gas plants is expected to be 740 MMcf/d.

In related news, the company’s investors in the Angola liquefied natural gas project have agreed to move the project forward to the construction phase. Cabinda Gulf Oil Co. Ltd., a wholly-owned subsidiary of Chevron, has a 36.4% interest in Angola LNG Ltd., which has entered into an investment contract with the Angolan government and Sonangol to develop the project. Other Angola LNG Ltd. shareholders are Sonangol with 36.4%, and BP and Total, each with 13.6%.

The Angola LNG project plans to commercialize dedicated Angolan natural gas resources by collecting and transporting gas located offshore Angola to an onshore liquefaction plant located in the Soyo region, Zaire Province.

The project is designed to receive roughly one billion cubic feet of associated natural gas a day and produce nearly 5.2 million metric tonnes a year of LNG and related gas liquids products. It is expected to supply up to 125 million cubic feet a day of natural gas to Sonangol for domestic use in Angola.

“Chevron is pleased to participate in such a significant gas project, and this milestone underscores Chevron’s commitment to grow an internationally competitive natural gas business that provides long-term, sustainable returns,” said George Kirkland, Chevron executive vice president, upstream and gas. “Chevron’s experience in executing technically and commercially complex projects is demonstrated by the progress of Angola LNG, which will establish Angola as a competitive source of LNG to the emerging global natural gas market.”

Alan Kleier, managing director of Chevron’s Southern Africa operations, added: “The benefits of Angola LNG are broad - the project is expected to commercialize the country’s natural gas resources, facilitate more oil development and natural gas exploration and provide natural gas for domestic use to stimulate further economic development.”

First LNG from the project is anticipated in early 2012. LNG is planned to be delivered to Gulf LNG’s Clean Energy regasification terminal in Mississippi for sale in the US.

Sonangol sets submission deadline for Angola oil concessions proposals

Sonangol EP, the national oil company of Angola, has set a March 13, 2008 submission deadline and guidelines for submission for all pre-qualified companies seeking to submit bid proposals for blocks offered in Angola’s 2007 –2008 Licensing Round, which include:

  • Block Centro (Cabinda Onshore)
  • Blocks KON 11 and KON 12 (Kwanza Onshore)
  • Block 9 (Shallow water)
  • Blocks 19, 20 and 21 (Deepwater)
  • Blocks 46, 47 and 48 (Ultra Deepwater)

In their proposals, companies submitting bids must indicate their interest in serving as operator or non-operator, as well as the minimum or maximum participation interest that they intend to obtain in the blocks for which they are bidding.

Sonangol and its associates will enter into Production Sharing Agreements on the aforementioned concessions.

Companies submitting bids on blocks are required to purchase the available data package for each block they bid upon by March 7, 2008. A list of the pre-qualified companies as well as maps of the blocks on offer are available at the Sonangol website.

Microwave fuel recovery technology gets ‘best invention’ recognition for Global Resource

Global Resource Corp., a developer of a patent-pending microwave technology and machinery for extracting oil and gas, has been recognized by Time Magazine. The company’s microwave technology has been deemed one of the “Best Inventions of the Year” because of its ability to “pull fuel out of shale rock, tires, and even plastic bottles.”

The emissions-free process developed by Global Technology’s Frank Pringle shows potential for being a major player in the fight to reduce US dependence on foreign oil.

Various forms of otherwise “trapped” or “unusable” oil sources are bombarded with the company’s specific microwave frequency in the form of “molecular vibrations.” These vibrations cause the “cracking” of the hydrocarbon chain, gasifying the hydrocarbon components.

Low production gas and oil wells are classified as marginal or stripper wells when production is less than 60 cubic feet per day and 10 barrels per day, respectively. Capped wells are those that have been closed off and are therefore no longer producing any oil or gas.

It is estimated that these wells still have 50% or more of their oil reserves still in the ground. However, “on average the global recovery factor is probably not much better than 30% to 35%”. Until recently, it was widely accepted that the remaining half of the oil in most of these reservoirs was not economically recoverable, even at high oil prices. Global Technology’s recovery process may be able to tap into this resource.

The same process is used for heavy oil or slurry oil. This oil is also known as refinery waste oil because it is too thick to economically crack or reprocess with current technologies. At least 3% of typical oil refinery production is slurry oil.

Finally, the microwaves have been applied to shale, whether in-situ or on the earth’s surface. On average, this shale contains about 50% to 70% hydrocarbon and kerogen by weight, making it the most abundant source of fuel in the US next to capped-off oil wells.

Word of the company’s technology is spreading. The company says it is receiving about ten inquiries a day from across the world regarding its microwave system. It has recently signed a contract with Warwick Communications for an exclusive 20-year license to use the company’s microwave machinery to recover energy from oil, gas, mining, and waste resources in Canada.

Surging demand forecast for offshore energy services

John Westwood, of energy business analysts Douglas-Westwood, recently spoke about future prospects for offshore energy industry business sectors.

“The offshore oilfield services sector is facing unprecedented levels of business; some companies that might normally have a six-month backlog are now booking work for 2011. Recent $100 oil has only served to add to the already massive demand for the products and services of firms that supply the offshore oil and gas companies,” he said.


He particularly highlighted deepwater oil and gas exploration and production. “Virtually the only place where giant fields will be found in future years is in deepwater, with Brazil’s recent Tupi elephant find is testament to that,” he said.

Douglas-Westwood expects world deepwater production to grow from 6 MMboe/d in 2007 to 11 MMboe/d in 2011.

Westwood also expects nearly $25 billion to be spent annually in deepwater capital expenditure by 2012, a 30% growth for the 2008-2012 period in comparison to the previous five years. “This will drive demand for deepwater drilling rigs, floating production systems, subsea production hardware, and more,” he added.

Service sector success

Oilfield services companies (OFS) have become an investor favorite. Douglas-Westwood’s index of 10 leading deepwater OFS companies has since November 2006 risen by 69%, while in comparison the FT oil and gas companies’ index has grown by 11%. Individual deepwater sector stars include drilling rig operator Transocean; up 105% and subsea flexible pipe manufacturer Wellstream; up 207%.

An exciting future

“Offshore energy offers exciting growth prospects. Although presently focused on oil and gas, the developing new sector of offshore renewable energy is now set for strong growth,” he said.

Nearly $2 billion has been spent installing offshore wind turbines over the past five years. Douglas-Westwood predicts that over the period 2008-2012, $16 billion will be spent installing over 1,300 turbines.

“The real issue the offshore supply chain companies face is trying to keep pace with ever-increasing demand,” Westwood concluded.