Mikaila Adams, OGFJ, Associate Editor
While Occidental Petroleum Corp. has secured its place as the fourth largest US oil and gas company, it is not stopping there. Oxy continues to expand and enhance its operations. Most recently by solidifying a contract with Libya and working to grow its enhanced oil recovery efforts.
Libya
Occidental Petroleum has signed 30-year agreements with the Libyan National Oil Co. (NOC) to upgrade its existing petroleum contracts.
At the signing ceremony in Tripoli, Libya, Occidental Petroleum chairman and CEO Dr. Ray R. Irani stated, “We believe these new agreements with NOC represent an important step toward Libya’s goal of doubling oil production to more than 3 million barrels per day in the near future.”
The new agreements, which cover fields with approximately 2.5 billion barrels of recoverable high-quality oil reserves, allow NOC and Occidental to design and implement major field redevelopment and exploration programs in the prolific Sirte basin.
Over the next five years, the company anticipates investing roughly $5 billion in the area and projects gross production to triple from its current 300,000 b/d level.
Oxy began operations in Libya in 1965 and continued operating until US sanctions were imposed in 1986. Oxy was the first US company to resume oil operations in Libya after the US sanctions were lifted in 2004.
Oil sands
In addition to its Libya operations, the company is particularly interested in oil sands. Oxy recently purchased a 15% interest in the Joslyn Oil Sands Project in Alberta from Enerplus Resources Fund for C$500 million.
Operated by Total, the Joslyn project holds over 8 billion barrels of bitumen in place and the recoverable reserves, net to Occidental are estimated at 370 million barrels. While the project is still in the early stage of development, it currently has more than 1,800 delineation wells drilled to date.
Oxy expects to spend $2 billion over a number of years to develop the reserves. Production from the operation is expected to begin in 2014 at roughly 11,000 b/d and grow to a plateau of approximately 31,000 b/d. Closing for this transaction is expected in the third quarter of 2008.
And, while Oxy is known as the largest oil producer in Texas, it recently looked to the state for additional EOR-related activity.
In July, the company signed an agreement with SandRidge Energy to develop a West Texas hydrocarbon gas processing plant and related pipeline infrastructure that will provide carbon dioxide for use in Oxy’s EOR projects.
“This project will allow us to exploit at least 3.5 trillion cubic feet of CO2 for our long-term use in enhanced oil recovery projects throughout the Permian Basin and will allow us to develop approximately 500 million barrels of reserves from currently owned assets at an attractive cost,” said Irani.
Oxy will continue to contract for and seek additional CO2 sources to further develop its existing Permian asset base.
Oxy will own and operate the new facilities and will invest approximately $1.1 billion in their development. The gas processing plant, located in Pecos County, Tex., is expected to have a CO2 takeaway capacity of at least 450 MMcf/d. Oxy additionally will get another 50 MMcf/d from existing SandRidge gas processing plants. A new 160-mile long pipeline will be constructed from the plant, through McCamey, Tex., to the industry CO2 hub in Denver City, Tex.
SandRidge’s locally produced, high CO2 content natural gas will be processed at the new Oxy plant with Oxy oil and gas production wells receiving the CO2 stream that is separated from the natural gas.
The new gas plant and pipeline are expected to begin operations in 2011.
