GENERAL INTEREST Quick Takes

OPEC extends production-cut targets for 9 months

Members of the Organization of Petroleum Exporting Countries said they agreed to extend their oil production cuts by 9 months to support oil prices amid a weakening world economy.

Saudi Arabia’s Energy Minister Khalid al-Falih said the cartel recognizes that this year’s first quarter was a period of slow demand. As OGJ went to press last week, the agreement was expected to receive approval from non-OPEC allies, including Russia, at a July 2 meeting in Vienna.

Al-Falih said a new charter of cooperation was drafted and will be published. Ahead of the July 1 meeting, OPEC had been widely expected to extend cuts by at least 6 months.

Iraq’s Oil Minister Bijan Zanganeh already told reporters in Vienna he had “no problem” with supporting oil supply cuts by 9 months. OPEC and some non-OPEC producers have been reducing production since 2017 to support oil prices worldwide.

Al-Falih said he would like world oil inventories to be in the level they were in 2010-14 rather than what he called a “bloated 5-year average.”

W&T Offshore acquires gulf assets from ExxonMobil

W&T Offshore Inc. has agreed to acquire interests in and operatorship of oil and gas producing properties in the eastern region of the Gulf of Mexico offshore Alabama and related onshore processing facilities from ExxonMobil Corp. for $200 million.

The deal allows for synergies, consolidations, and cost savings as W&T will become the largest operator in the area, the company said. The transaction includes working interests in nine shallow-water producing fields and an onshore treating facility that are immediately adjacent to existing properties owned and operated by W&T.

The company will add net proved reserves of 74 million boe, of which 99% are proved developed producing and 22% are liquids as of the Jan. 1 effective date. The assets produced 19,800 net boe/d (25% liquids) in this year’s first quarter.

The transaction is expected to close by Aug. 30.

Pieridae to buy Shell properties in Alberta

Pieridae Energy Ltd., Calgary, has signed an agreement to buy Shell Canada Energy’s midstream and upstream assets in the southern Alberta Foothills for $190 million (Can.), including $175 million in cash and the rest in company shares.

The deal covers production of 118.9 MMcfd of natural gas, 5,646 b/d of NGL, and 3,161 b/d of condensate and light oil.

It also covers the Jumping Pound, Caroline, and Waterton deep-cut, sour-gas processing plants with combined capacity of 750 MMcfd, a 14% working interest in the Shantz sulfur forming plant, and 1,700 km of pipelines. The gas processing plants have about 420 MMcfd of spare capacity.

Pieridae said the acquisition advances its plans to build a 10 million-tonne/year gas liquefaction plant at Goldboro, NS.

Alliance Resources adding Permian acreage

Alliance Resources Partners LP, Tulsa, has entered a definitive agreement to acquire oil and gas interests in the Permian basin from Wing Resources LLC and Wing Resources II LLC, Dallas, for $145 million in cash.

The deal covers 9,000 net royalty acres in the Midland basin with exposure to more than 400,000 gross acres there. The acreage encompasses 783 gross horizontal wells producing an average 468 boe/d of oil and gas—70% oil and 14% NGls—net to the Wing interests.

The acreage also has an additional 441 drilled but uncompleted wells and 279 permits.

After the acquisition, Alliance Resources will directly own about 51,000 net royalty acres—47% in the Permian basin, 40% in the SCOOP and STACK plays of Oklahoma, 8% in the Bakken shale play, and 5% in the Appalachian basin.

It also indirectly owns 3,950 net royalty acres through its limited partner interest in AllDale Minerals III LP.

Weatherford begins Chapter 11 process

Weatherford International PLC, Weatherford International Ltd., and Weatherford International LLC (collectively, Weatherford) commenced voluntary cases under Chapter 11 of the US Bankruptcy Code to effectuate its “prepackaged” plan of reorganization. The company’s other entities and affiliates are not included in the Chapter 11 cases.

Weatherford expects to file Bermuda and Irish examinership proceedings in the coming months.

The comprehensive financial restructuring will reduce the company’s long-term debt by more than $5.8 billion. In May, Weatherford reported executing a restructuring support agreement that contemplates $1.75 billion in new financing and up to $1.25 billion in additional post-emergence financing. Weatherford operations are continuing without interruption, the company said in a press statement.

EXCO emerges from Chapter 11 bankruptcy

Through a financial restructuring and the Chapter 11 process, EXCO Resources Inc. has reduced its leverage by more than $1.1 billion and is moving forward with $325 million in committed exit financing from a new credit facility (OGJ Online, Jan. 16, 2018). EXCO will continue to engage in the exploration, acquisition, development and production of onshore US oil and natural gas properties with a focus on shale resource plays in Texas, Louisiana, and the Appalachia region.

EXCO’s current management team remains in place. In accordance with the restructuring plan, the company’s new five-member board includes representatives from the holders of the company’s newly issued common stock.

Exploration & Development Quick Takes

Colombia to offer contracts for 10 blocks

Colombia’s National Hydrocarbons Agency has identified winning bidders for 10 of the 11 blocks on offer in its 2019 contracting round.

It will offer royalty-and-tax contracts to:

• State-owned Ecopetrol SA for Guajira Offshore Block 10.

• Ecopetrol subsidiary Hocol SA for onshore Cordillera Block 9.

• Gran Tierra Energy Colombia LLC for onshore Llanos Orientales Block 85 and Middle Magdalena Valley Block 24.

• Parex Resources Colombia Ltd. for onshore Llanos Orientales Block 94 and Upper Magdalena Valley Block 25.

• Frontera Energy Colombia Corp. for onshore Llanos Orientales Block 99.

• A combine of Hocol and GeoPark Colombia SAS for onshore Llanos Orientales Blocks 104, 86, and 87.

For the 11th block, Lower Middle Magdalena Valley Block 22, GeoPark received a right of first refusal for a 100% working interest. It said it will decide whether to exercise the right by July 9.

Frontera Energy is the block’s secondary bidder.

Contract awards are expected in July.

Redevelopment plan submitted for Tor field in North Sea

ConocoPhillips has submitted a plan for development and operation to the Norwegian authorities for redevelopment of Tor oil and gas field in the Greater Ekofisk area in the southern part of the Norwegian North Sea. The development concept—at a total investment cost of 6 billion kroner—involves installing two subsea templates tied into the Ekofisk Complex with production expected to restart in late 2020. Recoverable reserves are estimated at 10 million standard cu m of oil equivalent.

Tor, discovered in 1970, lies 13 km northeast of Ekofisk field in 70 m of water with a reservoir depth of 3,200 m. The field mainly lies on Block 2/4 in production license 018, but a small part extends into Block 2/5 in PL 006.

Developed with a combined wellhead and processing facility tied back to Ekofisk field, Tor produced oil and gas from fractured chalk of Late Cretaceous age in the Tor formation and of early Paleocene age in the Ekofisk formation from 1978 by natural pressure depletion. The well stream was transported by pipelines to the processing facility at the Ekofisk Centre and further to Teesside in the UK and Emden in Germany. Water injection started in 1992 but was stopped after 10 years due to well integrity problems. Production was shut down in 2015 when the installation reached the end of its lifetime. At shutdown, only 20% of the resources in place had been produced.

According to the formal disposal resolution, the facility has to be removed by the end of 2022. ConocoPhillips is operator with 30.66%.

KUFPEC reports gas discovery off Sarawak

KUFPEC Malaysia (SK-410B) Ltd. reports a “multi-tcf gas discovery” in a well operated by PTTEP HK Offshore Ltd. in the Central Luconia Gas Province offshore Sarawak, Malaysia.

The shallow-water Lang Lebah-1RDL2 well, drilled about 90 km offshore to 3,810 m TD, encountered a gross gas column of 252 m in the primary carbonate target.

It flowed on test at a stabilized combined rate of 41.3 MMscfd with 246 b/d of condensate through a 40/64-in. choke.

The PTTEP and KUFPEC units hold 42.5% interests each in the 1,870-sq-km SK-410B production-sharing contract area. Petronas Carigali holds a 15% interest.

Resources estimated for subsalt Gulf of Mexico well

A subsalt wildcat plugged for possible reentry last month in the Gulf of Mexico has prospective resources estimated at 184.8 million bbl of oil and 314.2 bcf of natural gas in six target zones, reports 75% partner Delek GOM Investments LLC.

Netherland, Sewell & Associates Inc. based the estimates on drilling results from the Gulf Slope Energy Inc. Tau-1 well, reprocessing in 2018 of 3D seismic data acquired in 2003-05, data from nearby oil and gas wells, and other geological and engineering information, Delek said (OGJ Online, July 27, 2018).

Gulf Slope Energy plugged the well after halting drilling with the well at 15,242 ft MD in 305 ft of water on Ship Shoal South Addition Blocks 336 and 351. Target depth was 29,857 ft.

“Complex geomechanical conditions required two bypass wellbores, one sidetrack wellbore, and eight casing strings to reach the current depth,” Gulf Slope said in a press release.

The operator said the well yielded hydrocarbon shows but did not establish commercial pay.

It said equipment limitations and commitment to another operator of the Rowan Ralph Coffman jack up rig required it to cease drilling. Drilling, pressure, and reservoir information confirmed geophysical and geological models, it said.

The well was designed to test Upper and Middle Miocene sand series targets over a 14,000-ft vertical section down the flank of a salt feeder stock below the base of an associated salt sheet.

The target subsalt strata produce oil at subsalt Mahogany field 5 miles to the southwest.

Gulf Slope holds a 20% working interest. Texas South Energy Inc. holds a 5% interest.

Kosmos: Well signals more Tortue potential

Results of the BP PLC Greater Tortue Ahmeyim-1 well off Senegal confirm expectations that the discovered resource in the area “will continue to grow over time,” said Andrew G. Inglis, chairman and chief executive offer of Kosmos Energy, a partner.

Drilled on the eastern anticline in the unit development area of Greater Tortue, the well encountered 30 m of net gas pay in a high-quality Albian reservoir. The Ensco DS-12 drillship drilled the well, designed as a future producer, to 4,884 m TD in 2,500 m of water.

The rig next will drill the Yakaar-2 appraisal well in Senegal, followed by the Orca-1 exploration well in Mauritania.

The Greater Tortue Ahmeyim LNG project, on which partners reached final investment decision last December, is on track to start up in 2022, Kosmos said in a press release.

First-phase development includes a 2.5-million-tonne/year nearshore floating liquefaction facility on the Senegal-Mauritania border (OGJ Online, Dec. 21, 2018).

MOU targets Otakikpo work in Niger Delta

A joint venture of Green Energy International Ltd., Abuja, and Lekoil Ltd., London, has signed a memorandum of understanding with Schlumberger Ltd. and “a subsidiary of a major oil company which has been operating in Nigeria for more than half a century” to advance development of Otakikpo and other marginal fields on Oil Mining License (OML) 11 in Nigeria’s Niger Delta.

Green Energy operates the field under a farmout from Shell Petroleum Development Co. Nigeria, a joint venture partner in OML 11 with Nigerian Petroleum Development Co., a unit of Nigerian National Petroleum Corp. (OGJ Online, Feb. 21, 2017). Shell’s role as operator of OML 11 has been subject to a recent political dispute.

The MOU covers infrastructure-sharing and marginal-field drilling. Phased development in the project includes the drilling of as many as five wells in Otakikpo field, which started commercial production in 2017 at an initial rate of 5,000 b/d of oil from two recompleted wells and now produces about 6,000 b/d. Lekoil expects second-phase development to raise production to about 20,000 b/d.

The project also includes expanding processing facilities, including an onshore terminal, and construction of a pipeline connecting the terminal to an offshore buoy.

Schlumberger will be technical and project-execution partner and provide oil field and project-management services during ramp-up of production and long-term field management.

Green Energy has a 60% interest in the project. Lekoil Nigeria, a 90% subsidiary of Lekoil, holds 40%.

IGas: Core study lifts UK shale potential

Core analysis of the IGas Energy PLC Springs Road-1 (SR-01) well in North Nottinghamshire, England, indicates the Bowland shale compares favorably with prolific US shales, the operator reports (OGJ Online, Mar. 11, 2019).

IGas collected 147 m of “highly encouraging” Bowland shale core. It said analysis by Stratum Reservoir confirms “that a significant hydrocarbon resource is present in the Gainsborough Trough.”

Key results:

• Total organic carbon—2-7%, averaging about 3%.

• Thermal maturity—average of 464°C. (wet gas to dry gas window).

• Total porosity—2-9%, averaging 4%.

• Gas content—24-131 scf/ton, averaging 71 scf/ton.

• Average clay content—about 30 wt %.

“The key characteristics of the Bowland shale in SR-01 compare favorably to commercial shale operations observed in North America, such as the Permian and Marcellus,” Egdon said. “The core results indicate a mature, organic-rich source rock with good porosity confirming favorable gas resource density. In particular, the low clay content is encouraging and an indication that hydraulic fracturing of the rock should be effective.” The vertical SR-01 well encountered all three Carboniferous target zones: Bowland shale, Millstone Grit, and Arundian shale. In the primary Bowland target, it encountered 429 m of hydrocarbon-bearing shale.

Drilling & Production Quick Takes

Construction finished on ADNOC’s offshore platform

National Petroleum Construction Co. (NPCC) in Abu Dhabi has finished building what it calls one of the largest offshore platforms to be manufactured in the UAE for Abu Dhabi National Oil Co. (ADNOC).

Construction was part of an engineering, procurement, and construction contract that ADNOC let to NPCC in consortium with TechnipFMC for a large offshore super complex at Umm Lulu field. Total weight of the super complex is 102,648 tonnes. The Umm Lulu Gas Treatment Platform (ULGTP) weighs 32,000 tonnes and measures 77.7 m x 83½ m. The ULGTP will form a key part of Umm Lulu field infrastructure.

The EPC contract includes laying more than 2,555 km of cable and 150 km of pipeline by NPCC.

Sultan Al Jaber, ADNOC Group chief executive officer, said, “Completion…marks another significant milestone for ADNOC as we drive oil production capacity towards 4 million b/d by end of 2020.”

Earlier, NPCC commissioned eight platforms for Umm Lulu Package 1. The anticipated two phases involve an investment of more than $2.5 billion.

ONGC, OIL seek bids for marginal-field EOR

India’s two largest state-owned upstream oil and gas companies are seeking partners to assist with enhanced recovery in marginal oil fields. Oil & Natural Gas Corp. has opened international competitive bidding for 64 fields in 17 contract areas with total oil and gas in place estimated at 300 million tonnes of oil-equivalent.

Terms of the 15-year contracts will be revenue-sharing on production above business-as-usual baselines. Contracts may be extended by 5 years. Contracts will include incentives for production above committed incremental output.

Oil India Ltd. invited offers for enhanced recovery at Digboi oil field in Assam and Baggitibba oil field in Rajasthan. It estimates hydrocarbons in place at 49 million tonnes of oil-equivalent.

ONGC, meanwhile, signed a memorandum of understanding with Indian Oil Corp. to use carbon dioxide captured at IOC’s 13.7-million-tonne/year Koyali refinery for enhanced oil recovery in Gandhar field. The refinery and field are in Gujarat.

KOC lets contract for Persian Gulf production

Kuwait Oil Co. let an integrated offshore drilling services contract to Halliburton Co. for six high-pressure, high-temperature (HPHT) exploration wells on two jack up rigs in the Persian Gulf.

The contract is part of KOC’s plan to “increase production capacity by charting new territory in Kuwait’s offshore reserves,” said Emad Mahmoud Sultan, KOC chief executive officer. It is the first offshore project in Kuwait since the early 1980s.

Halliburton will provide and manage drilling, fluids, wireline and perforating, well testing, coring, cementing, coiled tubing, and all offshore logistical services and will provide the offshore rigs and supply vessels for the project.

The contract includes a 3-year term with a 6-month extension option. Work will begin in mid-2020. The expected start date for the first rig is July 2020 and the second rig is January 2021.

Oil Search expands interests in Alaska

Oil Search Ltd., Port Moresby, has exercised an option to increase its oil and gas interests in Alaska with a view toward starting 30,000 b/d of early production by 2022 from Nanushuk oil field in the Pikka Unit (OGJ Online, Jan. 25, 2019).

It is buying remaining interests of 25.5% held by Armstrong Energy LLC, Denver, and 37.5% held by Armstrong affiliate GMT Exploration Co. in the Pikka Unit and Horseshoe area and a further 37.5% interest in the Hue Shale leases to the east and a 25.5% interest in other exploration areas. The deal value is $450 million.

It also plans to realign interests with partner Repsol.

After the transactions, Oil Search will hold 51% interests each in the Pikka Unit and Horseshoe area, a 38.76% interest in other exploration areas, and a 75% interest in the Hue shale area.

Armstrong/GMT Exploration will hold a 24% interest in other exploration areas and a 25% interest in the Hue shale. Repsol will hold 49% interests each in the Pikka Unit and Horseshoe area and a 37.24% interest in other exploration areas.

Oil Search plans to divest some of its Alaskan interests in the first half of 2020 before making a final investment decision on Pikka Unit development. It expects to retain about 35% of its core assets. It completed a two-rig, four-well drilling program in the Pikka Unit during 2018-19 and plans to drill two more wells in 2019-20. The new program will assess upside resource potential of Nanushuk field and of the Horseshoe area south of the Pikka Unit.

It envisions the use of facilities on adjacent leases for early production followed by installation of dedicated facilities to allow production to increase by 120,000 b/d in 2024.

TRANSPORTATION Quick Takes

TANAP ready to deliver gas, SOCAR says

The Trans Anatolian Natural Gas Pipeline (TANAP) is ready to deliver natural gas to Europe by way of the Trans Adriatic Pipeline, says State Oil Co. of the Azerbaijan Republic (SOCAR).

The 1,850-km pipeline extends between the Turkish Posof district of Ardahan and connects with TAP at Kipoi on Turkey’s border with Greece.

First gas sales in Europe via the 878-km TAP, which crosses Greece, Albania, and the Adriatic Sea with landfall in southern Italy, are expected next year.

TANAP, TAP, and an expanded South Caucasus Pipeline across Azerbaijan and Georgia constitute the 3,500-km Southern Gas Corridor, which will carry gas from Shah Deniz-2 field and other fields in the Caspian Sea to Europe.

A TANAP section between the Turkey-Georgia border and Eskisehir, Turkey, began operations in June 2018.

Mechanical work on the TANAP segment between Eskisehir and the border with Greece was completed at the end of last year. First test flows occurred in April.

TANAP partners are the Southern Gas Corridor joint venture between SOCAR and Azerbaijan’s Ministry of the Economy, BOTAS, BP, and Socar Turkey Energy.

Saddlehorn to expand and add Ft. Laramie origin

Saddlehorn Pipeline Co. LLC has launched an open season to solicit long-term commitments for capacity on the Saddlehorn pipeline it plans to expand with additional capacity and a new Ft. Laramie, Wyo. origin.

The Magellan-operated pipeline, jointly owned by affiliates of Magellan Midstream Partners, Plains All American Pipeline, and Western Midstream Partners, is currently capable of transporting 190,000 b/d of crude oil and condensate from the DJ and Powder River basins to storage facilities in Cushing owned by Magellan and Plains (OGJ Online, Mar. 19, 2015).

The expansion will increase the pipeline’s capacity to 290,000 b/d. The new capacity is expected to be available in late 2020 following the addition of incremental pumping and storage capabilities. Saddlehorn will add the new Ft. Laramie origin by leasing capacity on third-party pipelines.