GENERAL INTERESTQuick Takes
Aramco unit buys stake in Hyundai Oilbank
Aramco Overseas Co. BV, a subsidiary of Saudi Aramco, will purchase a 17% stake in South Korean refiner Hyundai Oilbank, supporting Aramco’s oil placement strategy by providing a dedicated outlet for Arabian crude to South Korea.
Abdulaziz Al-Judaimi, Aramco’s senior vice-president of downstream, said the $1.25-billion investment strengthens Aramco’s position in its downstream business, demonstrates its investment in refining in Asia, and provides “long-term crude oil options and offtakes as part of our trading business.”
The Daesan petrochemical complex in South Korea’s Chungnam Province, 130 km southwest of Seoul, where Hyundai Oilbank’s major facilities are located, has a capacity to process 650,000 b/d (OGJ Online, Sept. 26, 2016). The business portfolio of Hyundai Oilbank and its five subsidiaries includes refining, base oil, petrochemicals, and a network of retail outlets.
Carlyle buying Cepsa stake from Mubadala
Funds affiliated with The Carlyle Group will acquire 30-40% of the Spanish integrated oil, gas, and chemical company Cepsa from sole shareholder Mubadala Investment Co. of Abu Dhabi.
In a statement, the companies said the deal is “based on an enterprise value of $12 billion.”
Cepsa has interests in 175,000 boe/d of oil and gas production in Algeria, Peru, Colombia, Abu Dhabi, Thailand, and Malaysia; operates three refineries in Spain; and produces chemicals in Spain, Canada, Brazil, Indonesia, Germany, and China.
Mubadala said it will remain majority shareholder.
Delek to buy Ceasar Tonga field interest from Shell
Delek Group agreed to acquire 22.45% interest in Caesar Tonga oil field in the Green Canyon area of the deepwater Gulf of Mexico from Shell Offshore Inc. for $965 million, having paid a $50-million deposit, and will sign a long-term off-take agreement with Shell Trading (US) Co. to purchase oil from the field for 30 years.
Delek joins Ceasar Tonga partners Anadarko Petroleum Corp. (operator, 33.75%), Equinor Gulf of Mexico LLC (23.5%), and Chevron USA Inc. (20.25%).
The field—covering 90 sq km over Blocks 683, 726 (S2 and E2NE4), 727, and 770—lies 300 km south of Louisiana in 1,500 m of water and contains eight wells connected by two pipelines to Anadarko’s wholly owned Constitution spar floating production facility in 5,000 ft of water on Green Canyon Block 680, which transports the oil and gas through an existing pipeline to the coasts of Louisiana and Texas. In 2009, Anadarko began modifying Constitution’s topsides to accommodate production from Caesar Tonga.
Current production from the field, which began in 2012, is 71,000 boe/d (total gross, 90% oil) (OGJ Online, Mar. 12, 2012). With no change in the current production rate and an expected field life of another 30 years, Delek’s interest is 78 million boe (2P) reserves. Closing is expected before Sept. 30.
Marathon to acquire NY terminal, retail outlets
Marathon Petroleum Corp., through subsidiaries including Speedway LLC, agreed to acquire a 900,000-bbl capacity light product and asphalt terminal and 33 NOCO Express retail outlets in Buffalo, NY, from NOCO Inc., building on prior investments to “maximize refinery utilization,” the company said.
“The terminal is well positioned to receive supply from the Midwest, Canada, or the New York Harbor via multiple supply routes, including pipeline, truck, rail, or waterborne vessels and deliver our products in this attractive new market,” said Marathon Petroleum Chairman and CEO Gary R. Heminger.
Jones Energy files voluntary bankruptcy
Jones Energy Inc., Austin, has filed a prepackaged plan of reorganization under Chapter 11 of the US Bankruptcy Code designed to convert to equity all its funded debt. The company said the plan will enable it to maintain operations as usual.
The company produces oil and gas in the Merge play of Oklahoma and in the western Anadarko basin of Oklahoma and the Texas Panhandle.
US Senate confirms Bernhardt’s Interior nomination
The US Senate confirmed David L. Bernhardt’s nomination to be secretary of the Interior in a bipartisan 56-41 vote.
Bernhardt, who has been both acting and deputy Interior secretary, answered environmental and other groups’ assertions that he would cater to oil and gas interests that were clients when he was in the private sector with a pledge to remain committed to the highest ethics possible as the Energy and Natural Resources Committee held a hearing on his nomination. The committee referred his nomination to the full Senate on Apr. 4.
Following the Senate’s approval, National Ocean Industries Association Pres. Randall B. Luthi, who directed what was then the US Minerals Management Service during George W. Bush’s second term as president, said, “NOIA looks forward to working with the Department of the Interior and we encourage timely decisions on important pending offshore policies, including the final Well Control Rule, Atlantic seismic permits, an expanded national offshore oil and gas leasing program, and a reliable and consistent schedule of future offshore wind lease sales.”
ESAI: Russian crude exports to reach a multiyear high
Russian crude exports will reach a multiyear high of 5.7 million b/d in April, 400,000 b/d higher than average exports in the previous 5 months, according to a market alert released by ESAI Energy.
As the past few years’ fluctuations in Russian exports have shown, uncommonly high exports are accompanied by greater flows of Russian crude into Asia.
The unusual jump in exports has been triggered in part by the unplanned extension of maintenance at Rosneft’s Tuapse refinery. Due to the delayed resumption of refining, 600,000 b/d of distillation capacity will be offline in April, according to ESAI Energy estimates. Lower domestic crude demand will free up more crude for export, having the biggest impact on seaborne Urals volumes.
“Any spike in crude exports will impact the flow of Urals from Russia’s European ports to Asia,” ESAI Energy Principal Andrew Reed noted. “In search of a market, exporters of Russian crude generally ship these excess barrels to Asia. The irony, which will not be lost on the Saudis, is that Russian exports to Asia will strengthen just as Russian producers finally comply with their OPEC+ obligations,” Reed said.
Park Place Energy renamed Trillion Energy
Trillion Energy International Inc. is the new name of Park Place Energy Inc., Vancouver, BC.
The company has oil and gas producing interests in Turkey and exploratory assets in Turkey and Bulgaria.
Exploration & DevelopmentQuick Takes
BP reported exiting Chinese shale gas PSCs
BP PLC is reported to be planning to withdraw from its two production-sharing contracts covering exploration for natural gas in Sichuan basin shale (OGJ Online, Mar. 31, 2016).
Reuters reported the company’s exit from PSCs covering the Neijiang-Dazu and Rongchangbei blocks, both operated by China National Petroleum Co. It said sources blamed disappointing results from drilling.
BP signed both contracts in 2016. It was the last major international oil company with interests in Chinese shale gas.
The company declined to comment.
Energean to develop gas strike off Israel
Energean Oil & Gas PLC, London, plans to develop a gas discovery in its deepwater Karish North exploration well off Israel.
The well, drilled to 4,880 m TD in more than 1,700 m of water by the Stena DrillMAX drillship, encountered a gross hydrocarbon column of up to 249 m with high-quality reservoir in Early Miocene Tamar B and C sands. Energean recovered a 27-m core and plans further evaluation.
It estimates initial gas in place at Karish North at 1-1.5 tcf.
The Stena DrillMAX will deepen the well to assess the D4 horizon. Energean plans to tie the Karish North discovery back to the Energean Power floating production, storage, and offloading vessel under construction in Zhousan, China.
The FPSO, the Eastern Mediterranean’s first such unit, will be installed about 5.4 km from the Karish North well to support development of Karish and Tanin gas fields. The vessel will have capacities of 775 MMscfd of gas treatment and export and 800,000 bbl of liquids storage.
Energean will develop the 16-sq-km main Karish field first with three development wells (OGJ Online, Jan. 29, 2018). Karish is about 40 km east-northeast of Tanin. Early plans for Tanin involve the drilling of six development wells.
Energean holds 100% interests in the Karish and Tanin leases.
Talos Energy updates Zama appraisal program
Talos Energy Inc. and partners drilled the Zama-2 ST1 appraisal well 589 ft updip of the Zama-2 well and 1.4 miles north of the Zama-1 well off Mexico on Block 7 in the Sureste basin.
Talos operates Block 7. Partners are Sierra Oil & Gas and Premier Oil PLC (OGJ Online, Dec. 4, 2018).
The Zama-2 ST1 well logged 873 ft of gross TVD pay through multiple penetrations. The well was cased and perforated totaling 248 gross ft of perforated section with varying rock properties. Talos captured 714 ft of whole core with 98% recovery, which the company called the longest whole core acquired in a single well offshore Mexico.
Oil and natural gas flowed without stimulation in two separate tests and achieved a combined rate of 7,900 boe/d, of which 94% was oil. The well test was completed 5 days ahead of schedule and more than 30% below budget.
Talos plans to use a combination of fixed platforms and dry trees to develop Zama in 550 ft of water. Given flow test results, peak production of 150,000–175,000 boe/d is expected.
The Zama-3 appraisal well will be drilled just south of the original Zama-1 exploration well and will assist in delineating reservoir continuity in the southern part of the field.
Ukraine launches tender offering for Dolphin block
The Ukrainian government has launched a public tender for the Dolphin offshore block under a production-sharing agreement, covering 9,496 sq km of the northwestern part of the Black Sea’s continental shelf. Interested parties have 60 days to submit applications to PSA Interagency Commission. Winning bidders will be notified by July. Prospects already discovered within the block are Zonalna, Myrna, and Charivna.
The PSA duration is 50 years. Bidders must provide a minimum financial commitment of $55.5 million throughout the 5-year exploration period. A minimum work program requires drilling of no less than five exploration wells.
The government’s share of profit petroleum is to be at least 11% with a 2% liquids royalty rate and a 1.5% gas royalty rate. Ukraine also has an 18% general corporate income tax rate.
Cadogan plans test of well in Ukraine
Cadogan Petroleum PLC, London, plans to test its Blazh-10 well in western Ukraine after open-hole logs indicated oil in the target Paleocene Yamna formation (OGJ Online, Sept. 27, 2018).
The well penetrated a 207-m Yamna section at a depth 50 m higher than prognosis. Further log interpretation and testing will determine the net pay extent and expected deliverability.
The well reached 3,394 m TD after drilling encountered hole instability described by Cadogan as severe. It’s on the company’s Monastyretska license near the border with Poland.
Appraisal results lower Verbier potential
A dry well drilled to appraise Equinor’s Verbier oil discovery in the Moray Firth off Scotland lowers resource potential to the lower end of the initially estimated range, a partner reported earlier this month (OGJ Online, Oct. 9, 2017).
Jersey Oil & Gas, which holds an 18% interest in the P2170 license, said the 20/05b-14 appraisal well went to 3,784 m TD without encountering expected Upper Jurassic sands.
The initial resource estimate was 25-130 million boe of oil and gas. Jersey said a large part of the mapped area of the Verbier discovery northwest of the appraisal well and deeper-pool potential remain untested.
Pin Oak acquires Utica acreage from SWEPI
Pin Oak Energy Partners LLC has acquired 43,000 acres prospective for Utica shale development in northwestern Pennsylvania from SWEPI LP, a wholly owned Shell subsidiary.
The deal ups Pin Oak’s holdings to 64,000 net deep acres in Ohio and 103,000 net deep acres in Pennsylvania, 99% held by production. It includes drilled and completed but not producing horizontal Utica shale wells and undrilled well pads.
Drilling & ProductionQuick Takes
BP lets contract for Azerbaijan offshore project
BP Exploration (Caspian Sea) Ltd. has let a contract to Turan Drilling & Engineering Co., a joint venture of KCA Deutag and Socar AQS, for the operation and maintenance of seven platform drilling rigs, said Turan Drilling, formed in July 2018.
The contract covers work on production-sharing contracts involving East, West, and Central Azeri, Deepwater Gunashli, West Chirag, Chirag, and Shah Deniz installations.
The initial contract, worth $500 million, is for 5 years with two 1-year extension options.
Socar AQS is an Azerbaijan drilling and well services company that entered into a joint venture with UK oil and gas services company KCA Deutag. Turan Drilling, based in Baku, has said it will focus on existing and future opportunities in the offshore and onshore Caspian drilling and engineering markets.
Qatargas lets jackets contract for North field
Qatargas has let a contract to McDermott International Inc. for engineering, procurement, construction, and installation for expansion of North field offshore facilities in Qatar.
The contract for new facilities, valued at $50-250 million by McDermott, includes the full suite of EPCI services for eight offshore jackets.
McDermott will use project management and engineering teams in Doha with fabrication primarily taking place at facilities in Batam, Indonesia. Vessels Derrick Barges 50 and 27 are scheduled to undertake the installation and completions work.
Well on Taq Taq western flank flows oil
A well drilled to assess potential of the western flank of Taq Taq oil field in the Kurdish region of Iraq is on production, reports Genel Energy PLC, London. The TT-20z horizontal sidetrack well started production at an initial rate of 2,000 b/d through a 24/64-in. choke, boosting gross output to 15,500 b/d of oil.
Genel said it expects flow to increase from the TT-20z well, which produced during tests at a combined maximum rate of 4,000 b/d of oil through a 40/64-in. choke from three zones. The rig has spudded the TT-33 well on the field’s southern flank.
In February, Genel reported that the TT-32 well on the field’s northern flank had begun production at an initial rate of 3,100 b/d of oil on a 24/64-in choke.
During tests, the well flowed from three zones at a maximum individual zone rate of 5,500 b/d through a 34/64-in. choke.
The well encountered the free-water level at 1,458 m, 29 m deeper than the predrilling estimate and 57 m above the original field-wide free-water level.
The oil column at the TT-32 well location is 169 m.
An earlier well on the northern flank, TT-29w, went onto production late in 2017 after flowing oil at individual zone rates up to 6,400 b/d through a 40/64-in. choke during tests of six zones in Cretaceous Shiranish and Kometan reservoirs (OGJ Online, Mar. 31, 2017). The well went online at a restricted rate of 3,200 b/d of oil from the Lower Shiranish reservoir. The oil-water contact in the TT-29w well is at least 45 m deeper than expected before drilling.
Genel jointly operates the Taq Taq production sharing contract, with a 44% working interest, with Addax Petroleum, a Sinopec Group company.
PROCESSINGQuick Takes
Unipetrol lets revamp contract at Litvinov refinery
Unipetrol RPA SRO-Rafinerie, the refining arm of Unipetrol AS and parent company Polski Koncern Naftowy SA (PKN Orlen), has let a contract to McDermott International Inc. to provide engineering, procurement, and construction management services for a unit upgrading project at its 108,400-b/d refinery in Litvinov, Czech Republic. As part of the contract, McDermott will deliver a full suite of EPCM services for the upgrade of the refinery’s hydrocracking unit, the service provider said.
Work on the project is scheduled to be completed in second-quarter 2020, McDermott said.
Sinopec starts up composite IL alkylation unit
China Petroleum & Chemical Corp. (Sinopec) has started up a revamped unit now based on composite ionic liquid (IL) alkylation technology at subsidiary Sinopec Jiujiang Co.’s 161,000-b/d refinery in Jiujiang City, Jiangxi Province, China.
The brownfield unit—equipped to produce 300,000 tonnes/year of high-quality alkylate—is the largest commercial adoption of Beijing-based China University of Petroleum’s (CUP) Ionikylation process, which uses a more selective composite IL catalyst than other IL alkylation processes, said Well Resources Inc., the technology’s licensor.
Construction of the Ionikylation unit at the refinery started in February 2018 and was completed in December 2018, with unit startup preparation initiated in mid-March 2019.
On Mar. 31, catalyst and feed were introduced into the Ionikylation reactor, which was followed by production of the first batch of high-quality alkylate, the service provider said.
Sinopec remains on track to commission two additional Ionikylation units of the same capacity later this year at subsidiaries Sinopec Anqing Co.’s 161,000-b/d refinery in Anqing, Anhui Province, and Wuhan Petrochemical Co. Ltd.’s 161,000-b/d refinery in Wuhan City, Hubei Province (OGJ, Jan. 7, 2019, p. 61).
TRANSPORTATIONQuick Takes
QP advances LNG expansion of North field project
Qatar Petroleum reported it has issued the invitation to tender package for engineering, procurement, and construction of the four LNG megatrains of its North field expansion project.
The package has been issued to three EPC joint ventures: Chiyoda Corp. and Technip France SA; JGC Corp. and Hyundai Engineering & Construction Co. Ltd.; and Saipem SPA, McDermott Middle East Inc., and CTCI Corp.
The tender calls for the EPC of the four LNG megatrains with gas and liquid treating facilities, ethane and liquefied petroleum gas production and fractionation, a helium plant, and utilities and infrastructure to support the processing units.
The megatrains are part of QP’s plans to expand Qatar’s LNG production to 110 million tonnes/year by 2024 from the current 77 million tpy.
Feed gas introduced into Train 1 at Cameron LNG
Train 1 of the Cameron LNG project in Hackberry, La., has reached the final commissioning stage, marking the transition from construction to startup, said McDermott International Inc. Since the initial award in 2014, McDermott and Chiyoda International Corp., a US unit of Japan’s Chiyoda Corp., have provided the engineering, procurement, and construction.
Pipeline feed gas was introduced into Train 1 of the liquefaction export facility, the precursor for LNG production.
Once fully operational, Train 1 will have the capacity to produce 4 million tonnes/year of LNG, McDermott said . The project includes three liquefaction trains with a projected export of 12 million tpy of LNG (1.7 bcfd). An expansion, if undertaken, would include two additional liquefaction trains and as many as two additional full containment LNG storage tanks. The expansion is capable of increasing LNG production capacity by 9.97 million tpy of LNG (1.41 bcfd). If constructed, Cameron LNG’s export capacity will be 24.92 million tpy (3.53 bcfd).
Concho, Frontier form Midland basin midstream JV
Concho Resources Inc. and Frontier Midstream Solutions IV LLC have agreed to form Beta Crude Connector LLC (BCC) to build and provide crude oil gathering, transportation, and storage services in the northern Midland basin. Frontier will serve as operator. Each company will own equal equity interest. Following an open season set to launch this month, construction will begin, targeting initial flows in mid-2019.
The new system will consist of a 100-mile gathering system, 250,000 bbl of crude oil storage facilities, and truck terminals. The pipeline will have the initial capacity to deliver 150,000 b/d of crude oil to multiple delivery points, accessing local refineries and connecting to several downstream pipelines.
BCC will file for US Federal Energy Regulatory Commission authority to operate as a common carrier pipeline and solicit interest from other producers and marketers for capacity on the system. Concho has agreed to enter into a long-term acreage dedication agreement with BCC.
NEB approves NGTL’s West Path Delivery project
Canada’s National Energy Board has granted approval to Nova Gas Transmission Ltd.’s (NGTL) West Path Delivery project plan to construct and operate a 21½-km natural gas pipeline, two compressor station unit additions, and related facilities to supply southwest Alberta and connected markets with Western Canadian production.
The proposed pipeline (Rocky View section) will begin just north of Cochrane, Alta., at NGTL’s existing WAS110 valve site, and terminate at NGTL’s existing WAS100 valve site, 16 km west of Calgary.
The Turner Valley Compressor Station Unit Addition, 3 km northwest of Turner Valley, includes one 30-Mw turbocompressor package and auxiliary systems. The Burton Creek Compressor Station Unit Addition, 39 km west of Claresholm, includes one 30-Mw turbocompressor package and auxiliary systems.
Pipeline and compressor station construction is expected to begin before June for an anticipated in-service date of June 2020.
