OGJ Newsletter

Exploration & DevelopmentQuick Takes

Shell Australia approved for Bratwurst-1 wildcat

Shell Australia has been granted approval from the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) for the drilling of proposed wildcat Bratwurst-1 in Ashmore Cartier permit AC/P64 in the Browse basin off Western Australia.

The well will be drilled in 155 m of water 160 km northeast of Shell’s Prelude floating LNG (FLNG) facility. The well is expected to be spudded in midyear and take about 45 days to complete.

Bratwurst is a gas-condensate prospect and will be drilled by a semisubmersible rig supplied from Shell’s base in Broome. The well will then be plugged or suspended if further appraisal is required. A discovery has the potential for a tie-back to the Prelude FLNG facilities, which began production earlier this year.

The NOPSEMA approval includes potential for future side-tracking and testing in the event of a discovery.

Gazprom has two offshore Yamal gas finds

Gazprom said it has discovered more than 500 billion cu m of natural gas in two fields offshore the Yamal Peninsula in the Russian Arctic. It said authorities have approved its estimate of C1+C2 (explored and estimated) reserves for Dinkov field on the Rusanovsky block of 390.7 billion cu m.

Its estimate of C1+C2 reserves for Nyarmeyskoye field on the Nyarmeysky block is 120.8 billion cu m. Since acquiring the blocks in 2013, Gazprom has acquired 5,790 sq km of 3D seismic data. It drilled two exploratory wells last year.

Eni group finds more light oil off Angola

Eni SPA said the fourth oil discovery in the exploration program it started with partners in mid-2018 on Block 15/06 off Angola has production capacity exceeding 10,000 b/d of light oil. The Ndungu-1 NFW well cut 65 m of Oligocene sandstone with 45 m of net pay with petrophysical properties described as “excellent.” Oil is 35° gravity.

The well went to 4,050 m TD in 1,076 m of water about 2 km from Mpungi field and “a few kilometers” from Eni’s West Hub. Eni said fast-track development will use the N’goma floating production, storage, and offloading vessel.

It estimates light oil in place at up to 250 million bbl.

Other discoveries on the block are Kalimba, Afoxe, and Agogo (OGJ Online, Mar. 13, 2019).

Eni operates Block 15/06 with a 36.8421% interest. Other interests are Sonangol P&P, 36.8421%, and SSI Fifteen Ltd., 26.3158%.

Eni group awarded block off Argentina

Eni SPA has joined the list of international oil and gas companies awarded licenses in Argentina’s recent bid round (OGJ Online, Apr. 17, 2019).

Eni leads a group that will shoot a 3D geophysical survey across Block MLO 124 and conduct other surveys. The 4,418-sq-km block is in the Cuenca Marina Malvinas basin about 100 km off Tierra del Fuego. Water depths are 100-650 m.

Eni holds an 80% working interest. Tecpetrol SA and Mitsui & Co. Ltd. hold 10% interests each.

Drilling & ProductionQuick Takes

Lukoil claims record for Baltic Sea well

Lukoil claimed a Baltic Sea length record for one of two extended-reach wells drilled this year from an onshore cluster pad to develop offshore D41 oil field.

One of the wells has a borehole length of 7,947 m with a horizontal section of 616 m. The other well has a length of 7,417 m and a horizontal section of 439 m.

D41 recoverable reserves are pegged at 2.003 million tonnes.

Eni Mexico lets contract for Amoca field off Mexico

Eni Mexico has let a contract to McDermott International Inc. for engineering, procurement, and construction of wellhead platform 1 (WHP1) to be installed in Amoca field, 30 km offshore Dos Bocas in southeast Mexico. The unmanned Amoca WHP1 oil and gas production facility includes eight production wells and four water injection wells. WHP1 will be installed in the Gulf of Mexico, on Contract Block 1 in 28 m of water. Fluids will be exported to a floating production, storage, and offloading vessel.

The four-deck topsides will have two main decks and will weigh 2,924 tons. The four-legged jacket and piles will weigh 1,785 tons. McDermott will perform the hookup, commissioning, and startup of 12 wells. Jacket and piles are scheduled to be ready for loadout by the end of this year’s fourth quarter. The deck is expected to be ready for loadout by the end of second-quarter 2020.

Work will be completed through McDermott’s engineering center in Mexico City and its fabrication facility in Altamira. Engineering work is expected to begin immediately.

Contract let for offshore Mexico gas production

MODEC of Japan has let a contract to MAN Energy Solutions to supply six compressor trains for a floating production, storage, and offloading vessel in the Gulf of Mexico as part of development of the Eni SPA subsidiary’s Eni Mexico S. de RL de CV-operated Area 1 offshore Mexico (OGJ Online, May 1, 2019).

As part of the contract, MAN will deliver the compressor trains for gas production on the FPSO, which will be supplied, owned, and operated by MODEC for deployment in the Area 1 block, about 10 km offshore Mexico in 32 m of water.

The total order includes three medium-high-pressure (MP-HP) compressor trains, two low-pressure (LP) compressor trains, and one fuel gas compressor train with one single-stage centrifugal compressor driven by a fixed speed electric motor.

The MP-HP compressor trains will consist of three intercooled two-stage centrifugal compressors driven by a fixed-speed electric motor, while the LP compressor trains will consist of two single-stage centrifugal compressors driven by a variable-speed electric motor, all of which will be designed, manufactured, and tested by MAN Energy Solutions in Zurich, Switzerland.

The high-end machines will be ready for installation in the FPSO in February 2020, and once in operation, will help maintain pressure of Eni’s Area 1 field to maximize quantity and efficiency of gas production.

The FPSO, once completed, will be capable of processing a total of 90,000 b/d of crude oil and 75 MMcfd of gas. First production from the FPSO is scheduled for 2021, MAN said.

Qatar Petroleum acquired a 35% participating interest in Area 1 late last year, according to an Eni news release.

PROCESSINGQuick Takes

Shell weighs plan for Louisiana MEG plant

Royal Dutch Shell PLC subsidiary Shell Chemical LP is advancing feasibility studies for a potential $1.2-billion manufacturing expansion of monoethylene glycol (MEG) production at its 841-acre Geismar chemicals complex in Ascension Parish, La.

As part of the project, the operator would build an MEG plant at the site that—pending final engineering, design, and investment decisions—Shell could approve as early as 2020, the Louisiana Economic Development (LED) said.

The proposed MEG project already won unanimous approval from the Ascension Parish Council in January and the Ascension Parish School Board in February for parish and local property tax abatement under Louisiana’s industrial tax exemption program, according to LED.

LED said it will also complete negotiations with Shell Chemical on an incentive package for the project ahead of a final investment decision.

Further details regarding the MEG plant, including its proposed capacity, were not disclosed.

In late 2018, Shell Chemical completed its $717-million project to increase alpha olefins (AO) production by 425,000-tonnes/year at the Geismar chemical plant, raising total AO production at the complex—now the world’s largest AO production site—to more than 1.3 million tpy (OGJ Online, Jan. 7, 2019).

ExxonMobil lets contract for Baytown expansion

ExxonMobil Corp. has let a contract to a consortium of Maire Tecnimont SPA subsidiary Tecnimont SPA and Performance Contractors Inc. to provide front-end engineering design, early execution studies, and early procurement activities for new process units and associated offsites and utilities at the operator’s recently approved $2-billion project to expand its Baytown, Tex., chemical plant (OGJ Online, May 3, 2019).

The Tecnimont USA Inc.-led consortium’s scope of work includes implementation of new innovative process units, including a 400,000-tonne/year Vistamaxx performance polymer unit as well as a 350,000-tpy linear alpha olefins unit, Maire Tecnimont said.

The expansion project aims both to maximize value of increased production from the Permian basin as well as expand ExxonMobil’s and its affiliates’ operations at the US Gulf Coast.

Maire Tecnimont initially announced the $230-million reimbursable contract late last year without identifying the Baytown site, according to a Nov. 15, 2018, news release from the service provider.

The proposed Baytown expansion comes in addition to the company’s 10-year, $20-billion “Growing the Gulf” investment initiative that, launched in 2017, outlined plans to build and expand manufacturing installations along the USGC.

Located on about 3,400 acres along the Houston Ship Channel, about 25 miles east of Houston, ExxonMobil’s Baytown complex includes a 584,000-b/d refinery, integrated chemical, olefins, and plastics plants, as well as a global technology center.

ExxonMobil Chemical Co. most recently started up its 1.5 million-tpy ethane steam cracker at the Baytown complex, which provides ethylene feedstock for two 650,000-tpy high-performance polyethylene lines that began production in fall 2017 at the company’s plastics plant in Mont Belvieu, Tex. (OGJ Online, July 26, 2018).

Meritage to double Powder River basin gas processing

Thunder Creek Gas Services LLC, a subsidiary of Meritage Midstream Services II LLC, is more than doubling natural gas processing capacity on its supersystem in Wyoming’s Powder River basin with construction of a new cryogenic processing plant in Converse County, several miles west of Douglas, Wyo.

To be known as Steamboat I, the new plant—which will have a nameplate capacity of 200 MMcfd—is scheduled to come into service early in this year’s third quarter, bringing Meritage’s total processing capacity in the basin to 380 MMcfd, the company said.

The Steamboat complex is large enough to accommodate two additional 200-MMcfd cryogenic processing plants as customer demand warrants, Meritage said.

Located in the southern portion of the basin, the Steamboat plant complements Meritage’s 50 Buttes plant in Campbell County near Gillette, Wyo., about 100 miles north of the Steamboat complex (OGJ Online, May 5, 2017).

Now under construction and nearing completion, a 20-in. trunk line will connect the Steamboat I plant to the company’s Thunder Creek gas gathering system, with Steamboat I to connect to Wyoming Interstate Co.’s mainline system for residue gas.

Meritage said construction of the Steamboat I plant is supported by multiple long-term acreage dedications of more than 1 million acres.

TRANSPORTATIONQuick Takes

IGU: Global LNG imports rose 40% in 2018 vs. 2017

Continued growth in US Henry Hub-priced LNG exports and a general rise in spot LNG cargoes led to the highest year-to-year increase ever in total global LNG imports during 2018, the International Gas Union (IGU) said as it released its 2019 Wholesale Gas Price Survey on May 13 in Barcelona.

Worldwide LNG imports in 2018 reached 416 billion cu m (bcm), or 11% of the 3,390 bcm of total worldwide gas consumption, it reported. The year-to-year growth was nearly 40% from 2017’s 92 bcm and 103.2% from 2016’s 62 bcm, IGU said. It was driven mainly by the continued rise in US Henry Hub exports and general growth in spot LNG imports, it noted.

Spot LNG cargoes were slightly more than a 30% share of global LNG import volumes in 2018, totaling 126 bcm, which was nearly 40% more than 2017’s 92 bcm and 80% above 2016’s 70 bcm, the survey said.

Gas-on-gas competition accounted for more than 50% of LNG imports into Europe in 2018 compared with 33% in 2017, while the gas-on-gas competition in the China and Indian subcontinent rose from 24% to 30.5% and for the Asia Pacific importers (mainly Japan, South Korea, and Taiwan) from 18% to 24%, it indicated.

Monthly US LNG exports peaked at nearly 126 bcf in January before retreating to almost 102.9 bcf in February, the most recent month listed at the US Energy Information Administration’s web site. Volumes looked strongest in the summertime since the beginning of 2014 but did not start to grow markedly until 2016 when they jumped from 26 MMcf in January to 2,019 MMcf in February and 43,553 MMcf in March, EIA’s figures show.

Cameron LNG starts production from Train 1

Cameron LNG has started production of LNG from Train 1 of its facility in Hackberry, La. In the initial phases, the production is a precursor to a first cargo, which is expected later this quarter, said McDermott International Inc.

Since the initial award in 2014, McDermott and Chiyoda International Corp. have provided the engineering, procurement, and construction for the project.

Pipeline feed gas was introduced into Train 1 of the liquefaction export facility in April (OGJ Online, Apr. 16, 2019).

Once fully operational, Train 1 will have the capacity to produce 4 million tonnes/year of LNG. The overall 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).

Cameron LNG is jointly owned by affiliates of Sempra LNG LLC, Total SA, Mitsui & Co. Ltd., and Japan LNG Investment LLC, a company jointly owned by Mitsubishi Corp. and Nippon Yusen Kabushiki Kaisha.

Freeport LNG receives FERC approval for Train 4

Freeport LNG Development LP reported obtaining approval from the US Federal Energy Regulatory Commission to site, construct, and operate its fourth natural gas liquefaction train, which will be integrated into its existing gas liquefaction and LNG export facility on Quintana Island near Freeport, Tex.

Freeport LNG expects approval from the US Department of Energy for the export of Train 4 volumes to non-free trade agreement countries later this quarter.

Freeport LNG’s Train 4 is expected to add more than 5 million tonnes/year of LNG production to its existing project, increasing the total export capability of the four-train facility to more than 20 million tpy.

About 13.5 million tpy of this capacity has been contracted under 20-year tolling agreements to Osaka Gas Trading & Export LLC, Jera Energy America LLC, BP Energy Co., Toshiba America LNG Corp., and SK E&S LNG LLC. Also, about 500,000 tpy has been contracted to Trafigura Pte. Ltd. under a 3-year sale and purchase agreement starting in 2020.

Michael Smith, Freeport LNG founder, chairman, and chief executive officer said that with FERC’s approval now in hand, the company is closer to moving ahead with Train 4 construction “later this year.”

Train 4 is expected to start operations in 2023. Freeport LNG’s export facility currently consists of three liquefaction trains, with Train 1 scheduled for commercial startup in this year’s third quarter, and full three-train commercial operations expected by mid-2020.

Mozambique grants approval for Rovuma LNG project

ExxonMobil Corp. and its Mozambique Rovuma Venture SPA (MRV) partners have received approval from the government of Mozambique for the joint venture’s development plan for Rovuma LNG, which will produce, liquefy, and market natural gas from three reservoirs in the Area 4 block offshore Mozambique, two of which straddle the boundary with neighboring Area 1.

The partners expect LNG production to start in 2024. Marketing is jointly led by ExxonMobil and Eni SPA. The companies have submitted sales and purchase agreements for 100% of LNG from Trains 1 and 2 to the government of Mozambique for approval. The two trains will produce a total of more than 15 million tons/year.

Rovuma LNG partners expect to provide up to 17,000 tons/year of LPG to Mozambique from Area 4 resources, replacing about 50% of the country’s LPG imports. Area 4 partners also plan to distribute up to 5,000 LPG burners and cooking stoves in the Afungi area to replace the burning of wood.

Area 4 is operated by MRV, an incorporated joint venture owned by ExxonMobil, Eni, and China National Petroleum Corp., which holds a 70% interest in the Area 4 exploration and production concession contract. Galp Energia, Korea Gas Corp., and Mozambique’s state-owned Empresa Nacional de Hidrocarbonetos EP each hold 10%.

ExxonMobil will lead construction and operation of natural gas liquefaction and related facilities on behalf of MRV, and Eni will lead construction and operation of upstream facilities.