GENERAL INTERESTQuick Takes
Shell to sell $3.3-billion stake in CNRL
Royal Dutch Shell PLC subsidiary Shell Gas BV has agreed to sell all its interest in oil sands producer Canadian Natural Resources Ltd.
The underwriting agreement with Goldman Sachs & Co., RBC Capital Markets, Scotiabank, and TD Securities includes the 97.6 million shares for total pretax proceeds of $3.3 billion.
The sale, expected to be complete on May 9, is part of the company’s 3-year, $30-billion divestment program that included a March 2017 sale of a large portion of its Canadian oil sands interests for $7.5 billion (OGJ Online, Mar. 9, 2017).
Risco Energy makes takeover bid for Tap Oil
Perth-based Tap Oil Ltd., has received an unconditional on-market takeover offer from Risco Energy Investments (SEA) Ltd., Singapore, valuing Tap at $29.8 million (Aus.).
Risco, already a major Tap shareholder with 22.2% of its shares, has bid 7¢ (Aus.)/share aiming to acquire all the ordinary shares in Tap that it doesn’t already own.
Risco said the cash offer is unconditional and it has appointed Morgans Financial Ltd. to act as its on-market broker. The offer is scheduled to close on June 18.
Risco’s move on Tap comes after a turbulent year during which Risco tabled a proposal last November to change the Tap board. Risco wanted to minimize capital investment and operating costs to increase short-term returns. It wanted Tap to focus on its only production—a 30% interest in the Manora oil field in the Gulf of Thailand.
Tap’s board has advised its shareholders to do nothing until it has had time to study the offer and make a recommendation.
On the other hand, when making the takeover offer public, Risco Chief Executive Officer Tom Soulsby said as an on-market bid, the offer is unconditional and provides shareholders with a simple cash exit from their investment in Tap. Shareholders would receive the offer consideration in two trading days following their acceptance of the offer.
Survey: Inspection spending insufficient for oil, gas
Nearly half, about 46%, of the 813 senior oil and gas professionals who participated in a recent survey said they believe there has not been enough investment in inspection and maintenance of infrastructure and equipment in recent years, Oslo-based DNV GL reported on May 1.
Slightly more than a quarter, 28%, said they expect to increase safety expenditures in 2018, while 61% said they would maintain current budgets, and 5% said they planned to cut investments, DNV GL said.
It said the report also affirmed expectations for digital technologies to bridge the gap between long-term cost efficiency and enhanced safety in projects and operations.
While cost efficiency has been the top, or a high priority, for more than 82% of senior industry professionals since 2015, 40% of the survey’s respondents believe digital tools and technologies have already improved safety over the past three years, DNV GL said.
“The industry’s strong focus on cost control must continue in the long term for oil and gas to remain competitive and play an increasingly important role in the energy transition,” said Liv Hovem, chief executive of DNV GL’s oil and gas division. “However, our research confirms the sector’s clear belief that cost control must never come at the expense of safety.”
The report said many new safety investments will be aimed at digitalizing monitoring, processes, and responses this year. It also highlights the risks that implementing digital technologies can have on operations, particularly around cyber security, and warns that existing guidelines and standards may not be sufficient to demonstrate the safety of new concepts.
GSPM acquires Thunderbird assets in Oklahoma STACK
Continuing its buildout of infrastructure in the STACK play of northwestern Oklahoma, Great Salt Plains Midstream Holdings LLC (GSPM) closed on its acquisition of Thunderbird Midstream LLC. Both companies are based in Oklahoma City.
The transaction includes a 34-mile natural gas pipeline gathering system and the Thunderbird Midstream cryogenic natural gas plant. The plant, which covers 40 acres and has a processing capacity of 20 MMcfd, began operations in 2016 and provides immediate processing capacity with additional firm market outlets for residue and natural gas liquids, the company said.
“The additional gathering pipeline from Thunderbird extends our system west into Major County, providing producers with low-pressure gathering and additional residue market optionality,” said Rusty Rains, chief executive officer of GSPM.
The company’s Silver Lake plant, a cryogenic processing facility under construction in Major County, Okla., is expected to have an initial capacity to process as much as 70 MMcfd, with expansion capacity of as much as 220 MMcfd. Additionally, GSPM is constructing more than 90 miles of gas gathering pipelines and multiple compressor stations and expects the new facilities to be in service in July.
Exploration & DevelopmentQuick Takes
Eni finds oil in deep Western Desert well
Eni SPA reports an oil discovery with its first well exploring deep sequences of the Faghur basin in Egypt’s Western Desert.
It has put the well, SWM A-2X, on production at the rate of 2,300 b/d of 32° gravity oil and 400 Mscfd of associated natural gas from completions in Carboniferous Dessouky sandstone.
The well, drilled to 5,090 m TD, also encountered hydrocarbon pay in Cretaceous Alam El Bueib sandstone.
It’s on the Southwest Meleiha license 103 km north of the Siwa oasis. Eni holds 100% interest in the license through its Egyptian subsidiary.
It plans to further appraise the A2-X discovery and drill other prospects nearby.
Savannah logs oil pay in Niger well
Savannah Petroleum PLC, London, is firming its license in southeastern Niger after making an indicated oil discovery in the R3 part of its R3/R4 production sharing contract area (OGJ Online, July 27, 2016).
It received a 1-year extension of its PSC for the R1/R2 area, which is adjacent to R3/R4 to the northwest. The first phase of Savannah’s exclusive exploration authorization now will expire on Aug. 5, 2019.
On R3, the Bushiya-1 exploration well last month logged 10 m of net oil-bearing sandstone across two intervals in the primary Eocene Sokor Alternances objective. Wireline logs indicated excellent reservoir quality in both intervals, which pressure data indicated hold light oil.
Savannah brought an oil sample to surface from the shallower section but could not sample the lower interval because of equipment limitations.
The well, which went to 2,200 m, is being suspended for testing after drilling of two more exploration wells.
Like Bushiya-1, the next well, Amdigh-1, will test the Sokor Alternances as the primary target and the Eocene-Oligocene Upper Sokor as a secondary objective.
Savannah’s PSC areas are in the Agadem Rift basin near oil-producing fields discovered by China National Petroleum Corp., including Goumeri and Sokor.
India’s open-acreage round draws 110 bids
Nine companies submitted a total of 110 electronic bids for 55 blocks offered in India’s first open-acreage licensing round, which had been extended by a month (OGJ Online, Mar. 23, 2018).
Five of the companies are owned by the Indian government. The others are private Indian companies, including Vedanta Resources, which is based in London and bid on every block on offer.
Bidding alone and in groups, the companies made 92 bids for 46 onshore blocks and 18 bids for 9 offshore blocks, all nominated by prospective bidders.
All but two blocks received two or more bids.
The number of blocks by basin are Assam-Arakan, 19; Cambay, 11; Rajasthan, 9; Krishna-Godavari, 5; Cauvery, 3; Mumbai Offshore, Kutch, and Saurashtra, 2 each; and Foreland and Ganga, 1 each.
The government plans to award the licenses, which are based on revenue-sharing, by June.
Drilling & ProductionQuick Takes
QP lets contract for North field expansion
Qatar Petroleum has let a contract to McDermott International Inc. for detailed design of offshore jackets for the expansion of giant offshore North natural gas field (OGJ Online, July 5, 2017).
The project will add 4.6 bcfd of production capacity in the southern part of the field and includes expansion of LNG production capacity to 100 million tonnes/year (tpy) from 77 million tpy.
The jackets contract is part of offshore work that will include installation of six wellhead platforms and associated field and trunk pipelines.
The offshore facilities will be integrated with three new 7.8 million-tpy LNG trains.
Chiyoda Corp. has the contract for front-end engineering and design of the onshore facilities, to which a fourth train might be added in the future.
Processing of feed gas from the expansion project will yield 3,000 tonnes/day of ethane, 185,000 b/d of condensate, 8,500 tonnes/day of LPG, and 12 tonnes/day of pure helium.
Drilling is to begin next year. LNG production is due by the end of 2023.
Flow starts from Iraq’s Seeba gas field
Production has started from Seeba natural gas field operated by Kuwait Energy Co. in the Basrah governate of southern Iraq.
Flow began at 25 MMscfd and will rise to a plateau of 100 MMscfd by yearend. The field also will produce 1,200 b/d of gas liquids and 19,000 b/d of condensate, according the oil ministry.
Kuwait Energy’s partners in the development are Turkish Petroleum Co. and state-owned Missan Oil Co.
Yuri Korchagin second-phase drilling due
Drilling in the second phase of development of Yuri Korchagin oil and gas field in the Caspian Sea offshore Russia is expected to start this month, reports Lukoil.
The company has completed installation of the wellhead platform’s topsides, which will support drilling in the eastern part of the field. Because most operations on the platform will be automated, accommodations are for temporary worker stays.
Oil and gas from Yuri Korchagin field flow to a platform on Vladimir Filanovsky field.
Lukoil last month said combined production from the fields, which are in 11-13 m of water, had reached 15 million tonnes of oil. Yuri Korchagin, in 11-13 m of water, started producing in 2010. Vladimir Filanovsky, in 7-11 m of water, started in 2016 (OGJ Online, Nov. 2, 2016).
DNO accelerates Kurdistan operations
Norwegian operator DNO ASA has assumed operatorship of the Baeshiqa license, its third license in Iraq’s Kurdistan region, following government and partner approvals of a transaction with ExxonMobil Corp.
DNO has 40% interest alongside ExxonMobil, Turkish Energy Co., and the Kurdistan Regional Government.
At the Tawke license, DNO accelerated development of Peshkabir field with three new wells. Production testing is planned for the recently completed Peshkabir-4 well. The Peshkabir-5 well is drilling at 2,250 m. The Peshkabir-6 development well was spudded in the field’s deeper Triassic formation.
DNO operates Tawke license containing Peshkabir and Tawke fields. Two Peshkabir wells produce together 15,000 b/d of oil that is comingled with 90,000 b/d from Tawke field for export through Turkey.
A new Tawke Cretaceous well was brought on stream in early April at more than 5,000 b/d. DNO plans to drill additional Tawke development wells following mobilization of a fourth rig.
UKCS production efficiency improves again this year
UKCS production efficiency (PE) rose for a fifth consecutive year, increasing to 74% in 2017, and the improvement is estimated to have contributed to an additional 11.8 million boe during 2017, reports the UK Oil & Gas Authority.
PE is defined as the total volume of hydrocarbons produced in 2017 as a percentage of economic maximum production potential. More details will be published in the annual report, UKCS Production Efficiency 2017, scheduled for release by late August.
The information was collected as part of UK OGA’s 2017 UKCS Stewardship Survey, which analyzes operating performance in key areas such as the causes of production losses. The Maximizing Economic Recovery (MER) UK Asset Stewardship Task Force has set an average PE target of 80% PE by Dec. 31.
In recent years, the UKCS has reversed a declining trend in both PE and overall production. Statistics show 2017 production was 1.63 million boe/d or 595 million bbl. PE in the UKCS fell from more than 76% in 2008 to a low of 60% in 2012.
FAR lets contract for Gambia drilling program
FAR Ltd., Perth, has let a contract to Stena Drilling for the drilling of the large Samo prospect offshore Gambia with operations to begin late this year.
Stena will use its Stena Drillmax drillship for the wildcat, which will be the first well offshore Gambia in 40 years.
FAR said Samo-1, on Block A2, has two target intervals, the primary target having potential (P50) to hold 825 million bbl of oil. The prospect is on trend and has many similarities to the company’s large SNE oil field off Senegal immediately north across the international boundary between the two countries.
FAR is operator and 80% interest-holder of the Gambia Block A2 joint venture as well as in adjacent Block A5, a position it acquired through a farm-in to US firm Erin Energy Corp.
FAR paid Erin an upfront sum of $5.18 million and guaranteed to fund Erin up to $8 million for the drilling of Samo-1.
The Stena Drillmax recently completed the successful drilling campaign in the SNE prospect in Senegal.
PROCESSINGQuick Takes
Petrobras starts binding phase for Pasadena refinery
Petroleo Brasileiro SA (Petrobras) has started the binding phase of its earlier announced proposal to sell subsidiary Pasadena Refining Systems Inc.’s (PRSI) refinery in Pasadena, Tex., in compliance with the Brazilian operator’s divestments portfolio and a divestment plan from Brazil’s Federal Court of Accounts, or Tribunal de Contas da Uniao (TCU).
At this stage of the project, process letters are issued to potential undisclosed buyers qualified in the previous phase with instructions about the divestment process, including the guidelines to conduct due diligence and submit binding offers, Petrobras said on May 4.
Petrobras formally is seeking a qualified buyer for affiliate Petrobras America Inc.’s (PAI) interest in the entire Pasadena refining operations system, the sale of which includes PAI’s stake in PRSI, PRSI Trading LLC (PRST), and PRSI Real Property Holdings LLC (REAL).
Alongside the 110,000-b/d Pasadena refinery, the transaction will include sale of 5.1 million bbl of oil and products storage capacity, an associated marine terminal and logistics system, existing inventory, and land on the Houston Ship Channel usable for potential future expansion.
The proposed sale follows PAI’s determination after a comprehensive analysis that the Pasadena system does not align with Petrobras’s strategic focus but may have higher value for the right investor.
Chinese operator lets contract for ethane-only crackers
Lianyungang Petrochemical Co. Ltd. (LPCL), a subsidiary of Zhejiang Satellite Petrochemical Co. Ltd.—also known as Zhejiang Satellite Energy Co. Ltd. (Satellite Energy)—has let a contract to CB&I, Houston, to provide ethylene technology for LPCL’s petrochemical complex in Xujing New District, Lianyungang City, Jiangsu Province, China.
Alongside the project’s process design package, CB&I will deliver heater engineering and technology licensing for two ethylene plants, each with a production capacity of 1.25 million tonnes/year, CB&I said.
Project design will be based on CB&I’s low-cost ethane cracker flowsheet, which reduces investment costs by eliminating plant equipment, CB&I said.
Once completed, the plants will be China’s first ethylene plants to crack 100% ethane feed, signaling a new wave of ethylene projects to be fed by US-sourced shale gas ethane, the service provider said.
Currently, all of China’s large ethylene plants crack mixed or liquid feeds.
LACC advances Louisiana petrochemical project
LACC LLC, a 50-50 joint venture of Lotte Chemical Corp. subsidiary Lotte Chemical USA Corp. and Westlake Chemical Corp., is progressing with work on a long-planned grassroots petrochemical project in southwest Louisiana.
CB&I, Houston, has completed installation of the first three of four major modules and expects to install the final module later this month at the project in Lake Charles, La., marking the first time CB&I has modularized its proprietary SRT ethylene heaters, a key component of the project’s ethane cracker that will produce more than 1 million-tonne/year of ethylene, the service provider said.
The modularization, delivery, and installation of the modules also marks the first time a modular project of this size and complexity has been executed in the US, according to CB&I.
LACC previously let a contract to CB&I to provide engineering, procurement, fabrication, and construction for the ethane cracker, which will use the service company’s proprietary highly selective SRT cracking heaters as well as its recovery section design.
CB&I’s scope of work under the $1.3-billion EPC contract was to include supply of spheres and fabricated pipe spools.
CB&I also delivered detailed engineering and early procurement services for the project following the service provider’s previous delivery of front-end engineering and design and other early-stage engineering works for the cracker.
LACC started major construction on the $3-billion Lake Charles petrochemical project in June 2016, just following announcement of Axiall’s now-completed merger with Houston-based Westlake Chemical Corp. (OGJ Online, June 14, 2016).
Lotte subsidiary Lotte Chemical Louisiana LLC separately let earlier contracts to CB&I to provide construction planning and reviews, early works services, and construction services for its $1.1-billion, 700,000-tpy monoethylene glycol plant under construction adjacent to the Lake Charles cracker.
The Lake Charles ethylene plant is slated for startup during first-quarter 2019, Westlake Chemical said. Lotte previously said the MEG plant also is due for startup in early 2019.
TRANSPORTATIONQuick Takes
EPP, ETP combine to revive Old Ocean pipeline
Through the formation of a 50-50 joint venture, Enterprise Products Partners LP and Energy Transfer Partners LP plan to bring the Old Ocean natural gas pipeline back into service in this year’s second quarter to meet demand for takeaway capacity from the Delaware basin and Midland area.
ETP will operate the 24-in. pipeline, which originates at Maypearl, Tex., in Ellis County and extends south about 240 miles to Sweeny, in Brazoria County. The system has been essentially idled since 2012.
Both parties are expanding their jointly owned North Texas 36-in. pipeline that will provide more capacity from West Texas for deliveries into the Old Ocean Pipeline. The North Texas Pipeline expansion project is expected to be complete by late in this year’s fourth quarter.
Inpex lets contract for Abadi LNG plant
Inpex Masela Ltd. has let a pre-front-end engineering and design contract to KBR Inc. for the Abadi LNG project in eastern Indonesia. The subsidiary of Inpex Ltd., Tokyo, plans a 9.5 million-tonne/year plant to liquefy gas from offshore Abadi field.
Indonesian authorities in 2010 approved Inpex’s initial plan for a 2.5 million-tpy floating liquefaction facility. After Inpex amended the proposal to triple liquefaction capacity based on reserves added by appraisal drilling in 2013-14, the government required that the LNG plant be built onshore.
The field is in 400-800 m of water on the 2,503-sq-km Masela Block in the Arafura Sea, 150 km offshore Saumlaki, Maluku Province.
KBR’s service under the new contract will include site master plan development, scope of work for the FEED phase, and an engineering, procurement, and construction schedule and cost estimate. The firm expects the work to take 6 months.
Inpex Masela, 51.93% owned by Inpex, operates the Masela Block with a 65% interest. Shell holds a 35% interest.
LNG Canada picks Fluor-JGC for EPC work
LNG Canada, which delayed a final investment decision on its planned natural gas liquefaction plant in Kitimat, BC, in mid-2016, has named an engineering, procurement, and construction contractor for the project. The move follows an offer by the British Columbia government of conditional incentives for LNG plant construction (OGJ Online, Mar. 26, 2018). Three other LNG projects planned for the province have been canceled.
LNG Canada selected the joint venture of Fluor Corp. and JGC for the EPC work, conditional on a final investment decision later this year.
The project involves two, 6.5-million-tonne/year liquefaction trains and an option to expand to four trains.
LNG Canada is a joint venture of Shell Canada Energy, 50%, and affiliates of PetroChina, 20%, and Korea Gas Corp. and Mitsubishi Corp., 15% each.
