Nov. 21, 2017
Select upstream news items as appeared in the November 2017 issue of OGFJ

ExxonMobil makes Fifth Discovery Offshore Guyana

Exxon Mobil Corp. has made a fifth new oil discovery after drilling the Turbot-1 well offshore Guyana.

Turbot is ExxonMobil's latest discovery to date in the country, adding to previous discoveries at Liza, Payara, Snoek, and Liza Deep. Following completion of the Turbot-1 well, the Stena Carron drillship will move to the Ranger prospect. An additional well on the Turbot discovery is being planned for 2018.

ExxonMobil affiliate Esso Exploration and Production Guyana Ltd. began drilling the Turbot-1 well on Aug. 14, 2017 and encountered a reservoir of 75 feet (23 meters) of high-quality, oil-bearing sandstone in the primary objective. The well was safely drilled to 18,445 feet (5,622 meters) in 5,912 feet (1,802 meters) of water on Sept. 29, 2017. The Turbot-1 well is located in the southeastern portion of the Stabroek Block, approximately 30 miles (50 kilometers) to the southeast of the Liza phase one project.

The Stabroek Block is 6.6 million acres (26,800 square kilometers). Esso Exploration and Production Guyana Ltd. is operator and holds 45% interest in the Stabroek Block. Hess Guyana Exploration Ltd. holds 30% interest and CNOOC Nexen Petroleum Guyana Ltd. holds 25% interest.

Kalnin Ventures makes fifth Marcellus asset acquisition

An affiliate of Kalnin Ventures LLC's BKV Oil and Gas Capital Partners LP fund has entered into Purchase and Sale Agreements with respect to the fund's fifth acquisition of assets in just over two years in the northeast portion of the Marcellus Shale. The fund is financially backed by its sole investor, Banpu Pcl, a Thailand-based coal mining and power generation company with total assets of more than $6 billion.

The transaction is valued at an aggregate price of $210 million, with potential additional payments to the sellers of up to $18.75 million over the next three years depending on natural gas prices. Separate purchase and sale agreements were entered into with Carrizo (Marcellus) LLC and Reliance Marcellus II LLC, to acquire their respective interests in the assets (subject to customary closing conditions), which are comprised of interests in 112 wells, including 98 producing wells, 11 drilled and uncompleted (DUC) wells and three wells that are temporarily abandoned.

The assets are predominantly located in Pennsylvania's Wyoming and Susquehanna Counties.

Kalnin has invested, through the fund, $417 million in the Marcellus Shale and is poised to fully invest its first fund. With this acquisition, the fund is now one of the top 20 natural gas producers in Pennsylvania.

"This deal is unique from our previous four in that it provides us the opportunity to naturally expand into an operator position while also acquiring additional midstream assets," said Christopher Kalnin, managing director and co-founder of Kalnin Ventures LLC. "However, it is similar to prior deals in that we are acquiring profitable assets and enhancing them with technology and big data. Our experience as a non-operator, and now operator, coupled with our high-quality asset base and proprietary technology, has put us in a compelling position to expand further in the Super Core of the Marcellus."

The acquisition follows the Fund's previous transactions with Zena Energy LLC, Radler 2000 LP - Tug Hill Marcellus LLC; Chief Exploration and Development LLC; and Range Resources - Appalachia LLC, all located in the Marcellus Shale.

Upon completion of this transaction, the fund will have an interest in 355 active wells. These transactions provide the fund with net natural gas production of 160 million cubic feet per day.

Energean sees first CPR results for two 100% owned blocks, offshore Montenegro

Energean Oil & Gas has received the first Competent Persons Report (CPR) for its assets offshore Montenegro, compiled by Netherland Sewell & Associates (NSAI), detailing the recoverable gas and liquids resource estimates in respect to Energean's 100% interest in blocks 4218-30 and 4219-26.

The CPR shows the combined net unrisked prospective recoverable resources (P50) for the two blocks, awarded to the company earlier this year, as 1.8 TCF natural gas and 144 MMbbls liquids (438 MMboe in total).

Energean is currently the sole operator, with 100% working interest, of offshore blocks 4218-30 and 4219-26. The blocks were officially awarded in March 2017, following the signing of a Concession Agreement between the company and the State of Montenegro. The two blocks cover a surface area of 338 km2 in shallow waters.

The CPR is part of the first three-year exploration phase, which entails a mandatory work program including a 3D seismic survey covering the two blocks that is planned to be acquired in 2018, and geological and geophysical studies. The total cost of this initial exploration phase is estimated at US$5 million.

KrisEnergy commits to Cambodia Apsara oil development

KrisEnergy Ltd., an independent upstream oil and gas company, is pleased to announce it has made a final investment decision to proceed with the first phase of development for the Apsara oil field, the first hydrocarbon development project in the Kingdom of Cambodia.

Located in Cambodia Block A in the Gulf of Thailand, Phase 1A of the Apsara development envisages a single unmanned minimum facility 24-slot wellhead platform producing to a moored production barge capable of processing up to 30,000 barrels of fluid per day with gas, oil and water separation facilities on the vessel. Oil will be sent via a 1.5 km pipeline for storage to a permanently moored floating, storage and offloading vessel.

KrisEnergy is the operator of Cambodia Block A and holds 95% working interest. The General Department of State Property and Non Tax Revenue of the Ministry of Economy and Finance holds the remaining 5% on behalf of the Royal Government of Cambodia.

The Cambodia Block A contract area covers 3,083 sq. km over the Khmer Basin in the Gulf of Thailand where water depths range between 50 meters and 80 meters. The individual oil accumulations in Cambodia Block A are small and spread over a large geographic area, requiring significant funds and time to fully develop. Additionally, reservoir production performance in the Khmer Basin has yet to be proven. For these reasons, among others, there is some uncertainty regarding long-term production rates, reserves and commercial viability and therefore a phased development approach has been prudently adopted. Once the initial Phase 1A platform is on stream, there will be a period to monitor reservoir performance before commencing Phase 1B, which envisages up to three additional platforms producing to the Phase 1A facilities. A Phase 1C will potentially add up to six additional platforms for the full 10-platform Apsara development.

Texas drilling permits, completions statistics

The Railroad Commission of Texas (Commission) issued a total of 903 original drilling permits in September 2017 compared to 746 in September 2016. The September total included 781 permits to drill new oil or gas wells, 16 to re-enter plugged well bores and 106 for re-completions of existing well bores. The breakdown of well types for those permits issued September 2017 included 215 oil, 64 gas, 554 oil or gas, 58 injection, one service and 11 other permits.

In September 2017, Commission staff processed 318 oil, 101 gas, 40 injection and four other completions compared to 430 oil, 155 gas, 38 injection and seven other completions in September 2016. Total well completions processed for 2017 year to date are 5,408; down from 8,737 recorded during the same period in 2016.

According to Baker Hughes Inc., the Texas rig count as of October 6 was 448, representing about 48% of all active rigs in the United States.

Wood Mackenzie: What's behind the boost in Libyan production?

Libya's oil production has increased steeply from August 2016's low point of below 300,000 barrels per day (b/d) to around 850,000 b/d at present, passing the one million b/d barrier in July. But Wood Mackenzie believes Libya may now be reaching its near-term production limits and future growth will be gradual.

Effective export capacity will be constrained by damage to the key ports of As Sidrah and Ras Lanuf limiting production to a maximum of 1.25 million barrels per day, National Oil Corporation's (NOC) previously announced 2017 year-end target. Reaching this would be quite an achievement, given ongoing challenges, including international oil companies' reluctance to recommit capital and expertise, a national oil company starved of funding and, not least, the propensity for violence to flare up and armed groups to hinder oil output.

With political agreement still some way off, international oil companies have taken differing stances to the country's upstream sector. North American players continue to view Libya with trepidation and some may seek to mitigate their exposure by divesting. But for many European companies, the risks are manageable and a gradual re-entry into familiar projects without committing capital makes sense.

OPEC has ruled that Libya will remain exempt from any production cap: a tacit acknowledgement of the upside limitations to the country's production recovery. Wood Mackenzie expects that it will be well into next decade before production is restored to pre-war levels. Maintaining stable output of one million b/d and realizing incremental gains in the interim could be considered a success and may help avert a deepening of the country's crisis.The possibility of longer-term political normalization and a reduction in conflict will depend on the country being able to maintain oil production.

Chevron sanctions polymer-based EOR for Captain oil field in the North Sea

Chevron North Sea has decided to proceed with the first phase of its Captain enhanced oil recovery (EOR) project in the outer Moray Firth offshore northeast Scotland.

The program is designed to increase the field's overall recovery rate through the application of polymer technology.

Stage 1 of the EOR project, which follows several EOR pilot programs at the Captain field, will involve drilling up to six long-reach horizontal injection wells within the existing Captain platform area.

Greta Lydecker, managing director, Chevron Upstream Europe, said: "Sanctioning Stage 1 EOR at Captain is an important milestone in the development of the technology, which we believe will improve the recovery rate from older fields and help extend the life of assets.

"The application of advanced EOR technology in the North Sea supports the UK government's strategy of Maximizing Economic Recovery of its offshore energy resource, and this is in direct alignment with Chevron Upstream's strategy of extracting value from our existing asset base."

Oil & Gas Authority (OGA) area manager Eric Marston said: "Polymer EOR has the potential to increase recovery, extend field life, and stimulate field redevelopments…Chevron, along with BP, Shell and Statoil, has been a driving force behind the industry-led EOR task force."

Texaco (since merged with Chevron) discovered the billion-bbl Captain field in 1977 in UK block 13/22a. First production followed in March, with the development driven by advances in horizontal drilling and downhole pumps.

The production complex comprises a wellhead protector platform and bridge-linked platform connected to an FPSO. Chevron operates with an 85% interest, in partnership with Dana Petroleum (15%).

-Offshore staff