OGJ Newsletter

Aug. 4, 2014
International news for oil and gas professionals


EIA: OPEC's 2013 oil export revenues down 7%

According to recent estimates from the US Energy Information Administration, members of the Organization of the Petroleum Exporting Countries, excluding Iran, earned about $826 billion in net oil export revenues in 2013, a 7% decrease from 2012 earnings. But this was still the second-largest earnings totals during 1975-2013-the timespan of how long EIA has tracked OPEC oil revenues.

For each country, EIA derived net oil exports based on its oil production and consumption estimates from the latest edition of the EIA's Short-Term Energy Outlook. For countries that export several different crude varieties, EIA assumes that the proportion of total net oil exports represented by each variety is equal to the proportion of the total domestic production represented by that variety.

These net export earnings do not include Iran's revenues. As explained by EIA, this is because of the difficulties associated with estimating Iran's earnings, including the country's inability to receive payments and possible price discounts Iran offers its existing customers.

EIA indicated a drop in OPEC oil production in 2013, largely because of the supply disruption in Libya, and a 3% decline in average crude oil prices as measured by the Brent crude oil price marker have led to the decline in OPEC earnings.

Saudi Arabia earned the largest share of these earnings, $274 billion in 2013, representing about one third of total OPEC oil revenues. On a per capita basis, OPEC (excluding Iran) net oil export earnings reached about $2,520 in 2013.

Based on projections from EIA's July 2014 STEO, EIA estimates that OPEC (excluding Iran) could earn about $774 billion in net oil export revenues in 2014 and $723 billion in 2015 (unadjusted for inflation). These declines from the 2013 level reflect projected declines in the call on OPEC crude oil production because of the large increases in non-OPEC production for 2014-15, as well as expected crude oil price declines that are also the result of declines in the call on OPEC crude oil production.

Oando completes purchase of Nigeria assets

Oando Energy Resources (OER), a Calgary-based subsidiary of Oando PLC, has completed its acquisition of the Nigeria upstream business of ConocoPhillips for $1.5 billion (OGJ Online, Dec. 20, 2012).

ConocoPhillips says it expects to recognize an aftertax gain from the sale of $1.1 billion. Proceeds would be available for general corporate purposes, including investments in the company's higher-margin, organic growth programs.

Templar to buy Granite Wash assets for $588 million

Templar Energy LLC, Oklahoma City, has agreed to purchase Granite Wash assets from Newfield Exploration Co., Houston, for $588 million, effective July 1. The deal is expected to close in the third quarter.

The assets consist of 42,000 net acres with current net production of 65 MMcfd of natural gas equivalent, 60% of which is gas. Proved net reserves from the acreage totaled 38 million boe at yearend 2013.

Templar, an exploration and production company formed by First Reserve Corp. in 2012, previously acquired 7,000 net acres in Ellis and Roger Mills counties, Okla. (OGJ Online, Jan. 14, 2013); and assets in the Texas Panhandle from Forest Oil Corp. for $1 billion (OGJ Online, Oct. 4, 2013).

Newfield also is in the process of completing repairs to its Pearl facility in the South China Sea. The topsides, near Hong Kong, were recently loaded on a barge and installation remains on schedule, pending weather conditions over the next month, the company reported.

Production is expected to begin in the fourth quarter, with gross facility capacity of 40,000 b/d of oil gross. Newfield says it intends to monetize its business in China.

Exploration & DevelopmentQuick Takes

ConocoPhillips group makes Browse basin gas discovery

The ConocoPhillips-Karoon Gas Australia partnership has made a natural gas discovery with its latest Browse basin wildcat, Pharos-1, drilled in permit WA-398-P offshore Western Australia.

The group reported the presence of moveable hydrocarbons indicated by petrophysical log interpretation, formation pressure gradients, and downhole gas sampling.

Karoon's assessment shows a 53-m gross gas interval with 34 m of net pay in the well, which was drilled to a total depth of 5,220 m. Wireline logging operations are still under way; these will be followed by a full production test.

Pharos-1 is the sixth and final well in Phase 2 of the group's Browse basin drilling campaign to evaluate the Greater Poseidon area. Pharos prospect is 9 km northeast of Proteus-1 and was drilled as a further evaluation of the Proteus-Crown trend. The well targeted an extension of the Proteus discovery, which established good reservoir quality and condensate-bearing gas in the Montara formation.

Operator ConocoPhillips used the Transocean Legend semisubmersible for the Pharos well. ConocoPhillips holds 60% interest and Karoon, 40%.

BOEM schedules western gulf Lease Sale 238

The US Bureau of Ocean Energy Management (BOEM) has scheduled western Gulf of Mexico Lease Sale 238 for Aug. 20 in New Orleans, where it will offer 21.6 million acres offshore Texas for oil and gas exploration and development.

The sale, proposed in April, includes 4,026 blocks that lie 9-250 miles offshore in 16-10,975 ft of water (OGJ Online, Apr. 15, 2014). BOEM estimates the sale could result in the production of 116-200 million bbl of oil and 538-938 bcf of natural gas.

Blocks will be offered from within or partially within the 3-statute-mile US-Mexico Boundary Area, and within the former Western Gap that lies within 1.4 nautical miles north of the Continental Shelf Boundary between the US and Mexico, subject to the terms of the US-Mexico Transboundary Hydrocarbon Agreement.

Lease Sale 238 is the sixth sale under the Outer Continental Shelf Oil and Gas Leasing Program for 2012-17. The first five offered more than 60 million acres and netted $2.3 billion.

The last western gulf lease sale, held in August 2013, received 61 bids from 12 companies totaling $102,351,712 in apparent high bids (OGJ Online, Aug. 28, 2013).

March's central gulf lease sale received 380 bids from 50 companies resulting in a total of $850 million in apparent high bids (OGJ Online, Mar. 19, 2014).

BOEM as of July has administered more than 6,100 active oil and gas leases covering 34 million acres in the US OCS. In 2013, oil and gas leases on the OCS accounted for 18% of domestic oil production and 5% of domestic natural gas production.

Development planned for Libyan oil field

An Indonesian-Libyan joint operating company has taken a step toward development of an oil field in the Hamada area of the Ghadames basin about 200 km south of Tripoli.

The company, Nafusah Oil Operations BV Libyan Branch, let a front-end engineering design contract for the project to a joint venture of Foster Wheeler AG's Global Engineering & Construction Group and Taknia Libya Engineering Co., a wholly owned subsidiary of Libya's National Oil Corp. (NOC).

The Area 47 Development Project includes North Hamada field.

Foster Wheeler said the development will involve about 11 existing and 23 new wells, flowlines, and a common gathering trunkline to carry produced fluids to a central gas-oil separation (GOS) facility.

The planned design capacity of the GOS facility is 50,000 b/d of oil and 90 MMscfd of natural gas. Produced water will be injected into the reservoir.

After separation, oil and gas will move through new pipelines to connections with existing lines for transport to the Mellitah terminal on the Mediterranean Sea in northwestern Libya.

Production is planned to start by the end of 2016.

Partners in Nafusah Oil Operations are NOC, 51%, and Medco International Ventures Ltd. and Libyan Investment Authority, 24.5% each.

Drilling & ProductionQuick Takes

API issues new standard for subsea capping stacks

The American Petroleum Institute has published new guidelines for the design, manufacture, and use of subsea capping stacks. The equipment is part of the oil and gas industry's emergency preparedness in the event of a subsea spill at a wellhead.

"Enhanced industry standards are an essential piece of our collaboration with regulators to make offshore oil and gas development safer than ever before," API Standards Director David Miller said. "These guidelines will further strengthen subsea spill response capabilities as part of industry's commitment to continuous improvement in safety."

The recommended practice, known as RP 17W, applies to installation of new subsea capping stacks and can serve as a guide to improving existing equipment. API said it can aid during the design and manufacturing process and in developing instructions for preservation, transportation, maintenance, testing, and operations.

The document also provides guidelines for the deployment, well shut-in, and recovery of a subsea capping stack, the trade association added.

Statoil installs Valemon topsides in Norwegian North Sea

Statoil ASA has installed topsides for the Valemon platform on Blocks 34/11 and 34/10 in the Norwegian North Sea. Samsung Heavy Industries built the structure after receiving a 2.3-billion kroner contract in 2011 (OGJ Online, May 18, 2011).

The topsides departed South Korea on June 15, reaching Norway after 40 days. The Saipem 7000 crane vessel lifted the 9,750-tonne topsides onto the steel jacket, installed in 2012, over a 2-hr period (OGJ Online, June 19, 2012). The flare boom was subsequently installed.

The West Elara rig has predrilled production wells through the jacket. Well operations will resume in mid-October.

Statoil plans for three wells to produce when the field comes on stream at yearend. Drilling on the field is planned to continue until 2017. The company says field commissioning will occur in the coming months, as it will link wells with onboard production facilities, install seawater pumps, and connect electricity, water, and pipelines.

Valemon will be powered from Kvitebjorn, which lies to the west of Valemon. Cable as well as gas and condensate pipelines-linked to Heimdal and Kvitebjorn, respectively-have already been laid on the seabed.

"Some work remains before we are ready for start-up, but we are on track," said Bjorn Laastad, Statoil vice-president for Valemon field development.

While good weather accommodated a timely installation of the topsides, Statoil cautions that poor weather could cause delayed commissioning work.

Gazprom Neft says deliveries forthcoming from Badra

JSC Gazprom Neft reports that oil production from Badra field will soon be flowing into Iraq's main pipeline system and then to the Basra export terminal.

Crude from two wells is flowing to a recently completed Central Gathering Point, which has a first-phase capacity of 60,000 b/d. A 165-km pipeline connecting Badra to Iraq's main pipeline system was completed in March.

The company said oil will be supplied to the main pipeline system in "the coming month."

A third well is expected to begin production soon. The drilling of a fourth well began in June.

Initial production volumes are estimated at 15,000 b/d. Peak production is projected to be 170,000 b/d in 2017.

Badra field is in Wasit province in eastern Iraq (OGJ Online, June 2, 2014). Gazprom Neft, the operator, has 30%; Iraqi Oil Exploration Co. 25%; Korea Gas Corp. 22.5%; Petronas 15%; and TPAO 7.5%.

Rosneft, PDVSA sign agreements for offshore projects

OAO Rosneft and Petroleos de Venezuela SA (PDVSA) have signed a cooperation agreement for offshore projects in the Rio-Caribe and Mejillones blocks, the second stage of the Mariscal Sucre gas project (OGJ Online, July 3, 2013).

The companies intend to continue negotiations on key technical requirements and commercial and legal terms for establishment of joint ventures to develop Rio-Caribe and Mejillones.

The parties also agreed to set up joint ventures for engineering, construction, and well servicing, and held negotiations on LNG plant construction.

The signings took place during a visit to Caracas by Rosneft Pres. Igor Sechin.

Rosneft and PDVSA have five joint oil production projects in Venezuela: Carabobo-2 and 4, Junin-6, PetroMonagas, Boqueron, and Petroperija.

CNOOC starts gas production from E. China Sea field

China National Offshore Oil Corp. Ltd. reported the start of natural gas production from Lishui 36-1 field on Block 25/34 in the East China Sea.

The field has four producing wells, a platform, and a processing terminal. Average water depth is 84 m. The area is about 150 km from Wenzhou, Zhejiang Province (OGJ Online, Oct. 10, 2013).

Development operator CNOOC holds 51% in the field. CNOOC's parters include Primeline Energy China Ltd. with 36.75%, and Primeline Petroleum Corp. with 12.25%.


Petronas lets contract for RAPID complex

Malaysia's state-run Petronas has let a contract to Zelan Construction Sdn. Bhd., a subsidiary of Zelan Bhd., Kuala Lampur, for the basic design, detail engineering, procurement, construction, and commissioning (EPCC) of the material offloading facilities (MOLF) jetty for Petronas' planned refinery and petrochemical integrated development (RAPID) complex at Pengerang in southeastern Johor, Malaysia (OGJ Online, Mar. 27, 2014).

Zelan Construction's scope of work under the EPCC contract, which is valued at about $78.3 million, is scheduled to last 18 months, Zelan said July 24 to Bursa Malaysia.

The MOLF jetty, to be built at Tanjung Setapa, will be used to handle imports of heavy-lift, oversized equipment and materials as well as some break-bulk and containerized cargo during construction and implementation of RAPID, according to Zelan.

The EPCC contract follows the completion of the MOLF's concept design by BMT Asia-Pacific Pte. Ltd., a subsidiary of BMT Group Ltd., earlier this year.

Zelan did not indicate when it would begin construction.

With a planned capacity of 300,000 b/d, the proposed RAPID refinery will produce naphtha and liquid petroleum gas feedstock for the petrochemical complex, as well as gasoline and diesel meeting European specifications to help address Asia-Pacific's growing need for petroleum and petrochemical products.

In addition to production units that include a naphtha steam cracker, the RAPID development will provide storage and logistics facilities for a number of dry and liquid bulk products.

Petronas plans to commission the refinery by early 2019 (OGJ Online, June 27, 2014).

Petronas estimates the RAPID refinery will cost about $16 billion, while associated installations for the project will require an investment of about $11 billion, according to an Apr. 3 news release from the company.

CVR confirms fire at Coffeyville refinery's isom unit

CVR Refining LP, Sugar Land, Tex., has confirmed the outbreak and subsequent extinguishing of a fire at the isomerization (isom) unit at its 115,000 b/d refinery at Coffeyville, Kan. The fire was reported at about 12:30 a.m. on July 29 and extinguished less than an hour later.

The company conducted a shutdown of the facility, which is a complex full-coking, medium-sour crude refinery. The refinery is operated by CVR unit Coffeyville Resources Refining & Marketing of Coffeyville.

The company said that four employees were injured and have been transported to the hospital and that all other employees are accounted for at this time.

"Initial reports indicate there was no impact to the surrounding community," the company said, adding that company officials continue to assess the situation.

Delay halts start-up of La Porte ethylene expansion

LyondellBasell has pushed back the start-up of expanded production at its ethylene plant in La Porte, Tex., until later this year (OGJ Online, July 1, 2013).

The company expects to begin production from its 800 million lb/year La Porte ethylene during this year's third quarter, LyondellBasell said.

The revised timeline for the newly expanded plant project, which was scheduled to begin production this summer (OGJ Online, May 2, 2014), resulted from a delay in the completion of extensive scheduled maintenance at the La Porte plant during the second quarter, the company said.

A mechanical issue with a compressor at the plant was partially to blame for the extended turnaround at La Porte, according to LyondellBasell.

While the company said its third-quarter earnings would be negatively impacted by the delayed start-up at La Porte, it did not disclose a firm date for when production at the plant would begin.

The La Porte project is the first of three ethylene expansions LyondellBasell has under way, which include projects at its plants in Channelview and Corpus Christi, Tex., all of which are benefitting from rising North American shale gas production (OGJ Online, May 2, 2014).

LyondellBasell previously said it expects start of construction on the Corpus Christi plant during 2014's second half for a planned start-up in late 2015, while expanded production from the Channelview plant is slated for commissioning in 2015.

Gas plant on tap for Oklahoma oil play

Oneok Partners LP, Tulsa, will spend $365-470 million by yearend 2016 to build a 200-MMcfd gas processing plant and related infrastructure in Grady and Stephens counties, Okla.

The Knox plant will increase Oneok's Oklahoma gas processing capacity to 900 MMcfd. It and the related infrastructure, including expansions and upgrades to the company's existing gas gathering and compression, are to be completed during fourth-quarter 2016.

The estimated costs include $175-240 million to build the plant and $190-230 million to build related systems, including gas gathering pipelines and compression.

Oneok said it plans total investments of $6.4-6.8 billion through 2016 for acquisitions and infrastructure growth projects related to gas gathering and processing and NGLs, including the Knox plant and gathering.

The investments consist of $3.4-3.7 billion for gathering and processing and $3-3.1 billion for NGL. Some $3.1-3.3 billion are for projects related to development in the Williston basin in North Dakota.


Production from PNG LNG project reaches full capacity

The ExxonMobil Corp.-led Papua New Guinea LNG (PNG LNG) project is now producing at full capacity.

The project, which takes gas from several fields in the Southern Highlands of Papua New Guinea and pipes it to an LNG facility on the south coast near Port Moresby, has been ramping up since the first LNG shipment left for Tokyo Electric Power Co. on board Spirit of Hela carrier in May (OGJ Online, May 15, 2014).

The two-train facility has a production capacity of 6.9 million tonnes/year of LNG.

The project fields are expected to produce more than 9 tcf of gas during the project's estimated 30 years of operations.

LNG will be supplied to four major customers in the Asian region: China Petroleum & Chemical (Sinopec), Tokyo Electric Power, Osaka Gas, and CPC Corp. of Taiwan.

Turkey approves EIA for South Stream

OAO Gazprom reported that Turkey has approved the environmental impact assessment (EIA) for the South Stream gas pipeline in the Black Sea.

The first pipelaying vessel is slated to enter the Turkish exclusive economic zone in first-quarter 2015. The pipeline's offshore section will have four strings, each more than 930 km long.

South Stream is designed to extend offshore Turkey some 110 km at a depth reaching 2,200 m.

The EIA, approved by the Ministry of Environment and Urban Planning, includes potential impact on the seabed geology, water quality, and marine ecology, the company said.

"The document concludes that the project will have no considerable effect on the Black Sea environment or the regional fishing industry," Gazprom said. It noted that the designed pipeline route "bypasses certain locations of shipwrecks."

South Stream pipeline construction is under way in Russia, Bulgaria, and Serbia (OGJ Online, July 9, 2014). Gas will be shipped to Europe starting in late 2015, Gazprom said.

LNG export bill offers a compromise, Hoeven says

US Sen. John Hoeven (R-ND) introduced an LNG export bill that he said represents a compromise between measures introduced from both sides of the aisle. S. 2638 would give the US Department of Energy 45 days to make a national interest determination after an export project sponsor filed an application with the US Federal Energy Regulatory Commission, Hoeven said on July 24.

Hoeven, who is a member of the Energy and Natural Resources Committee, said the measure is a simple compromise between LNG export proposals Republicans and Democrats have offered because it keeps DOE in the process, but provides certainty by placing a reasonable timeline for it to make a decision. He said he would ask the committee for an immediate hearing on the proposal.