GENERAL INTEREST Quick Takes
PNR exits W. Panhandle field with divestiture
Pioneer Natural Resources Co., Dallas, has agreed to sell its West Panhandle field assets in Texas for $201 million to an undisclosed buyer. The assets include all of PNR’s producing wells and the associated systems. Net production from the field averaged 6,000 boe/d during this year’s first quarter.
The sale, expected to close in the third quarter, is part of PNR’s plan to operate solely in the Permian basin.
In June, the company agreed to sell its Raton assets in southeastern Colorado to Evergreen Natural Resources LLC for $79 million (OGJ Online, June 13, 2018). In March, an agreement was signed to sell certain Eagle Ford acreage to Sundance Energy Inc. for $102 million (OGJ Online, Mar. 27, 2018).
Southcross ends $3-billion combine deal with AMP
Southcross Energy Partners LP has terminated its agreement to merge with American Midstream Partners LP citing AMP’s failure to achieve required conditions. In October 2017, AMP had proposed to merge Southcross Energy into a wholly owned subsidiary of AMP (OGJ Online, Nov. 1, 2017).
Additionally, effective July 29, Southcross Energy parent Southcross Holdings LP terminated its October 2017 contribution agreement with AMP because of a funding failure by AMP. Under terms of the agreement, Southcross Holdings is entitled to a $17 million termination fee.
Marathon names combine executive leadership
Following Marathon Petroleum Corp.’s acquisition of Andeavor, the combined company will be led by a team consisting of seven executives from MPC and three from Andeavor (OGJ Online, Apr. 30, 2018).
Gary R. Heminger will continue to serve as Marathon’s chairman and chief executive officer. Greg Goff, Andeavor’s current president and CEO, will become executive vice-chairman; Don Templin will remain president of refining, marketing, and supply; Anthony Kenney will continue as president of Speedway LLC; Mike Hennigan will remain president of MPLX; Tim Griffith will continue as CFO.
Exploration & Development Quick Takes
Bay du Nord takes step toward development
Production might start in 2025 from the deepwater Bay du Nord oil discovery in the Flemish Pass basin 500 km offshore Newfoundland and Labrador under a framework agreement announced July 26 by the provincial government.
Premier Dwight Ball said project sanction by Equinor, the operator, and Husky Energy is expected in 2020. Ball didn’t disclose details of the agreement or operational plans.
Bay du Nord, in 1,170 m of water, holds reserves of 300 million bbl of 34° gravity oil, including volumes from Equinor’s nearby Bay de Verde and Baccalieu discoveries, both made in 2016 (OGJ Online, July 10, 2017).
Equinor discovered Bay du Nord in 2013 after making Mizzen and Harpoon discoveries. All the discoveries are within 10-20 km of one another.
The Flemish Pass basin discoveries are northeast of producing Hibernia, Hebron, Terra Nova, and White Rose oil fields in shallower water of the Jeanne d’Arc basin.
Eni has second Faghur basin deep strike
Eni SPA reports a second discovery in its exploration of deep sequences of the Faghur basin in Egypt’s Western Desert.
Its B1-X well on the South West Meleiha license, 130 km north of the Siwa oasis, produced 5,130 b/d of 37° gravity oil from the Carboniferous Dessouky formation with low associated gas. The well, drilled to 4,523 m, encountered 35 m of net light oil pay in Dessouky and Cretaceous Alam El Bueib sandstones. It’s 7 km from Eni’s first deep, light-oil strike on the license, the A2-X (OGJ Online, May 7, 2018).
Eni said it plans to drill other prospects near the discoveries “to consolidate what can result as a new productive area.”
Echo Energy reports Argentina well encounters wet gas
Echo Energy PLC, a UK company focused on Latin America, announced CSo-2001(d) well in an Argentina drilling campaign encountered what company executives are calling “a notable gas column,” with initial results indicating wet gas.
The CSo-2001(d) well, in the Fraccion D license operated by Compania General de Combustibles SA, reached 1,511 m TD in the Upper Jurassic Tobifera formation across which extensive gas and light hydrocarbon shows were recorded.
The well encountered more than 60 m of gas shows through the Upper Tobífera with gas peaks of over 168,000 ppm. Preliminary wireline log evaluation indicates around 30 m of potential net pay at 1,272-1,304 m.
Echo Energy plans to run a final production casing before completion and testing using the Quintana 01 rig.
Test well due south of Otway gas strike
Rawson Oil & Gas Ltd., Sydney, plans an exploratory well 9 km south of a recent natural gas discovery by Beach Energy Ltd., Adelaide, in Australia’s onshore Otway basin.
According to the operator, the Nangwarry-1 well, to be drilled during the fiscal year ending next June, will test Early Cretaceous Pretty Hill and Sawpit sandstones found to be gas-bearing in the Beach Haselgrove-3 ST 1 well.
Rawson described the Nangwarry-1 prospect as a conventional three-way dip, fault-dependent trap analogous to nearby Katnook, Haselgrove, and Ladbroke Grove fields. The fields were found in the late 1980s and have produced a combined total of 70 bcf of gas.
The company has signed a nonbinding memorandum of understanding to sell as much as 4 PJ/year of gas with Weston Energy Pty. Ltd., Sydney, if the Nangwarry well is a commercial discovery.
GulfSlope Energy to drill at Canoe Prospect in gulf
GulfSlope Energy Inc. said the Rowan Ralph Coffman jack up rig is being towed to the Vermilion area in the Gulf of Mexico’s South Addition on Block 378. GulfSlope plans to spud a well at the Canoe prospect in 325 ft of water by Aug. 1, pending final rig inspection and regulatory drilling approval.
The Canoe exploration well seeks to test multiple Pleistocene amplitudes correlating to zones in nearby producing fields. Crews expect drilling will take 15 days to reach a measured depth of 6,249 ft. If successful, this above-salt test will be evaluated for options including subsea tiebacks to a platform.
After the Canoe well, GulfSlope will mobilize the Ralph Coffman to drill an exploration well on the Tau prospect in the Ship Shoal area on South Addition Blocks 336/351. Crews plans to drill the Tau well, in 305 ft of water, to 29,728 ft.
Tau targets multiple deep subsalt formations. GulfSlope has government approval for the Tau well and expects to receive the approved drilling permit in August.
GulfSlope operates both wells with a 20% working interest. Delek GOM Investments LLC holds 75% working interest and Texas South Energy Inc. owns 5% working interest.
Drilling & Production Quick Takes
Total starts production at Kaombo offshore Angola
Total SA has started up production of the Kaombo oil development offshore Angola. Operated by Total E&P Angola, the project lies on Block 32 in 1,400-2,000 m of water about 260 km offshore Luanda.
Kaombo Norte, the first floating production, storage, and offloading unit, has been brought on stream and will produce 115,000 b/d. The second FPSO, Kaombo Sul, is expected to start up next year. Overall production is expected to reach 230,000 b/d at peak. Associated gas will be exported to the Angola LNG plant.
A total of 59 wells will be connected to the two FPSOs. Together, they will develop the resources of six fields—Gengibre, Gindungo, Caril, Canela, Mostarda, and Louro—over an area of 800 sq km in the central and southern part of the block.
“The Kaombo start up is a great milestone for Total. Developing the estimated 650 million bbl of reserves will contribute to the group’s growing production and cashflow in Africa,” said Arnaud Breuillac, president exploration and production.
According to Total, the project will account for 15% of the country’s oil production. The company is committed to help develop the oil and gas industry in the country, Breuillac said, and plans to relaunch exploration “in areas such as Block 48.”
Chevron lets subsea installation contract for Gorgon
Chevron Australia has let a subsea installation contract to TechnipFMC for the second development phase within the Gorgon area offshore western Australia in 250-1,340 m of water. The development phase aims to upgrade the project’s existing subsea facilities to ensure production is maintained for future gas supply.
The contract covers project management and engineering, transportation, installation, and precommissioning of umbilicals and flying leads and manifolds. The award also includes fabrication, transportation, installation, and rigid spools testing.
Husky Energy updates progress on West White Rose
Husky Energy Inc. said initial construction work is progressing at the West White Rose project with oil production anticipated in 2022. West White Rose is expected to reach peak production of 75,000 b/d (52,500 b/d Husky working interest) in 2025.
Meanwhile, a program of infill wells and workover activities at White Rose oil field 350 km east of St. John’s, Newf., and its satellite extensions is offsetting reservoir declines until West White Rose comes on stream.
Husky said July 26 that it plans more delineation of the north White Rose area. In its second-quarter earnings report, Husky also said it has completed a planned turnaround of the White Rose floating production, storage, and offloading vessel.
The White Rose A-24 exploration well, 10 km north of the SeaRose FPSO, encountered a net pay thickness of more than 85 m of oil-bearing sandstone (OGJ Online, May 18, 2018).
ADES acquires 31 onshore drilling rigs from Weatherford
ADES International Holding Ltd., which provides oil and gas drilling and production services in the Middle East and Africa, announced plans to acquire 31 onshore drilling rigs from Weatherford International PLC for $287.5 million.
Terms call for ADES to acquire Weatherford’s onshore drilling business, including associated assets, contracts, management systems, and 2,300 employees and contract personnel spread across Algeria, Kuwait, and Saudi Arabia.
ADES is acquiring 12 rigs in Kuwait, 11 rigs in Saudi Arabia, 6 rigs in Algeria, and 2 rigs in southern Iraq. Twenty of the 31 rigs currently are operational. The other 11, including 2 idle rigs in Iraq, will help ADES grow its operations in the Middle East and Africa.
Barclays analyst J. David Anderson of New York issued a research note saying Weatherford had been trying to sell its land rig business for 4 years. Weatherford still has 79 land rigs scattered across 12 countries.
PROCESSING Quick Takes
Fuji Oil ramps up aromatics output at Sodegaura
Fuji Oil Co. Ltd. has implemented Honeywell UOP LLC’s proprietary R-364 Platforming catalyst to produce more aromatics for chemical production at its 143,000-b/d Sodegaura refinery on Tokyo Bay in Chiba Prefecture, Japan.
The Sodegaura refinery is now using the R-364 catalyst to increase the site’s production of aromatics by boosting throughput of the plant’s existing CCR Platforming unit.
The high-activity catalyst—the design of which can increase production of a CCR Platforming unit by up to 10%—converts naphtha feedstock into aromatics or can be blended into gasoline to improve its octane rating. “The R-364 catalyst is a drop-in replacement catalyst that effectively increases our capacity and flexibility,” said Daiki Imai, general manager of Fuji Oil’s operation management department.
Fuji Oil’s selection of the R-364 catalyst comes amid Japan’s waning gasoline demand, which reached a peak in 2004.
In lieu of gasoline, Japanese refiners such as Fuji Oil increasingly have turned to manufacturing higher-value aromatics such as chemical-grade benzene and mixed xylenes, which have become more valuable than motor fuels.
Uzbekistan lets contract for Jizzakh refinery
Jizzakh Petroleum JV LLC, a joint venture of JSC Uzbekneftegaz and Gazprom International SA subsidiary Gas Project Development Central Asia AG, has let a contract to Honeywell UOP LLC to provide technology for a proposed 5 million-tonne/year grassroots refinery under construction in the Jizzakh region of eastern Uzbekistan.
Honeywell UOP will provide licensing and basic engineering design services to Jizzakh Petroleum for its proprietary CCR Platforming, Par-Isom, Distillate Unionfining, Unicracking, and Merox processes, the service provider said.
Designed to produce clean-burning gasoline, diesel, and jet fuel, the Jizzakh refinery is part of the Uzbekistan government’s multiyear development plan to achieve national energy independence and increase the country’s export potential.
Once completed, the refinery will produce 3.7 million tpy Euro 5-quality motor fuels, 700,000 tpy of aviation fuel, and 500,000 tpy of other products, including LPG and bitumen, Honeywell UOP said.
Uzbekistan first announced the proposed $2.2-billion complex and broke ground on the project in 2017.
Contract let for polyolefin plant in Uzbekistan
Surhan Gas Chemical Operating Co. FC LLC (SGCOC) has let a contract to John Wood Group PLC, Aberdeen, to provide a feasibility study for development of Uzbekistan’s “25 Years of Independence” gas field, including construction of a gas-to-chemical complex, in the Surkhandarya region in the southern part of the country (OGJ Online, Nov. 29, 2017).
The gas field will process 4 billion cu m of raw natural gas containing a high amount of sulfur and carbon dioxide to be treated in a gas processing plant (GPP) for purification, mainly to remove water and sour components to eventually produce a stream of treated natural gas, Wood said.
The treated gas will be partly used for direct sale on the domestic or export market and partly used to produce polyolefins—including polyethylene and polypropylene—in the dedicated GCC to be operated by SGCOC, said the service provider, which did not disclose a value or timeframe for its work on the project.
Reserves of the 25 Years of Independence gas field and the O’zbekiston Mustaqillik investment block currently are estimated at more than 100 billion cu m.
The project has an overall timeframe of 35 years and will cost an estimated $2 billion, project partners said in November 2017.
IOC lets clean-fuels contract for refineries
Indian Oil Corp. Ltd. (IOC) has let a contract to Honeywell UOP LLC to provide pressure-swing adsorption (PSA) technology for supply of high-quality hydrogen at five refineries as part of the operator’s effort to produce clean-burning fuels complying with the Indian government’s strict Bharat Stage VI (BS-VI, equivalent to Euro 6) environmental standards.
As part of the contract, Honeywell UOP will deliver PSA units to IOC’s 13.7 million-tonne/year Koyali refinery at Vadodara in India’s western state of Gujarat, the 15 million-tpy Panipat refinery and petrochemical complex in Haryana north of New Delhi, and the 8 million-tpy Mathura refinery in the northwestern region of the country, the service provider said.
Alongside the units at Koyali, Panipat, and Mathura, Honeywell UOP’s scope of work will include upgrading existing hydrogen plants with its proprietary Polybed PSA technology at IOC’s 7.5 million-tpy Haldia refinery in the district of Purba Medinipur, West Bengal, the 1 million-tpy Guwahati refinery in Assam, and the Koyali refinery in Gujarat.
The six projects will generate 166,000 tpy of new hydrogen capacity, representing an almost 30% increase for IOC.
Scheduled for completion by yearend 2019 to meet the government’s aggressive delivery schedule for BS-VI emissions standards, the project’s annual yield of additional hydrogen will have a value of about $400 million for IOC.
The six projects awarded under this contract come as part of the operator’s broader BS-VI quality improvement program for all its refineries, which now under way and collectively slated for startup by September 2019, will require a total investment of about 166 billion rupees, IOC said on its web site.
TRANSPORTATION Quick Takes
Oneok becomes sole owner of West Texas LPG line
Oneok Inc., Tulsa, has acquired the remaining 20% interest in the West Texas LPG Pipeline LP from Martin Midstream Partners LP for $195 million. Oneok will become the sole owner of the natural gas liquids pipeline system. Oneok completed the acquisition of its initial 80% interest in West Texas LPG in December 2014.
Owning the West Texas LPG “allows Oneok to more effectively integrate it into the rest of our extensive NGL system, positioning us for future expansion opportunities currently under development,” said Terry K. Spencer, Oneok president and chief executive officer. In October, the companies announced plans to invest $200 million to expand the system into the Delaware basin (OGJ Online, Oct. 24, 2017).
West Texas LPG Pipeline consists of 2,600 miles of NGL pipeline in Texas and New Mexico and provides transportation to the Mont Belvieu market center from nearly 40 third-party gas processing plants in the Permian basin.
Woodside lets contract for Scarborough pipeline
Woodside Petroleum Ltd., Perth, has let a contract for define phase engineering services for the main trunkline to shore in its proposed Scarborough gas field development on the Exmouth Plateau off Western Australia to fellow Perth company Subsea Engineering Associates Pty. Ltd. (SEA).
SEA said the company will use its ICE Platform to ensure rapid delivery of engineering and a mature digital basis of design that can be carried into the project’s front-end engineering and design phase.
SEA has subcontracted another Perth company, Intecsea Pty. Ltd., to provide specialized deepwater experience for the project.
This follows an earlier Woodside contract to international seabed survey company Ocean Infinity Ltd. in June for provision of seabed data in support of the Scarborough development.
That contract involves deepwater geophysical preengineering route survey extending from Scarborough field in 950-1,400 m of water, up the scarp towards the existing onshore domestic gas and LNG processing facilities on the Burrup Peninsula near Karrartha.
Scarborough lies 375 km west-northwest of the Burrup.
The proposed development will comprise 12 subsea production wells tied back to a semisubmersible platform moored in 900 m of water close to the field.
The field contains 7.3 tcf of dry gas and was discovered in 1979 by the ExxonMobil-BHP partnership. Woodside now has a 75% interest in Scarborough field following the $444-million acquisition of ExxonMobil’s interest in March.
Inpex starts gas production from Ichthys field
The Inpex Corp.-led consortium at Ichthys gas-condensate field in the Browse basin 220 km offshore Western Australia has started natural gas production from its subsea wells to the massive 120,000-tonne Ichthys Explorer production platform.
LNG from the project’s onshore Darwin plant in the Northern Territory is expected by the end of September.
Inpex said the start-up marks the beginning of what is expected to be a 40-year life for the $40-billion project.
Gas from the wells will be processed on the platform. Condensate will then be piped to the Ichthys Venturer floating production, storage, and offloading vessel moored nearby, while dry gas will be piped nearly 900 km by subsea pipeline to the Darwin LNG facilities.
The project expects its initial cargo of condensate to be shipped first and then LNG and LPG during September.
It will take 2-3 years to reach full production of 8.9 million tonnes/year along with 1.7 million tonnes of LPG and 100,000 b/d of condensate.
The start-up of gas production is about 18 months after the original expected on-stream date of yearend 2016. The project reached final investment decision in 2012.
Tallgrass to build Cushing-to-St. James oil line
Tallgrass Energy LP, Leawood, Kan., plans to build a crude oil pipeline from Cushing, Okla., to the St. James, La., refining complex, as well as a separate new export-capable liquids terminal near the mouth of the Mississippi River.
The 700-mile, 30-in. Seahorse Pipeline would transport as much as 800,000 b/d of oil and operate as a common grade batch system that, along with Tallgrass’ Pony Express Pipeline, would give US refiners and international markets access to “clean” barrels from five different production basins, the company said.
The proposed new Plaquemines Liquids Terminal (PLT), a joint development with Drexel Hamilton Infrastructure Partners LP, is being structured as a public-private partnership in concert with the Plaquemines Port & Harbor Terminal District, a Louisiana state agency.
The terminal is permitted for as much as 20 million bbl of storage and is expected to be fully operational in second-quarter 2020. PLT will have the ability to fully load and unload Post-Panamax vessels (each with a capacity of about 1 million bbl) and barges on multiple deepwater docks.
Tallgrass anticipates building a separate offshore pipeline extension that would give PLT the capability of loading very large crude carriers by third-quarter 2021.
An initial open season for the proposed pipeline is expected to begin Aug. 15 and run for 45 days.