GENERAL INTEREST — Quick Takes
BOEM, Mexico's ASEA sign Gulf of Mexico agreement
The US Bureau of Ocean Energy Management and Mexico's Agency for Safety, Energy, and Environment (ASEA) signed a letter of intent to strengthen cooperation, coordination, and information sharing on environmental matters related to Gulf of Mexico offshore hydrocarbon activities.
ASEA's Executive Director Carlos de Regules said formal cooperation between the two countries' agencies was an important step toward creating a regulatory framework in the gulf, which is critical to Mexico's implementation of its energy policy reforms.
The letter of intent outlines ways the two agencies may coordinate, including cooperation related to shared environmental objectives, including joint studies and research; application of science and management practices related to environmental protection; periodic information exchanges; staff member training; participation as observers in activities related to each country's respective authorities; and organization of bilateral events and visits.
Cooperation between BOEM and ASEA is in keeping with broader bilateral environmental and hydrocarbons cooperation efforts between the two countries, officials said.
Merger of ADMA-OPCO, ZADCO due by 2018
A steering committee formed by Abu Dhabi National Oil Co. (ADNOC) will oversee merger of the company's two main offshore operating companies, Abu Dhabi Marine Operating Co. (ADMA-OPCO) and Zakum Oil Development Co. (ZADCO).
ADNOC's announcement of the merger did not specify how international ownership would be reconciled. ADNOC holds 60% interests each in ADMA-OPCO and ZADCO.
Holding other interests in ADMA-OPCO are BP PLC, Total SA, and Japan Oil Development Co. (JODCO). ExxonMobil Corp. and JODCO hold interests in ZADCO.
ADMA-OPCO produces about 650,000 b/d of oil from Lower Zakum, Umm Lulu, Nasr, and Umm Shaif fields in the Persian Gulf. It processes crude oil and associated gas on Das Island.
ZADCO is raising production capacity of its main field, Upper Zakum, to 750,000 b/d from 550,000 b/d and aims to sustain the expanded level for 25 years. It also produces crude a lower rates from Umm Al-Dalkh and Satah fields.
ZADCO processes crude on Zirku Island. Its associated gas flows to Das Island.
Consolidation of the firms is to be completed by early 2018.
Yaser Al Mazrouei, ADMA-OPCO chief executive officer, will be CEO of the combined company. Sultan bin Ahmad Sultan Al Jaber, minister of state and ADNOC chief executive officer, said the consolidation wouldn't affect existing concession rights of the operating company partners.
"ADNOC will continue to review and consider all options and pursue partners for concessions expiring in 2018," he said.
Sandridge emerges from bankruptcy
SandRidge Energy Inc., Oklahoma City, has emerged from Chapter 11 having eliminated $3.7 billion in pre-petition funded debt.
Combining its unrestricted cash balance with the availability under its first lien credit facility following emergence, Sand- Ridge exits its restructuring with $525 million in total liquidity. The firm's new capital structure consists of a $425 million first lien revolving credit facility maturing in 2020 and $282 million in mandatorily convertible notes.
The Midcontinent and Niobrara-focused firm said previously it plans to invest $225-255 million of capital expenditures in 2016, with $56 million spent during the second quarter and $110 million during the first half. Its full-year total production is estimated at 18.9-19.3 million boe.
Exploration & Development — Quick Takes
BP abandons Bight exploration program
BP PLC has decided to abandon its planned $600-million (Aus.) exploration drilling program in the Great Australian Bight (GAB) off South Australia.
The company says the decision follows a review of its upstream strategy conducted earlier this year that included focusing its exploration programs on opportunities that were likely to create near-term to medium-term value.
BP now says that the GAB project won't be able to compete for capital investment with other upstream opportunities in its global portfolio for the foreseeable future.
Clair Fitzpatrick, BP's managing director for exploration and production in Australia, says the company looked long and hard at its exploration plans in the GAB, but that in the current external environment, the company "will only pursue frontier exploration opportunities if they are competitive and aligned to our strategic goals."
She said, "After extensive and careful consideration, this has proven not to be the case for our project in the Bight."
Fitzpatrick added that the decision is not a result of a change in BP's view of prospectivity in the region, and not of the ongoing regulatory process that is run by the independent Australian regulator, the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA). Rather it is an outcome of the company's strategy and the relative competitiveness of the GAB in its portfolio.
She said that BP had consulted with Statoil SA, its joint-venture partner in the permit, and Statoil accepts BP's decision.
BP was awarded its four exploration licence blocks in the Ceduna subbasin in January 2011. Seismic data was acquired in 2011-12 and Statoil farmed in for 30% interest in the licences in 2013. The first well in the program was to have been Stomlo-1.
Karoon awarded permit in GAB
Karoon Gas Australia Ltd., Melbourne, has been awarded a large exploration permit offshore South Australia in the Ceduna subbasin of the Great Australian Bight to the southeast of the controversial deepwater permits held by BP PLC, Statoil AS, Murphy Oil Corp., Santos Ltd., and Chevron Corp.
Karoon's block, covering just fewer than 18,000 sq km, is EPP 46 and lies about 200 km west of Port Lincoln.
The company says the Ceduna subbasin hosts a large Cretaceous-age delta system that it believes holds hydrocarbon potential on a world scale.
The combined exploration commitments of the major companies total $1 billion (Aus.) and include the drilling of 9 wells over the next 2 years. Karoon is quick to say, however, that its initial 3-year commitment does not include a well, but does require the acquisition of 2D and 3D seismic data.
The company adds that the geology, potential target size, and the exploration programs proposed for nearby permits make its permit a high-impact opportunity.
The thick sedimentary section has multiple structural and stratigraphic stacked play types and the sediments thicken in the central-to-outer areas of the subbasin. These remain largely untested. Earlier work suggests the presence of a working petroleum system.
Beach makes oil discovery with Kangaroo wildcat
Beach Energy Ltd., Adelaide, has made an oil discovery on the western flank of the Copper-Eromanga basin of South Australia with the Kangaroo-1 wildcat well.
The well intersected a 20-m gross oil column in a stratigraphic trap in the Jurassic-age Birkhead formation. A drillstem test recovered 41.6 bbl of 52° gravity oil from the drill string after a 3-hr flow period from an interval 1,694.5 m to 1,712 m. Beach said the flow rate was equivalent to 320 b/d of oil.
Kangaroo-1 is being cased and suspended as a future producer and may be brought on stream early next year. It lies in permit PEL 91 about 4 km northwest of the existing Spitfire field. The well was the first in Beach's 10-well exploration program for financial year 2016-17.
The company says the discovery confirms the quality and ongoing prospectivity of the western flank acreage.
Beach has 100% interest in PEL 91.
Sasol completes 3D seismic work in Mozambique
Sasol Exploration & Production International Ltd. has acquired 115 sq km of seismic data in Inhassaro field, onshore Mozambique. Geofizyka Torun of Poland shot 2D and 3D seismic with Vibroseis trucks, and the contractor is now moving its equipment to Pande field where it will shoot an additional 42 sq km of 3D seismic data.
Sasol has conducted 3D seismic surveys offshore Mozambique-1,836 sq km and 2,100 sq km-on the M10/Sofala blocks and Block 16/19, respectively. This is the first time a 3D seismic campaign has been conducted onshore.
Sasol's production sharing agreement license is Inhambane province, adjacent to its current producing petroleum production agreement license, where the operator is developing is an integrated oil, LPG, and gas project. Tranche 1 of the PSA development was approved by Mozambique's Council of Ministers on Jan. 26.
In May, Sasol spudded the first of 13 wells in a drilling campaign aimed at developing Temane G8, Temane East, Inhassaro G6, and Inhassaro G10 reservoirs. Sasol said the first two wells of its campaign showed "encouraging results." The company encountered previously unknown accumulations of hydrocarbons within the development and production area, indicating the presence of gas and oil. Sasol has issued a notice of discovery to the Mozambican government, the company said.
Drilling & Production — Quick Takes
Cuadrilla wins approval to frac UK wells
Cuadrilla Resources Ltd., Preston, UK, has received approval of the UK secretary of state for communities and local government to hydraulically fracture as many as four wells at a Bowland basin shale prospect in Northwest England.
The approval is for a Preston New Road location in the company's Lancashire area, which it estimates holds 200 tcf of natural gas in place in shale.
Cuadrilla has identified two Preston New Road locations and hopes to drill four exploration wells at each. It has identified seven other prospect sites in the Lancashire area.
The approval overturned Lancashire County Council rejection of the Cuadrilla application last year.
Hydraulic fracturing has met strong opposition from environmental and other groups in the UK. Cuadrilla applied to frac wells at Preston New Road and another Lancashire site, Roseacre Wood, more than 2 years ago.
The secretary of state for communities deferred action on the Roseacre Wood application. At Roseacre Wood, too, Cuadrilla plans to drill four exploration wells each from two locations.
Earlier this year, Third Energy, London, received approval to frac its KM8 well, drilled in 2013 in Kirby Misperton natural gas field in North Yorkshire County, to test Carboniferous Bowland interbedded shale and sandstone.
Origin group flows gas from Beetaloo fraced well
Origin Energy Ltd., Sydney, has reported flow of natural gas from its Amungee NW-1H horizontal well in the Beetaloo basin onshore Northern Territory, 500 km southeast of Darwin.
The well, which is the final one of three in the Stage 1 joint venture Beetaloo project with Falcon Oil & Gas Ltd., flowed at variable rates ranging from 0.8-1.2 MMcfd during an initial production test.
Origin noted that the well flowed back fracture stimulation fluid at the rate of 100-400 b/d.
A workover rig has now been mobilized to install production tubing that will enable Origin to run an extended production test that has a permit to continue until late in November.
Amungee is the first horizontal well in the Beetaloo. The test follows an 11-stage hydraulic stimulation program along a 1,000-m horizontal well section in the Middle Velkerri B shale.
Origin won approval for the frac program on Aug. 27, the eve of the recent Northern Territory election that just beat the newly elected Labor government of Chief Minister Michael Gunner's moratorium on fracing imposed ahead of its inquiry into the practice.
The ban includes fracing for both exploration and production. Any future request for fracing will be decided by an independent scientific inquiry.
Origin released initial estimates of the reservoir zone as a thickness of 30 m, a porosity of 4-7.5%. Gas saturation is 50-75% and permeability 50-500 nD. The gas produced is 95% methane with a carbon dioxide content varying 2-4%. The first two wells in the three-well program were Kalala-1 and Amungee NW-1, both vertical wells drilled in 2015.
PDVSA will reactivate 931 wells in Lake Maracaibo
Petroleos de Venezuela SA (PDVSA) announced two partnership agreements, one finalized and one still pending, to replace flow and gas lines that will include 931 oil wells in Lake Maracaibo, Zulia state.
PDVSA said China's Shandong Kerui Group Holding Co. will repair and connect 624 wells. Shandong Kerui agreed to an initial investment of $30 million. Production will increase by 22,600 b/d of crude oil and 13 MMcfd of natural gas.
PDVSA and the Bulgarian Venezuelan Consortium are negotiating a partnership that, if finalized, would connect 307 wells in Lake Maracaibo. Such a partnership would be supported by a $100-million investment from Bulgarian investor group ALECO, PDVSA said.
The wells, distributed in nine production units, would add 28,000 b/d of oil and 30 MMcfd of gas.
Plans call for both projects to be finished in a year.
Both projects include a total of 1,539 km of laid flexible pipe, both 2.4-in. and 6-in., at production units of Tia Juana Lago, Rosa Mediano, Urdaneta, Lagunillas Lago, Lagomar, Lagomedio, Centro Sur Lago, Lagocinco, and Moporo Lago.
DNO issues Kurdistan Tawke field operational update
DNO ASA has completed the drilling of three production wells in Tawke field in Iraq's Kurdistan region as part of an accelerated drilling program that DNO started in July.
The Tawke-31 well, targeting a Cretaceous reservoir, will be brought on stream following acid stimulation. Two additional wells targeting the shallow Jeribe reservoir, Tawke-33 and Tawke-34, are being readied for production.
Another well, Tawke-37, will be spudded in days, DNO said on Oct. 12. DNO spudded the Peshkabir-2 well to appraise a Jurassic reservoir and explore the deeper Cretaceous horizon from an earlier discovery to the west of the main Tawke field.
Plans to engage a third drilling rig were dropped in September although DNO expects to restart investments to boost production to a targeted level of 135,000 b/d. Tawke production during the third quarter averaged 109,159 b/d, of which 108,759 b/d was delivered for export through Turkey.
DNO is controlled by RAK Petroleum PLC.
PROCESSING — Quick Takes
Lukoil wraps unit revamp at Perm refinery
PJSC Lukoil has completed a project designed to expand production of Euro 5-quality diesel at subsidiary OOO Permnefteorgsintez's 13.1 million-tpy Perm refinery in Russia's North Urals region, on the north bank of the Kama River.
Reconstruction of equipment in the hydrodearomatization (HDA) section of the refinery's hydrocracking unit to enable hydrodewaxing was completed and the HDA block commissioned as of Oct. 6, Lukoil said.
Alongside increasing the refinery's yield of Euro 5-quality diesel by 70,000 tpy, the $50-million revamp of the HDA block also will allow the Perm manufacturing site to produce winter-grade diesel fuels without the use of additives, according to a June 2013 presentation from Vasily Anisimov, general director of Permnefteorgsintez.
The project comes as one of many under Lukoil's strategy to fulfill its commitments under a July 2011 quadripartite agreement on modernization of Russia's oil processing industry between oil companies; the Federal Antimonopoly Service of the Russian Federation; the Federal Service for Environmental, Technological, and Nuclear Supervision (Rostechnadzor); and the Federal Agency for Technical Regulating and Metrology (Rosstandart) to reequip and upgrade oil processing capacities at the country's refineries.
In addition to a series of projects at its other Russian refineries, Lukoil last year commissioned a new oil residue processing complex at the Perm refinery, the company confirmed.
The $950-million complex included construction of a 2.1 million-tpy delayed coking unit, a 1.5 million-tpy diesel hydrotreater, and a 29,000-tpy hydrogen production unit.
The $25.5-million revamp of a separate diesel hydrotreating unit at the Perm refinery to further boost production of Euro 5-quality remains under way, Lukoil said in its latest publication of annual operational statistics.
Citgo moves on restart plans for Aruban refinery
Citgo Petroleum Corp., an indirect wholly owned subsidiary of Petroleos de Venezuela SA (PDVSA), and the government of Aruba are moving forward with a previously announced program to restart Valero Energy Corp.'s former 235,000-b/d refinery in San Nicolas, Aruba (OGJ, May 28, 2012, p. 22).
Authorities from the governments of Aruba and Venezuela, as well as officials from PDVSA, Citgo, and Citgo Aruba, held a ceremony on Oct. 7 to launch the kick-off of activities that will lead to the refinery's full restart by yearend 2018, Citgo said.
Details regarding specific construction activities under way at the refinery, however, were not disclosed.
The recent ceremony follows a June agreement between the parties under which Citgo Aruba committed an investment of $450-650 million to transform the refinery into a plant designed exclusively to upgrade Venezuelan extra-heavy crude oil production.
Following the planned 18-24-month overhaul and revamp of existing processing units at the site, the refinery will have a capacity to upgrade 209,000 b/d of extra-heavy crude from Venezuela's Orinoco heavy oil belt into intermediate crude feedstock that will be shipped to Citgo's US refineries for further processing.
Citgo Aruba will operate the San Nicolas refinery-which is now owned by the Aruban government-under a 15-year lease agreement with a 10-year extension option.
Meridian plans ND refinery startup by early 2018
Meridian Energy Group Inc., Irvine, Calif., has filed its application to the air quality division of North Dakota's health department for a permit to proceed with construction of its planned 55,000-b/sd high-conversion Davis refinery to be built in the heart of southwestern North Dakota's Bakken shale region, near Belfield, in Billings County, ND.
Confident in the refinery's engineering and ability to comply with and exceed North Dakota's most stringent air-quality regulations, Meridian submitted the first application in history to seek permitting to construct a complex refinery under classification as a synthetic minor source (SMS) of air contaminants, Meridian said.
Meridian's decision to apply for SMS instead of major-source permitting follows the company's plan to outfit the refinery with the most advanced, best-available control technology (BACT) for detecting and controlling any fugitive emissions at the manufacturing site, according to the operators's web site.
With its application for construction permitting now filed, Meridian said it remains on schedule to have Phase 1 of the Davis refinery, including a 27,500-b/sd single crude unit and ancillary processing units, in operation no later than early 2018.
A second phase of development that will expand the refinery to its full 55,000-b/sd capacity is due for startup in 2019.
The company's submission of its permit-to-construct application follows the Billings County Board of County Commissioners' recent unanimous approval of Meridian's zoning certificate and conditional-use permit for the Davis refinery.
TRANSPORTATION — Quick Takes
Australia Pacific LNG second train brought on stream
The Australia Pacific LNG group (APLNG) has brought its second production train on stream on Curtis Island near Gladstone in Queensland.
This marks the final major construction milestone in the group's 8-year coal seam gas-to-LNG project in Queensland supplied by fields in the Surat and Bowen basins. Some 200 terajoules/day of gas are available for the two-train facility via a 530-km transmission pipeline from the fields to Curtis Island.
The second train has already produced 150,000 cu m of LNG, sufficient for its first shipment.
APLNG's Chief Executive Officer Page Maxson said the group is working with key customers in Australia and overseas to help meet their energy needs.
Maxson added that APLNG is the largest gas producer in eastern Australia that provides about 25% of domestic gas to the east coast with sufficient reserves to meet LNG and domestic demand.
APLNG's first train on Curtis Island was brought on stream in December 2015 and the first cargo of LNG exported in January 2016. Some 47 cargoes have been load to the present time.
APLNG is an incorporated joint venture of ConocoPhillips 37.5%, Origin Energy Ltd. 37.5%, and Sinopec 25%.
Long-term LNG sales and purchase agreements are held with Sinopec for 7.6 million tonnes/year and with Kansai Electric for 1 million tpy.
NuBlu Energy breaks ground on Louisiana LNG plant
NuBlu Energy, Center, Tex., has started construction of a 90,000-gpd natural gas liquefaction plant along the Mississippi River in Port Allen, La., to support high-horsepower fueling applications in the region, including rail, marine, long-haul transportation, power generation, gas interruption, asphalt, and other energy markets.
To be equipped with technology patented by NuBlu, the plant's first 30,000-gpd train is scheduled to begin production of LNG during second-quarter 2017, the company said.
Alongside a 100,000-gal LNG storage capacity, Phase 1 of the project also will include a transfer system to enable loading of both LNG transport trailers and intermodal containers.
