OGJ Newsletter
DONG to sell oil, gas business by yearend
DONG Energy, Fredericia, Denmark, expects to sell its oil and gas exploration and production business by yearend.
The company reported 115,000 boe/d of oil and gas production in 2015-90% in Norway and 10% in Denmark.
In a financial report, the company said its full-year 2016 statements will treat its oil and gas segment as "discontinuing operations."
DONG's other activities are wind power and Danish utility businesses.
EnQuest to buy stakes in Magnus field, other assets
EnQuest PLC is to buy a 25% stake in Magnus oil field in the UK North Sea from BP PLC, along with smaller interests in the Sullom Voe oil terminal, the Northern Leg gas pipeline, and the Ninian pipeline system for $85 million.
EnQuest has the option to acquire BP's remaining 75% of Magnus and BP's interests in the associated systems.
EnQuest currently has 3% in Sullom Voe and will add 3%. The company has 5.9% in Northern Leg and will add 9%. It has 2.7% in Ninian and will add 3.83%.
The agreement is subject to various approvals. EnQuest will become operator after a transition of up to 12 months.
Payment will come from cash generated from the assets.
"Magnus is a good-quality reservoir," said Amjad Bseisu, EnQuest's chief executive officer. "It has large volumes in place, with potential for infill drilling and for the revitalization of wells, and scope for field life extension."
Deirdre Michie, chief executive of Oil & Gas UK, said, "This is an innovative deal which will open a new chapter in the life of Sullom Voe and the productive life of Magnus, an iconic North Sea oil field. It also sends a very positive signal on the opportunities available in the North Sea and is an indication of confidence that, even after producing oil for more than 30 years, this mature field still has more to give."
EnQuest also has the option to receive $50 million from BP for managing the physical decommissioning of Thistle and Deveron fields.
Inpex, ADNOC to extend field development venture
Inpex Corp., Tokyo, reported an agreement in principle with Abu Dhabi National Oil Co. to extend the duration of joint development of Satah and Umm Al Dalkh oil fields offshore Abu Dhabi.
The companies "will discuss new detailed terms" for extension through 2042 from the current expiration date of Mar. 8, 2018.
Inpex said Satah produces about 20,000 b/d and Umm Al Dalkh, 15,000 b/d (OGJ Online, Oct. 10, 2016).
Inpex, which holds 40% in Satah and 12% in Umm Al Dalkh, said it will be granted an additional 28% interest in Umm Al Dalkh.
Tullow makes Erut-1 oil discovery in Kenya
The Tullow Oil PLC-operated Erut-1 well on Block 13T in northern Kenya has discovered a gross oil interval of 55 m with 25 m of net oil pay at a depth of 700 m. The overall oil column for the field is considered to be 100-125 m.
The objective of the well was to test a structural trap at the northern limit of the South Lokichar basin. The Erut-1 well was drilled 10 km north of the Etom-2 well and shares primary characteristics. Fluid samples taken and wireline logging all indicate the presence of recoverable oil.
Tullow says Erut-1 successfully shows that oil has migrated to the northern limit of the South Lokichar basin and has derisked multiple prospects in the area, which will now be considered in the partnership's future exploration and appraisal drilling program.
"This extends the known hydrocarbon limits of the basin beyond the successful Etom discovery into the underexplored northern part of the basin where we have several undrilled prospects," explained Angus McCoss, Tullow exploration director. The Etom-2 well encountered 102 m of net oil pay in two columns during late 2015 (OGJ Online, Dec. 15, 2015).
The PR Marriott Rig-46 drilled the Erut-1 well to a final depth of 1,317 m and will now move to the southern part of Block 10BB where it will spud the Amosing-6 appraisal well. "Following the scheduled appraisal wells at Amosing-6 and Ngamia-10, further exploration drilling of this area is now being planned," McCoss said.
Tullow operates Blocks 13T and 10BB with 50% interest. Partners are Africa Oil Corp. and Maersk Oil each with 25%.
SNE appraisals begin offshore Senegal
The Cairn Energy Ltd.-led group in the SNE oil discovery offshore Senegal has begun the 2017 appraisal program at the field, which was originally discovered in 2014.
The first well this year, SNE-5, was spudded Jan. 21 by the Stena DrillMax drilling rig. This will be followed immediately by SNE-6.
The aim of the program is to evaluate the upper SNE reservoir units with particular attention to reservoir connectivity and deliverability. To accomplish this, the group will conduct oil flow tests, including interference testing.
The joint venture is striving to improve understanding of the characteristics of these upper reservoirs and ensure potential development wells are located to optimize oil recovery and maximize value per well.
SNE-5 will be the southernmost well on the field and lies 2 km southeast of SNE-3. SNE-6 is a little farther north.
The 2017 program follows the successes in SNE-2, SNE-3, and nearby BEL-1 and SNE-4 appraisals drilled during 2015-16.
At this point the contingent recoverable resources are estimated to be 641 million bbl of 32° gravity oil.
The JV believes that this figure surpasses the minimum economic field size and the group is now committed to pre-FEED development activity.
Block partners are Cairn 40%, ConocoPhillips 35%, FAR Ltd. 15%, and Petrosen 10%. In July 2016 Woodside Petroleum Ltd. negotiated to buy ConocoPhillips's share of the JV. However this right has been disputed by fellow Australian company FAR, which claims it has preemptive rights to the sale. The matter has yet to be resolved.
Oryx continues development in Iraq's Kurdistan region
Oryx Petroleum Corp. Ltd., Calgary, is moving ahead on a third appraisal well at Zey Gawra field in the Kurdistan region of Iraq (OGJ Online, Nov. 11, 2013). The company said its third well will appraise both the Tertiary and Cretaceous reservoirs at Zey Gawra, but it will be completed as a second Cretaceous producer. The well will be spudded in the second quarter. This news followed Oryx's December 2016 sidetrack of the Zey Gawra-1 (Zey Gawra-1ST) well.
The operator completed the sidetrack in open hole partially penetrating the Cretaceous reservoir. Production is currently constrained to 1,500 b/d of 35.5° gravity oil with GOR 3 Mcf/stock-tank bbl and less than 0.5% water, with more than 1,500 psi. Extended production testing continues, Oryx said.
The operator is hauling Zey Gawra's production to the Hawler tanker terminal where it is stored and blended with Demir Dagh crude oil before being exported through the Kurdistan Export Pipeline (OGJ Online, June 18, 2013; Aug. 7, 2013).
The Hawler license area averaged 3,100 b/d in fourth-quarter 2016. Production from the Demir Dagh-3 well ceased in late December due to an abrupt increase in the water-oil ratio, Oryx said. The well, which produced from the Jurassic reservoir, was expected to decline later this year. The company is surveying options for remediation but said the loss of production was offset by its Zey Gawra-1ST well.
Drilling & Production — Quick TakesBP starts up Thunder Horse South expansion
BP PLC has started production from the Thunder Horse South expansion project in the deepwater Gulf of Mexico. It's expected to boost production at the Thunder Horse facility by an estimated 50,000 boe/d gross.
The project adds a subsea production system roughly 2 miles south of the existing Thunder Horse platform. The system is a collection point for wells connected to the platform by two 11,000-ft flowlines installed on the seabed in late 2016.
The first new well for the project tapped into the highest amount of hydrocarbon-bearing sand seen to date at Thunder Horse field, with drilling results confirming more than 500 ft of net pay.
The Thunder Horse platform sits in more than 6,000 ft of water and began production in June 2008 (OGJ Online, Dec. 22, 2008). It has the capacity to handle 250,000 bbl of oil gross and 200 MMcfd gross of natural gas. The facility continued to operate during construction and installation of the new subsea production and pipeline system.
BP last year launched a major water injection project at Thunder Horse field that will allow for the recovery of an additional 65 million boe (OGJ Online, May 25, 2016).
Thunder Horse is operated by BP with 75% working interest. Partner ExxonMobil Corp. holds the remaining interest.
BP says the Thunder Horse South expansion was completed more than 15% below budget and 11 months ahead of schedule by relying on proven standardized equipment and technology rather than building customized components.
"Thunder Horse South expansion, along with our recent approval of the $9-billion Mad Dog Phase 2 platform, demonstrates that the US Gulf of Mexico remains a key part of our global portfolio today and for many years to come," said Bob Dudley, BP chief executive officer.
Mad Dog Phase 2's floating production platform is slated to be built by Samsung Heavy Industries Co. Ltd. (OGJ Online, Jan. 13, 2017). The project was sanctioned late last year.
In the deepwater gulf, BP operates Thunder Horse, Atlantis, Mad Dog, and Na Kika, and holds interests in non-operated hubs Mars, Olympus, Ursa, and Great White.
Oil production added to Prirazlomnoye field
PJSC Gazprom Neft has drilled two oil production wells in Prirazlomnoye field in the Pechora Sea in the Russian Arctic. One well has had production of 1,760 tonnes/day.
The Prirazlomnaya platform now has 10 wells, including two injection wells and one absorption well. Waste is either reinjected into the strata or transported onshore. All wellheads are within the platform, which is 60 km offshore.
The company plans for a total of 32 wells in water depths up to 20 m (OGJ Online, Mar. 17, 2016).
Commercial production from Prirazlomnoye field began in December 2013.
Gazprom adds capacity at Bovanenkovskoye field
OAO Gazprom has added production and transmission capacity at Bovanenkovskoye natural gas-condensate field on the Yamal peninsula in northern Russia.
At a Jan. 18 ceremony, Gazprom said 88 operating wells were added, bringing the total to 391. Two booster compressor stations with a total capacity of 160 Mw also were brought online. Peak output is now 264 million cu m/day (cmd), up from 218 million cmd.
The field has two production facilities with a total design capacity of 90 billion cu m/year.
Gazprom also commissioned the 1,260-km Bovanenkovo-Ukhta 2 gas pipeline with a design capacity of 57.5 billion cu m/year, bringing combined capacity for both lines to 115 billion cu m/year. The first line was brought into operation in 2012.
Gazprom said it has plans in the medium term for a third production facility at Bovanenkovskoye and additional pipeline and compressor capacities to bring the field's design capacity to 115 billion cu m/year.
"Gazprom's main resource base is shifting northward to Yamal," said Alexey Miller, Gazprom management committee chairman.
Indonesia changes production-sharing terms
The government of Indonesia has implemented new production-sharing terms for oil and natural gas
The Ministry of Energy and Mineral Resources issued regulations for the new "gross-split contract," which is based on gross production with no mechanism for cost recovery.
Shares are adjusted for new contracts from government-contractor "base splits" starting at 57-43 for oil and 52-48 for gas.
The government-contractor splits under the former contract, which provided for cost recovery, were 85-15 for oil and 70-30 for gas.
PT Pertamina Hulu Energi signed the first contract under the new scheme, covering an extension of the Offshore North West Java (ONWJ) block.
The ONWJ government-contractor splits are 47.5-52.5 for oil and 37.5-62.5 for gas.
At the end of last year, the block produced 35,800 b/d of oil and 155 MMscfd of gas.
PDO seeks investment in heavy-oil project
Petroleum Development Oman has invited oil and gas companies to invest in what it calls a "sourcing exercise" targeting development of heavy oil in Oman's Habhab region.
The company, 60% owned by the sultanate, is seeking bids for participation under a service contract providing for cost recovery and profit-sharing from sales of diluted bitumen.
It estimates the target area holds 1 billion stock-tank bbl of 10-14° gravity bitumen in place. Viscosity is 30,000-100,000 cp at 65°C. reservoir temperature and 1 million cp at surface.
The project seeks "development and implementation of hydrocarbon production practices aimed at achieving the maximum economic recovery of Habhab oil," PDO says.
The bitumen accumulation is in a thinly laminated sandstone with an oil column thickness of 100 m encountered at depths starting at 1,550 m. The sandstone has permeability of 1-100 md and porosity of 20-25%. Initial oil saturation is about 50%.
Offering documents identify the target sandstone as Cambrian Miqrat and indicate development might be approved of the shallower Al Khalata and deeper Gariff formations.
PDO describes the contract area as "remote with no facilities existing." The agreement term is 27 years.
PROCESSING — Quick TakesShell selling 50% SADAF stake to SABIC
Royal Dutch Shell PLC will sell its 50% interest in the Saudi Petrochemical Co. (SADAF) joint venture to Saudi Basic Industries Corp. (SABIC), its partner, for $820 million.
The joint venture agreement was to have expired in 2020.
The SADAF complex, on 460 acres in Jubail, Saudi Arabia, comprises an ethylene plant, two styrene plants, a salt plant, an ethyl chloride-caustic plant, a methyl tertiary butyl ether plant, and a cogeneration plant.
It produces an average of more than 4 million tonnes/year of chemicals from ethane, benzene, methane, butane, and salt brine.
SABIC and Shell formed the venture in June 1980. Ethylene production began in October 1984.
Nova Chemicals wraps Joffre polyethylene expansion
Nova Chemicals Corp., Calgary, has commissioned the Polyethylene 1 (PE1) plant expansion project at its ethylene and PE complex in Joffre, near Read Deer, Alta. (OGJ Online, July 1, 2013).
The 450,000-tonne/year, single-train linear low-density PE (LLDPE) gas phase reactor, which reached startup in December 2016, is now producing butene LLDPE for shipment to customers, Nova Chemicals said.
The first new LLDPE reactor in the Americas in more than a decade, the $1-billion project expands nameplate PE capacity at Joffre by 40% to about 3.5 billion lb/year, lifting the company's total PE output from its operations to about 5 billion lb/year, the operator said.
Mechanically completed in September 2016, the PE1 expansion's gas phase LLDPE reactor-the Joffre plant's third-produces Nova Chemicals' proprietary Novapol butene LLDPE resin to help meet customers' growing demand for raw materials used to manufacture flexible film products that include food packaging, heavy-duty sacks, collation shrink, as well as trash bags and liners, the company said.
The PE1 expansion experienced a brief delay in early 2016 when Nova Chemicals temporarily suspended construction in the wake of a contractor fatality following an industrial accident at the project site (OGJ Online, Apr. 28, 2016).
Takreer begins restart of Ruwais refinery
Abu Dhabi Oil Refinery Co. (Takreer), the refining arm of state-owned Abu Dhabi National Oil Co. (ADNOC), is restarting operations at the recently shuttered 417,000-b/d West plant of its more than 800,000-b/d Ruwais refining complex in the UAE following an early January fire (OGJ Online, Jan. 11, 2017).
Startup activities are in progress at the refinery's crude distillation and associated units, with commercial production scheduled to resume shortly, ADNOC said in a statement published by UAE's state-owned Emirates News Agency on Jan. 20.
Preliminary results of an ongoing investigation into the Jan. 11 fire indicate only partial impacts to production of gasoline and propylene at the refinery, ADNOC reported.
The company said it currently is working to replace supply shortfalls to ensure ongoing fulfillment of supply commitments to customers.
Quickly contained to one of the refinery's still yet-to-be-identified units, the fire did not affect the Ruwais complex's East refinery, which has continued to operate as planned since the time of the event (OGJ Online, Jan. 17, 2017).
Cause of the fire remains under investigation.
TRANSPORTATION — Quick TakesPeru to cancel natural gas pipeline contract
Peru plans to cancel a contract for construction of the Southern Peruvian Gasline (GSP) after the consortium hired to build it failed to meet its financing deadline. Odebrecht SA, the subject of a multinational corruption investigation, led the consortium with a 55% stake. Enagas SA held 25% and Grupo Grana y Montero 20%.
The 620-mile GSP line would have used 32-in. OD pipe to transport 800 MMcfd of natural gas from Camisea across the Andes to the Pacific coast.
Odebrecht says it will over the next 20 years pay $2.1 billion in reparations related to the corruption to Brazil, the US, and Switzerland. Of this, 85% is for Brazil, 10% the US, and the remaining 5% for Switzerland. The amount owed Peru is still being calculated.
Sempra Energy in November 2016 withdrew from negotiations to buy Odebrecht's share of GSP, citing the Peruvian government's "inability to provide necessary assurances that the concession would not be cancelled due to alleged legal violations by the seller."
TransCanada shale gas pipeline projects approved
The US Federal Energy Regulatory Commission has issued an order approving the construction of TransCanada Corp.'s Leach XPress and Rayne XPress projects that will transport natural gas from the Marcellus and Utica regions to the Midwest and Gulf Coast.
The issuing of the certificates of public convenience and necessity follows the September 2016 release of FERC's final environmental impact statement for the projects. Once remaining regulatory approvals are obtained, TransCanada plans to begin right-of-way preparation and construction activities on both projects in February, and is reviewing the projects' overall timeline in an effort to maintain the proposed Nov. 1 in-service date.
The $1.4-billion Leach XPress will transport 1.5 bcfd of gas from the Marcellus and Utica. The 160-mile greenfield project crosses the northern panhandle of West Virginia and then traverses southeastern Ohio.
Rayne XPress primarily involves the construction of two compressor stations along TransCanada's existing Columbia Gulf system and is designed to create an additional 1 bcfd of capacity to transport Marcellus and Utica production to the Gulf Coast.
Both projects are underpinned by long-term, fixed-fee, firm transportation service agreements.
Plains All American to expand Cactus pipeline in Texas
Plains All American Pipeline LP is expanding the capacity on its 310-mile, 20-in. Cactus crude oil pipeline from McCamey to Gardendale, Tex., to 390,000 b/d.
The expansion will allow PAA to move increasing production volumes from the Permian basin to Corpus Christi and other delivery points along the system. The expansion includes manifold and metering enhancements at PAA's origination station that are anticipated to be completed in the third quarter.
The Cactus pipeline is capable of transporting crude oil from the Permian to the PAA-Enterprise Products Partners LP Eagle Ford joint venture pipeline. The 660,000-b/d Eagle Ford JV pipeline serves the Three Rivers and Corpus Christi markets directly and can supply the Houston-area market through a connection to the Enterprise South Texas crude pipeline.
Crude delivered on Cactus has access to the Eagle Ford JV barge dock facility in the Corpus Christi area as well as dock capacity at third-party facilities in Corpus Christi and Ingleside via connections with the Eagle Ford JV pipeline.