GENERAL INTEREST — Quick Takes
IEA: Carbon dioxide emissions flat as economy grows
Emissions of carbon dioxide remained unchanged for the second year in a row in 2015 while the global economy continued to grow, according to preliminary data from the International Energy Agency.
CO2 emissions last year totaled 32.1 billion tonnes, about their level since 2013. EIA said electricity generated by renewable energy "played a critical role." Renewable energy accounted for about 90% of new electricity generation in 2015, IEA said. Of that increment, wind accounted for more than half.
The global economy, meanwhile, grew by 3.1% in 2015 after growing by 3.4% in 2014, "offering further evidence that the link between economic growth and emissions growth is weakening," IEA said.
In more than 40 years of IEA records, past periods of stalled or declining CO2 emissions have been associated with global economic weakness-in the early 1980s, 1992, and 2009.
Energy-related CO2 emissions declined in China and the US, the two largest emitters, in 2015.
China's emissions dropped by 1.5% as economic restructuring lowered activity of energy-intensive industries and government efforts reduced coal use in power generation.
Emissions in the US fell by 2%, largely because of the switch to natural gas from coal in electricity generation.
UK budget eases oil and gas taxation
The UK government proposes to ease taxation of the oil and gas industry in its 2016 budget disclosed on Mar. 16.
Oil & Gas UK welcomed the measures, saying they lower the "headline rate of tax paid on UK oil and gas production" to 40% on all fields from 50-67.5% at present.
"Today's announcement does indeed mark further progress in modernizing the tax regime for an increasingly mature basin," said Deirdre Michie, Oil & Gas UK chief executive.
The budget abolishes the 35% petroleum revenue tax and reduces the supplementary charge on producers to 10% from 20%.
Among other provisions, it provides an additional £20 million of funding for a second round of seismic surveys in 2016-17.
The budget also provides assurance of the availability of decommissioning tax relief when offshore equipment is sold.
Tap Oil to make cuts to operations, jobs
Tap Oil Ltd., Perth, reported it plans to axe jobs and operations so it can meet its restructured debt repayment commitments.
The moves include Managing Director Troy Hayden stepping down on June 1 along with a reduction of the company's full-time staff. The job cuts will begin next month.
In addition, Mike Sandy, nonexecutive director, will step down from the board in May.
The cost-cutting initiatives also include a divestment of all Tap Oil's Australian exploration portfolio that has material outstanding commitments and to farmout, defer, or materially reduce the company's expenditure in Myanmar. It will also reduce costs at its Manora oil project offshore Thailand.
Tap Oil recently cancelled its $4-million share purchase plan and has announced a three-for-five rights issue to raise $7.75 million. The company's two major shareholders, Risco Energy and Northern Gulf Petroleum (NGP), have said they will each subscribe for $1.5 million and have agreed to underwrite subscriptions up to $1.6 million each. Perth broker Paterson Securities has underwritten the balance.
Risco and NGP each will be entitled to a seat on the board if their respective shareholdings in Tap Oil reach 25% and outstanding commercial and corporate disputes are resolved.
The capital raising is part of the restructuring of a debt facility with BNP Paribas and Siam Commercial Bank that will enable Tap to repay its outstanding debt of $36 million by yearend 2017.
Tap Oil said the global oil-price downturn had significantly degraded its share of the revenue from Manora oil field and reduced its borrowing capacity under the BNP facility.
Tap posted a $54-million full-year loss in 2015 following a $44 million loss in 2014.
Exploration & Development — Quick Takes
Egdon plugs UK wildcat, eyes shale work
Egdon Resources PLC, Odiham, UK, has plugged without testing the Laughton-1 exploratory well on Petroleum Exploration and Development License (PEDL) 209 in Lincolnshire, UK, and says it can proceed with a new phase of exploration that includes shale-gas potential (OGJ Online, Feb. 15, 2016).
The conventional well reached 1,700 m TD and had hydrocarbon shows in several Carboniferous intervals. Reservoir development was poor in the main objective, Carboniferous Silkstone Rock, which is productive in Corrington oil field 5 km southeast.
Egdon said drilling of the Laughton-1 fulfilled the company's commitments under a 2013 farm-out from Blackland Park Exploration Ltd. and Stelinmatvic Industries Ltd. in which Egdon agreed to pay 100% of the drilling costs to earn 60% interest in PEDL 209 and become operator.
Egdon later farmed out a 10% interest in Laughton-1 and two other conventional prospects on the license to Union Jack Oil PLC, which agreed to pay 16.67% of the well cost.
After the drilling of Laughton-1, interests in the Laughton prospect and two other prospects are Egdon 50%, Blackland Park 28%, Stelinmatvic Industries 12%, and Union Jack 10%.
"This completes the work commitment for the license's first term and allows it to proceed into its second term during which the remaining conventional and unconventional hydrocarbon potential will be further evaluated," Abbott said.
Total E&P UK Ltd. has an option to farm into PEDL 209 for 50% by paying £13.47 million for an exploration program separate from the three conventional prospects and targeting shale-gas potential thought to extend from PEDLs 139 and 140.
After exercise of the option, other license interests in unconventional resources would be Egdon 30%, Blackland Park 14%, and Stelinmatvic Industries 6%.
Total E&P UK farmed into PEDLs 139 and 140 for 40% interests in 2014. Egdon holds 14.5% interests in those licenses.
The target there is the Carboniferous Lower Pendleian shale in the Gainsborough Trough, which corresponds in age with the Bowland-Hodder shales under evaluation in the Bowland basin of Northwest England.
Exploration drilling starts at Yuzhno-Visovaya
Vostok NAO, a 50-50 joint venture of Lukoil and PJSOC Bashneft, has begun drilling exploration well No. 1 on the Yuzhno-Visovaya prospect on the Severo-Yareyyaginsky block in the Nenets autonomous district. The well's target depth is 4,000 m.
A 3D seismic survey covering 103 sq km was acquired earlier on the block. The resource potential of the Yuzhno-Visovaya prospect is concentrated in Devonian deposits.
One more exploration well is expected to be drilled in 2016 in the Yangareysky license block within the Korotaikhinskaya depression of the Nenets Autonomous District. Lukoil says these activities are being carried out in accordance with a long-term program that includes seismic acquisition, exploration drilling, and geological studies.
Tullow reports 'strong oil shows' in northern Kenya
Tullow Oil PLC reported "strong oil shows" in cuttings and rotary sidewall cores across a 700-m interval in its Cheptuket-1 well drilled on Block 12A in the Kerio Valley basin in northern Kenya (OGJ Online, Dec. 15, 2015).
Tullow said the oil shows indicate the presence of an active petroleum system.
The well reached total depth of 3,083 m. The PR Marriott Rig-46 will be demobilized. Further exploration activities are being evaluated. Operator Tullow has 40% in the block. Parterns are Delonex Energy 40% and Africa Oil Corp. 20%.
Drilling & Production — Quick Takes
ESAI: Libyan chaos to keep oil flow low
Oil production in Libya-recently one fourth of its 1.65 million b/d average prior to the start of civil unrest in 2011-will "remain constrained by realities on the ground perhaps for years," warns ESAI Energy LLC, Wakefield, Mass.
The country has become the focus of western-nation resistance to the Islamic State (also known as ISIS or ISIL). The US has conducted air strikes against IS targets, a French aircraft carrier was reported moving toward Libyan waters, and rumors emerged but were quickly rejected of Italian military troops moving to the country.
These developments, ESAI says, "only highlighted the ongoing chaos in that north African country."
Western-nation efforts concentrate on striking ISIS leaders and operators and on keeping refugees from flowing into southern Europe.
"The level of effort and the focus of western states in Libya, at least as regards ISIS, are on strict counterterrorism as opposed to creating conditions in which competing claimants to governing legitimacy can work out a compromise," ESAI says. Those factions, meanwhile, "have to defend themselves against not only other claimants to legitimacy but also ISIS and other smaller groups that have begun to attack Libyan oil production and export facilities with increasing regularity."
ESAI points out that the Libyan civil war is nearly 2 years old, and political chaos has escalated "with no end in sight" since the overthrow of Mohammar Gadaffi in 2011.
"Unfortunately for those looking for stability anytime soon," ESAI says, "the average civil war lasts 12 years."
India misses oil, gas production targets
India's public upstream companies missed targets for crude oil and natural gas production in recent years, according to India's Press Information Bureau.
The government's 12th 5-Year Plan began in 2012. Crude oil production through this February totaled 147 million tonnes compared with the target of 152.1 million tonnes. During the same period, 139.46 billion cu m of natural gas was produced compared with the target of 148.61 billion cu m.
Shri Dharmendra Pradhan, minister for petroleum and natural gas, noted decline from major producing fields, "particularly in Western offshore and onshore fields in Gujarat and northeastern region." He also cited "no major discoveries in the recent past" and challenges in development of marginal and deepwater fields (OGJ Online, Mar. 10, 2016).
Oil flows from Goliat platform in Norwegian Arctic
Eni SPA has started production from its Goliat platform in production license 229 in an ice-free area of the Barents Sea. The milestone follows numerous delays and cost overruns.
Boasted by Eni as the world's northernmost producing offshore oil field, Goliat was developed with a cylindrical FPSO vessel built to withstand the harsh conditions of the Arctic. It has a capacity of 1 million bbl of oil. The FPSO was floated off Hammerfest last April, and was towed 85 km northwest to its current location (OGJ Online, Apr. 28, 2015).
Output is slated to reach 100,000 b/d, of which 65,000 boe/d is net to Eni. The field is estimated to hold 180 million bbl in oil reserves. Production will take place through a subsea system consisting of 22 wells, of which 17 are already completed. Of the total, 12 are slated to be oil producers, 7 water injectors, and 3 gas injectors.
Goliat receives power from shore through subsea cables, reducing carbon dioxide emissions by 50% compared with alternative solutions, while water and gas products are reinjected into the reservoir, the firm says.
Shell starts oil production from BC-10 Phase 3
Royal Dutch Shell PLC has started oil production from the third phase of the deepwater Parque das Conchas (BC-10) development in Brazil's Campos basin. Production for this final phase of the project is expected to add as much as 20,000 boe/d at peak production from fields that have already produced more than 100 million bbl since 2009.
Parque das Conchas Phase 3 comprises five producing wells in Massa and O-South fields and two water-injection wells. The subsea wells lie in more than 5,900 ft of water and connect to the 100,000-boe/d Espirito Santo floating production, storage, and offloading vessel 90 miles offshore Brazil.
"These barrels, like other subsea tieback opportunities across our deepwater portfolio, have development cost advantages and will contribute to the strong production growth we expect from offshore Brazil," commented Wael Sawan, Shell executive vice-president, deepwater.
Parque das Conchas Phase 3 is operated by Shell with 50% interest. The project's first phase encompassed development of Abalone, Ostra, and Argonauta B-West fields and included nine producing wells and one gas injector well. It came on stream in July 2009, and by July 2013, the project had produced more than 70 million boe.
Phase 2, involving the tie-in of Argonauta O-North field, came on stream in October 2013. It has estimated peak production of 35,000 boe/d.
PROCESSING — Quick Takes
Ecopetrol defers Barrancabermeja refinery revamp
State-owned Ecopetrol SA has postponed further activities related to a more than $3-billion project designed to modernize and increase crude processing capacity to 300,000 b/d at its 250,000-b/d Barrancabermeja refinery in Santander, Colombia.
While Ecopetrol will resume the Barrancabermeja refinery modernization plan (PMRB), it has suspended the program indefinitely amid the present slump in crude oil prices, the company said in a regulatory filing.
In light of the suspended modernization plan, Ecopetrol's board alternatively has approved a roadmap for the refinery for 2016-20 that aims to maximize Barrancabermeja's long-term competitiveness and sustainability.
As part of its ongoing objective to improve Barrancabermeja's operations, Ecopetrol said it will make incremental investments in operational and maintenance programs to ensure the refinery's reliability and performance integrity.
Details of those programs, however, were not disclosed.
The decision to halt PMRB follows Ecopetrol's May 2015 strategy update to investors, in which the company hinted that the fall in global crude prices was impacting its modernization plan for Barrancabermeja.
In a May 26, 2015, conference call to investors, the company said it was evaluating the magnitude of the required investment for PMRB, and as a result, looking at alternative projects to implement as a result of the weaker price environment.
As of yearend 2014, physical progress on PMRB remained suspended at 18.14%, unchanged from a year earlier (OGJ Online, Oct. 27, 2015; Apr. 30, 2014).
NZRC formally unveils Te Mahi Hou expansion
New Zealand Refining Co. Ltd. (NZRC), the country's sole refiner, has officially opened the long-awaited $365-million (NZ) Te Mahi Hou (TMH) expansion project at its 107,000-b/d Marsden Point refinery at Northland on the North Island's east coast (OGJ Online, Nov. 5, 2015).
Formal unveiling of the project, which took 4 years to complete, occurred at Marsden Point on Mar. 10 during a special ceremony, RZRC said.
Designed to improve profitability of the refinery as well as its environmental performance, TMH also will result in increased production at the refinery to increase security of domestic fuel supplies for New Zealanders, said Sjoerd Post, NZRC's CEO.
The inaugural ceremony follows TMH's official commissioning, which took place late in 2015 (OGJ Online, Dec. 14, 2015).
Handed over for startup to NZRC's operations team on Nov. 25, TMH's new continuous catalyst regeneration (CCR) unit was producing on-specification gasoline about 3 weeks ahead of the original completion date of late December.
Designed for planned maintenance every 6 years as compared with the former platformer's required maintenance shutdown every 18 months, TMH's new fully commissioned CRR will allow the refinery to produce an additional 2 million bbl/year of petrol, increase its share of New Zealand's petrol market by about 10%, and drop carbon dioxide emissions by about 120,000 tonnes/year.
First approved in February 2012 and initially named the CCR Platformer project, TMH also will enable the refinery to process increased volumes of a wider range of crudes more effectively and efficiently (OGJ Online, May 29, 2015).
OMV schedules turnaround for Austrian refinery
Austria's OMV AG will shut down about half of its 203,892-b/d integrated refinery and petrochemical complex in Schwechat starting in April for 2 months of routine turnaround activities.
Scheduled to occur every 6 years, this year's turnaround at Schwechat will involve comprehensive cleaning, safety inspections, and preventative maintenance work at fuel production units, including crude distillation unit 4, the heart of the refinery, OMV said.
During the turnaround, OMV will suspend crude supplies into the refinery supply to clear the plant of hydrocarbons using steam and nitrogen, which will be followed by dismantling and cleaning of processing unit components for inspections, pressure tests, and possible repairs, the operator said.
OMV, which began preparatory work for the 2016 turnaround 2 years ago, said a central aspect of the shutdown also will include work to integrate a desulfurization column delivered to the refinery in June 2015 into plant operations.
As part of the work, TUV Austria Holding AG's Schwechat division will carry out inspections on the following: 16 process furnaces, 44 columns (mostly distillation installations), 478 heat exchangers, 2,128 valves, and 1,090 safety valves.
Alongside planned repairs to existing piping within the plant, the turnaround also will include replacement of 12.6 km of pipes, OMV said.
The company has scheduled a turnaround of petrochemical units at the Schwechat integrated complex in 2017.
TRANSPORTATION — Quick Takes
Mariner East 1 ships first ethane for export
Sunoco Logistics Partners LP said its Mariner East 1 pipeline between the Pittsburgh area and Mark Hook, Pa., on the Delaware River has begun carrying ethane along with propane and has delivered its first ethane for export.
The Ineos Intrepid LNG multi-gas carrier subsequently departed for Rafnes in Norway with 27,500 cu m of ethane. The 70,000-b/d pipeline began carrying propane in December.
"The Marcus Hook Industrial Complex is now positioned as the East Coast hub for processing and storing propane, ethane, and other natural gas liquids from the shale basins for distribution to local, domestic, and international markets," Sunoco Logistics said in a statement.
A second construction phase, Mariner East 2, will expand the system to origination points in Ohio, West Virginia, and western Pennsylvania; add take-off points for propane in central and eastern Pennsylvania; and expand capacity by about 275,000 b/d (OGJ Online, Feb. 18, 2016).
Capacity of Mariner 2, to be complete in first-half 2017, can be expanded to 450,000 b/d.
Constitution Pipeline in-service date delayed
The target in-service date for the Constitution Pipeline Co. LLC natural gas system has been delayed by about 6 months until second-half 2017, reported partner Cabot Oil & Gas Corp., Houston.
"This adjustment is to ensure compliance with the environmental conditions of the US Federal Energy Regulatory Commission order, as well as the US Fish and Wildlife Service biological opinion," Cabot said.
Specifically, Cabot said the in-service date adjustment is in response to the rapidly closing environmental window to complete tree felling activities before Mar. 31. To date, Constitution has completed nearly all tree felling activities in Pennsylvania.
The Constitution system, a 124-mile, 30-in., 650 MMcfd capacity joint-venture gas line, will span from northeast Pennsylvania to the Iroquois Pipeline in upstate New York.
Partners in the system include Cabot, Williams Cos. Inc., Piedmont Natural Gas, and WGL Holdings.
FERC gave the line its final environmental review in fall 2014 (OGJ Online, Oct. 27, 2014).
LBC unit expands storage at Port of Rotterdam
LBC Rotterdam BV, a division of LBC Tank Terminals Holding Netherlands BV, has let a contract to Engicon nv (Geldof), Harelbeke, Belgium, to provide engineering and construction services for all mechanical aspects of a project to expand storage capacity for petroleum products and chemicals at LBC's terminal in the Port of Rotterdam.
As part of the contract, Geldof will serve as main contractor for all stages of LBC's multiphase Rainbow expansion project at Rotterdam, which will triple the company's liquids storage capacity to a total 250,000 cu m as well as quadruple its logistical supply capacity at the site, Geldof said.
For Phase 1 of the project, Geldof will build and deliver 16 new storage tanks executed in qualitative duplex stainless steel that range up to 15 in. in diameter and more than 17 m in height, each with a capacity of as much as 3,000 cu m.
Geldof's scope of delivery under Phase 1 also includes construction and installation of a jetty equipped with 44 loading arms for seagoing and inland vessels, work to expand the land side of the terminal, as well as modernization and integration of infrastructure within the tank park, including installation of dozens of kilometers of stainless-steel piping and a few thousand tonnes of steel supporting structures, the company said.
Alongside building and supplying the jetty superstructure, pipes, storage tanks, and related infrastructure, Geldof also will be responsible for acting as coordinator for all strategic partners and supplies involved in the project, the company said.
Geldof, which did not disclose a value of the contract, plans to deliver and begin installation of the 16 storage tanks this summer, with existing infrastructure to remain in use during all phases of the expansion.
LBC Rotterdam started construction on Rainbow's tank capacity addition in February, the company said.
