GENERAL INTERESTQuick Takes
Saudi Arabia reports higher post-audit reserves
Saudi Arabia reported that it now holds 268.5 billion bbl of proved crude oil reserves—a figure higher than the previously reported 266.3 billion bbl. Saudi Arabia’s Energy Ministry also revised upward the country’s natural gas reserves to 325.1 tscf as of yearend 2017.
The revisions come after an unprecedented offer for an independent audit by US energy consultancy DeGolyer & MacNaughton. Saudi Arabia plans for a possible initial public offering in state-owned Saudi Aramco, although it has been reported that any offering of the company would not include the kingdom’s oil reserves.
Court rejects ExxonMobil bid to block AG’s subpoena
The US Supreme Court rejected ExxonMobil Corp.’s effort to block Massachusetts Atty. Gen. Maura Healy’s (D) subpoena for documents related to the multinational oil company’s research into global climate change. The nation’s highest court denied certiorari in the case of ExxonMobil Corp. v. Healey without comment on Jan. 8.
“The law is clear. The attorney general’s office has the authority to investigate Exxon’s conduct toward consumers and investors, and we are proceeding,” a spokeswoman for Healey’s office said following the high court’s action. “The public deserves answers from this company about what it knew about the impacts of burning fossil fuels, and when.”
ExxonMobil did not have an immediate comment. It sued after Healey’s office issued a civil investigative demand (CID) to the company on Apr. 19, 2016, demanding documents related to its correspondence starting on Jan. 1, 1976, with several politically conservative organizations concerning climate change and global warming.
Massachusetts Superior Court ruled in April 2018 that Healey has authority to investigate whether ExxonMobil suppressed information related to global climate change (OGJ Online, Apr. 16, 2018). The company had asked the court to modify or set aside the CID, arguing that ExxonMobil was not subject to personal jurisdiction in the state and the CID violated its statutory and constitution rights.
ExxonMobil also has criticized environmental activists’ claims that it has been aware of global climate change consequences for decades. “For the past several years, activist organizations have sought to punish ExxonMobil for voicing its opinion on climate policy, even though the company supports policies to limit climate change,” its web site said.
SC Atty. Gen. joins suit to stop offshore seismic tests
South Carolina Atty. Gen. Alan M. Wilson (R) moved in federal court on Jan. 7 to have the state join 16 cities and towns’ lawsuit to stop oil and gas seismic surveys in the state’s offshore areas. This lawsuit is separate from one by environmental groups and other organizations in which Maryland Atty. Gen. Brian E. Frosh (D) and eight other Mid-Atlantic states’ AGs intervened nearly 2 weeks earlier (OGJ Online, Dec. 20, 2018).
Like that action, however, the lawsuit by the South Carolina communities and the Small Business Chamber of Commerce is a response to the National Marine Fisheries Service’s issuing incidental harassment authorizations at the end of November to five offshore geophysical contractors seeking to conduct the first oil and gas surveys on the Mid-Atlantic Outer Continental Shelf since the 1980s (OGJ Online, Nov. 30, 2018). The geophysical contractors still need to get permits from the US Bureau of Ocean Energy Management before they can go ahead.
“We understand the need to have a long-term, reliable energy supply. However, any comprehensive energy strategy must comply with the rule of law,” Wilson said. “While oil and gas exploration could bring in billions of dollars, doing it without adequate study and precautions could end up costing billions of dollars and cause irreversible damage to our economy and coast.” The motion in US District Court for South Carolina’s Charleston Division noted that while several coastal parties already had joined the lawsuit, “the attorney general represents the interests of the entire state including its agencies that could be affected by the seismic surveying and the general public.” The motion said, “No single plaintiff or the present group of plaintiffs represents all of those interests.”
Wheeler nominated to be EPA administrator
US President Donald Trump nominated Andrew Wheeler to lead the US Environmental Protection Agency. Wheeler became EPA’s acting administrator on July 5, 2018, following E. Scott Pruitt’s resignation. He previously served as its deputy administrator. Wheeler’s Jan. 9 nomination as administrator will require the US Senate’s confirmation.
Exploration & DevelopmentQuick Takes
LLOG Exploration reports deepwater gulf discovery
LLOG Exploration Co. LLC, Covington, La., reported the drilling of a successful discovery on its Nearly Headless Nick exploratory prospect on Mississippi Canyon Block 387 in the deepwater Gulf of Mexico.
The Nearly Headless Nick discovery was drilled using Rowan Cos. Inc.’s Rowan Resolute mobile offshore drilling unit. The well was drilled to target Upper Middle Miocene sands in more than 6,500 ft of water 150 miles southeast of New Orleans.
The well encountered oil pay in high-quality Miocene sandstone reservoirs and is expected to be tied back to the LLOG-operated Delta House facility on Mississippi Canyon Block 254.
Equinor reports gas, condensate find south of Kristin
Equinor has, together with partners ExxonMobil Corp., Total SA, and Norway’s Petoro, made a natural gas and condensate discovery with the Ragnfrid North (6406/2-9 S) exploration well in the Norwegian Sea. The well, drilled in production license 199 about 20 km south of the Kristin platform, will be evaluated for development and tie-in to Kristin field and further maturing of the Kristin South project.
“Ragnfrid North will, together with the former discoveries Lavrans and Erlend East, give a more detailed picture of the potential in this area of the Norwegian Sea,” said Nick Ashton, Equinor senior vice-president, Norway and the UK.
“The Ragnfrid North discovery will increase the probability of discovery for other prospects and pave the way for more drilling operations in this central part of the Norwegian Sea. This is something we will consider going forward while further analyzing the results,” said Ashton.
Drilling of Ragnfrid North 6406/2-9 S by Seadrill’s West Phoenix drilling rig began Oct. 3, 2018. The rig now is being moved to the UK continental shelf to drill the Equinor-operated Bigfoot prospect south of Mariner field.
Equinor serves as operator of Ragnfrid North with 52%. Partners are Petoro 27%, ExxonMobil 15%, and Total 6%.
ADNOC awards two offshore exploration blocks
Abu Dhabi National Oil Co. (ADNOC) has awarded two offshore blocks to a consortium led by Italy’s Eni SPA and Thailand’s PTT Exploration & Production PCL following a competitive bid round. The two blocks in the northwest of Abu Dhabi—Offshore 1 and 2—are the first to be awarded among the geographical areas that were offered for commercial bidding by ADNOC in April 2018 as part of Abu Dhabi’s first competitive open block licensing strategy (OGJ Online, Apr. 10, 2018).
Under the terms of the agreements, Eni will operate the concessions and PTTEP and Eni will both hold a 100% stake in the exploration phase, investing at least $230 million to explore for oil and gas, and appraise the existing discoveries on Offshore Block 2. Simultaneously, exploration and appraisal plans for Offshore Block 1 will be finalized. The two blocks cover 8,000 sq km.
After exploration, Eni and PTTEP will be granted the chance to develop and produce any discoveries, with ADNOC retaining the option to hold a 60% stake in the production phase.
Eni wins Sharjah blocks, expands elsewhere
Eni SPA has been awarded the three blocks offered in Sharjah’s first international competitive exploration licensing round while expanding further in the Middle East with deals in Oman and Bahrain (OGJ Online, July 2, 2018).
Eni will operate 437-sq-km Concession Area A and 1,184-sq-km Concession Area C with 75% participating interests. Sharjah National Oil Corp. (SNOC) will hold the remainder.
In 264-sq-km Area B, SNOC will be operator with a 50% interest, and Eni will hold the remainder.
The three onshore blocks cover most of the emirate.
In Oman, Eni entered an exploration and production sharing agreement for Block 47 covering 8,524 sq km in the Omani A’Dakhiliyah Governate, awarded in a 2017 licensing round.
Eni is operator with a 90% interest. Oman Oil Co. Exploration & Production holds 10%.
The company also has signed a head of agreement with Oman’s Ministry of Oil and Gas and BP setting up principles for the acquisition of exploration and production rights to onshore Block 77. The 3,100-sq-km area is 30 east of Khazzan gas field operated by BP (OGJ Online, Oct. 22, 2018).
Under the agreement, Eni and BP will hold 50% interests each with Eni operating the exploration phase.
In Bahrain, Eni signed a memorandum of understanding with National Oil and Gas Authority (NOGA) for exploration of Block 1, covering more than 2,800 sq km off the island nation’s northern coast. Water depths in the largely unexplored area are 10-70 m.
Separately, Eni and partner PTT Exploration & Production received rights to two blocks off Abu Dhabi as part of a commercial licensing round launched last April.
Premier Oil updates drilling in Zama field off Mexico
Premier Oil says the first appraisal well in Zama field on Mexico’s offshore Block 7 encountered the main Zama reservoir. Separately in Mexico, Premier Oil plans a 3D seismic survey across offshore Block 30 starting in the second quarter.
Operator Talos Energy LLC and partners discovered oil and associated gas with the Zama-1 discovery well about 37 miles offshore Port of Dos Bocas, Mexico (OGJ Online, July 12, 2017). Block 7 interests are held by Talos 35%, Sierra Oil & Gas 40%, and Premier Oil 25%.
Zama-2 was spudded in late November 2018 to the north of Zama-1. Talos and partners are looking for the depth of the oil-water contact. The well will be deepened to test the Marte prospect and finally side tracked updip and flow tested.
Zama-1 contained 558-656 ft of net oil pay in Upper Miocene sandstones with no water contact. Initial tests recovered samples with 28-30° gravity oil and some associated gas.
Plans call for the drilling of the Zama-3 appraisal well to the south. The appraisal program is expected to be complete by midyear with the goal to achieve initial production in 2022.
Drilling & ProductionQuick Takes
CNOOC starts production from Huizhou development
CNOOC Ltd. reported the start of production from the Huizhou 32-5 oil field comprehensive adjustment/Huizhou 33-1 oil field joint development project in the south-central part of the eastern South China Sea.
CNOOC said in addition to using existing facilities of Huizhou 25-8 oil field, a drilling and production platform has been constructed. One well is currently producing. Peak production of 19,200 b/d of oil is expected in 2020. The project lies 170 km from Hong Kong in 115 m of water. CNOOC holds 100% interest in the project and serves as operator.
ExxonMobil makes FID to develop W. Barracouta
ExxonMobil Corp. plans to produce natural gas for the Australian market by 2021 following a final investment decision to develop West Barracouta gas field in Bass Strait. The project, on the VIC/L1 Block offshore Victoria, is part of the Esso-BHP Gippsland basin joint venture.
Front-end engineering design work has been completed, and contracts have been let to Subsea 7 and OneSubsea. The project will be tied back to the existing systems of Barracouta field, the first offshore field ever discovered in Australia.
The Gippsland basin joint venture supplies about 40% of east coast Australian gas demand.
The new project builds on more than $4 billion invested by the partnership in other recent projects in Victoria to supply Australian gas demand, including the Kipper Tuna Turrum offshore project and the Longford Gas Conditioning Plant.
ExxonMobil unit Esso Australia Pty. Ltd. operates the joint venture on behalf of a 50-50 partnership with BHP Billiton Petroleum (Bass Strait) Pty. Ltd.
Eni starts up Vandumbu production offshore Angola
Vandumbu field started producing oil on deepwater Block 15/06 offshore Angola in November, 3 months ahead of schedule, reported operator Eni SPA.
Production at Vandumbu field, along with the start-up of a subsea multiphase boosting system (SMBS) in early December, is boosting the oil production from Block 15/06—about 350 km North West of Luanda and 130 km West of Soyo—by 20,000 b/d via West Hub’s N’Goma floating production, storage, and offloading vessel, the company said. Ramp-up of Vandumbu will be completed in first-quarter 2019, to achieve total production of about 170,000 b/d of oil and further extending the production plateau.
The start-ups move forward the phased and clustered development strategy for Block 15/06, which has seen the start-up of eight fields since November 2014, when production from West Hub started from Sangos field. Eni, operator, and Sonangol P&P hold 36.84% interest each in Block 15/06. SSI Fifteen Ltd. holds 26.32%.
PROCESSINGQuick Takes
Husky mulls sale of Canadian downstream assets
Husky Energy Inc. is undertaking a review that could result in the potential sale of its Canadian retail and commercial fuels business, which includes the 12,000-b/d Prince George, BC, refinery.
The decision to review and consider a sale of its noncore downstream assets comes as the company increasingly focuses on core assets in its integrated corridor as well as its offshore business in Atlantic Canada and the Asia-Pacific region, the company said.
Husky said it is considering undertaking the potential disposition independent of the outcome of the company’s proposed acquisition of MEG Energy Corp. (OGJ Online, Oct. 1, 2018).
“Our retail network and the Prince George refinery are excellent assets, with exceptional employees, which have made solid contributions to Husky over the years,” said Rob Peabody, Husky’s chief executive officer. “However, as we further align our heavy oil and downstream businesses to form one integrated corridor, we’ve taken the decision to review and market these noncore properties,” he said.
Husky’s retail and commercial network consists of more than 500 retail outlets, travel centers, cardlock operations, and bulk-distribution sites from British Columbia to New Brunswick, including its myHusky Rewards loyalty program, which has about 1.6 million members.
The Prince George refinery processes light oil into low-sulfur gasoline and ultralow-sulfur diesel, along with other products, supplying refined products to retail outlets in British Columbia’s central and northern regions.
CNOOC starts up DHT unit at Huizhou refinery
CNOOC Oil & Petrochemicals Co. Ltd., the refining arm of China National Offshore Oil Corp. (CNOOC), has completed successful performance testing of a diesel liquid-phase hydrogenation (DHT) unit for production of China VI diesel at subsidiary CNOOC Huizhou Petrochemicals Co. Ltd.’s two-phased 440,000-b/d Huizhou refinery in China’s Guangdong province.
CNOOC completed calibration of the 68,300-b/d DHT unit—based on E.I. DuPont de Nemours & Co. division DuPont Clean Technologies’ proprietary IsoTherming technology—at 100% load during third-quarter 2018, with the system meeting all design requirements and product quality targets.
Earlier in 2018, the refinery also successfully started up a 52,200-b/d IsoTherming vacuum gas oil hydrogenation unit.
The DHT unit consumes only 4.55 kg of oil equivalent/tonne of raw materials, far lower than the traditional trickle-bed unit energy consumption, said Chen Chun, chief engineer of CNOOC’s refining and marketing division.
This latest unit follows DuPont Clean Technologies’ previous licensing of its proprietary emissions-lowering technology at the refinery, including its BELCO wet-scrubbing catalytic cracking flue gas desulfurization technology for two fluid catalytic cracking flue gas dedusting units with capacities of 24,000-b/d and 96,400-b/d, respectively.
The Huizhou refinery also includes a DuPont Clean Technologies-licensed 3,200-b/d STRATCO alkylation unit to convert low-value isobutane and olefins into high-value alkylate, a key ingredient for the production of clean gasoline.
Preem advances Lysekil refinery restart, VDU project
Swedish refiner Preem AB, a wholly owned subsidiary of Corral Petroleum Holdings AB, Stockholm, has restarted the bulk of operations 228,900-b/d at its refinery at Lysekil, Sweden, following a late December 2018 production disruption caused by an electrical power failure.
As of Jan. 15, the refinery was back at near-to-full capacity except for one unidentified unit, where a reactor is undergoing mechanical repairs, Preem said.
Other units at the site were restarted immediately in the wake of the electrical outage, the operator said.
Further details regarding the incident or its impact to production at the site were not disclosed.
The company did not reveal a timeframe for restart of the unidentified unit still under maintenance.
Preem, however, continues to progress with its previously announced plan to expand vacuum distillation capacity at the Lysekil refinery with a project adding a second vacuum distillation unit (VDU) to supplement the refinery’s 64,600-b/d VDU to increase the plant’s production of vacuum gas oil and eliminate monthly VGO import requirements of about 50,000 cu m.
IOC lets contracts for units at Indian refineries
Indian Oil Corp. Ltd. (IOC) has let contracts to McDermott International Inc. to provide proprietary technology and catalyst for new units at IOC’s 125,300-b/d Barauni refinery in Begusarai District, Bihar, and its 277,400-b/d Koyali refinery at Vadodara in India’s western state of Gujarat.
As part of the contract, McDermott will deliver license and basic engineering design of a 200,000-tonne/year polypropylene unit at Barauni and a 420,000-tpy polypropylene unit at Koyali, both of which will use Lummus’ proprietary Novolen process reactors and proprietary NHP catalyst to produce a full range of polypropylene products for the Indian and regional markets, the service provider said.
The units come as part of the refiner’s plan to increase production of petrochemical products to help meet India’s growing demand for plastics.
NKNK lets contract for methanol unit
TAIF Group subsidiary PJSC Nizhnekamskneftekhim (NKNK) has let a contract to Haldor Topsoe AS to deliver technology licensing and engineering services for a methanol unit to be built at NKNK’s petrochemical complex at Nizhnekamsk, Tatarstan.
The 500,000-tonne/year unit will be used to produce methanol for production of formaldehyde that will be used as a feedstock for NKNK’s isoprene production, Haldor Topsoe said.
While it disclosed neither a timeframe nor value of the contract, Haldor Topsoe said NKNK intends for the methanol unit to increase efficiency and reduce production costs at the complex’s isoprene production installations.
TRANSPORTATIONQuick Takes
Phillips 66, partners to develop ACE Pipeline system
Phillips 66 Partners, Harvest Midstream Co., and PBF Logistics LP plan to jointly develop the ACE Pipeline system to provide crude oil transportation service from the market hub in St. James, La., to downstream refining destinations in Belle Chasse, Meraux, and Chalmette, La., and have launched an open season for transportation service.
Harvest Midstream will contribute its existing CAM pipeline to the system, which will have an initial throughput capacity of 400,000 b/d and will include a newbuild segment to connect the St. James market center to the CAM pipeline. Additional expansion will be based on shipper interest. The parties may elect to add a delivery destination in Clovelly, La., subject to market demand. The pipeline system is expected to be placed into service in second-half 2020.
Woodside enters FEED for Pluto Train 2
Woodside Petroleum Ltd., Perth, has let a contract to Bechtel for the front-end engineering design stage for the Pluto LNG Train 2 project on the Burrup Peninsula of Western Australia.
FEED work includes activities needed to finalize the costs and technical definition for the proposed second train at the onshore facility. The contract also includes an option for Woodside to progress to a lump-sum engineering, procurement, and construction contract for execute phase work. This option is subject to conditions including a positive final investment decision expected in 2020. The project is expected to come on stream in 2024.
Woodside CEO Peter Coleman said the decision to enter FEED for Pluto Train 2 is a major step towards establishing the Burrup as a regional LNG production center in northern Western Australia.
“Our Burrup Hub vision is taking shape as we work with Bechtel to progress to Pluto Train 2, which will create a pathway for the globally cost-competitive development of Western Australia’s natural gas resources,” Coleman said. Coleman was referring to Woodside’s preferred concept for the development of the company’s 75%-owned Scarborough gas field, which has 2C resources of 7.3 tcf of gas.
Pluto Train 2 has a target capacity of 5 million tonnes/year of LNG.
