OGJ Newsletter

Exploration & DevelopmentQuick Takes

Guyana drilling, development work continues

Drilling and development offshore Guyana were unaffected by an incident involving seismic acquisition vessels on Dec. 22, ExxonMobil Corp. said.

Two vessels operated by Petroleum Geo-Services ceased conducting 3D seismic data acquisition in the northwest portion of the Stabroek block offshore Guyana when approached by the Venezuela navy claiming a border breach. ExxonMobil said the acquisition of seismic data was being conducted under license from the government of Guyana in the country’s exclusive economic zone. The incident occurred more than 110 km from the Ranger discovery, the closest of 10 oil discoveries made by ExxonMobil in the southeastern part of the block.

Exploration and development drilling continue in the southeast area of the Stabroek block, ExxonMobil said. Activities related to the Liza Phase 1 development, which is expected to begin producing up to 120,000 b/d in early 2020, are also unaffected. ExxonMobil estimates there is potential for at least five floating production, storage, and offloading vessels on the block producing more than 750,000 b/d of oil by 2025.

Liza Phase 2 is expected to start production by mid-2022 (OGJ Online, Oct. 22, 2018). Pending government and regulatory approvals, project sanction is expected in next year’s first quarter and will use a second FPSO designed to produce up to 220,000 b/d. Sanctioning of a third development, Payara, is also expected in 2019 with start up as early as 2023.

Esso Exploration & Production Guyana Ltd. is operator with 45% interest. Hess Guyana Exploration Ltd. has 30% and CNOOC Nexen Petroleum Guyana Ltd. 25%.

BLM releases draft EIS for ANWR leasing

The US Bureau of Land Management released a draft environmental impact statement (EIS) for oil and gas leasing on the Arctic National Wildlife Refuge Coastal Plain a year after US President Donald Trump signed federal tax legislation that included a mandate for the US Interior secretary to establish such a program.

“This draft reflects thousands of hours of work that demonstrate a commitment to the development of these documents and the range of alternatives,” Deputy Interior Sec. David Bernhardt said.

Comments on the DEIS will be accepted through Feb. 11. Publication of the US Environmental Protection Agency’s Notice of Availability in the Dec. 28 Federal Register will officially begin the 45-day public comment period, BLM said. The first lease sale will be held after the Final EIS and Record of Decision are issued and will offer not fewer than 400,000 acres area-wide of high-potential lands for bid, it indicated.

BLM said it also plans to hold public meetings in Anchorage, Arctic Village, Fairbanks, Kaktovik, Fort Yukon, Venetie, Utqiaqvik and Washington, DC, at times and locations to be announced in local media and on the agency’s web site.

Two blocks offered off Sable Island, Nova Scotia

Two blocks nominated by the oil and gas industry are on offer off Sable Island in the northern Atlantic.

The Canada-Nova Scotia Offshore Petroleum Board will accept bids through May 8, 2019, for exploration licenses covering 75,788-hectare Parcel 1 and 73,004-hectare Parcel 2, both in less than 100 m of water on the Scotian Shelf.

The parcels in Call for Bids NS18-3 are near earlier discoveries and existing production in the Sable subbasin.

Bids are evaluated based on proposed work expenditure.

Kosmos, partners reach Tortue offshore gas field FID

Kosmos Energy and its partners have made a final investment decision to proceed with Phase 1 of the Greater Tortue Ahmeyim natural gas project offshore Mauritania and Senegal. The project will produce gas from a deepwater subsea system and mid-water floating production, storage, and offloading vessel to a 2.5 million-tonne/year floating LNG unit at a nearshore hub on the Mauritania and Senegal maritime border. Kosmos estimates total recoverable gas in the field at 15 tcf.

The project will provide LNG for export, as well as make gas available for use in both Mauritania and Senegal. First gas for the project is expected first-half 2022. BP Gas Marketing will buy LNG offtake from Greater Tortue Ahmeyim Phase 1.

Phase 1 will move into detailed design and construction following final regulatory and contract approvals. Project execution is expected to begin in this year’s first quarter.

Kosmos holds a 29% stake the Tortue unit with partners BP 61%, Senegal’s Petrosen 5%, and Mauritania’s SMHPM 5%. Mauritania and Senegal agreed to joint development of the field in early 2018 (OGJ Online, Feb. 12, 2018).

Drilling & ProductionQuick Takes

Total starts production from Egina field off Nigeria

Total SA and its partners have started production from Egina oil field, which lies in 1,600 m of water 150 km offshore Nigeria. The field, at plateau, will produce 200,000 b/d of oil, which represents about 10% of Nigeria’s production.

The field is being developed using the Egina floating production, storage, and offloading unit—the largest one Total has ever built (OGJ Online, Aug. 28, 2018).

Six of the eighteen modules on the FPSO were built and integrated locally, and 77% of hours spent on the project were worked locally, Total reported.

Discovered in 2003, Egina field is the second development in production on Oil Mining Lease (OML) 130 following Akpo field, which started producing in 2009 (OGJ Online, Mar. 9, 2009). Preowei field is another large discovery made on OML 130 for which an investment decision is scheduled for 2019.

Total Upstream Nigeria Ltd. operates OML 130 with 24% interest. Partners include Nigerian National Petroleum Corp., South Atlantic Petroleum Ltd., CNOOC E&P Nigeria Ltd., and Petrobras Oil & Gas BV.

Oil flow increases at Iraq’s Halfaya field

Oil production at Halfaya field in southern Iran increased to 370,000 b/d after start-up of a new processing facility, an official of Maysan province told Reuters. The field, operated by PetroChina, had been producing 270,000 b/d.

The 200,000-b/d processing unit will help production rise to a targeted 470,000 b/d, the official said. Expansion will include a 300-MMscfd of gas plant.

Equinor starts up Aasta Hansteen production

Equinor and partners started production from deepwater Aasta Hansteen field in the northern part of the Norwegian Sea. The natural gas and condensate field, 300 km from Norway in 1,300 m of water, has been developed with Norway’s first floating SPAR platform and is designed as a hub to support other area discoveries. The plan for development and operation was submitted in January 2013.

Gas is produced from seven wells in three subsea templates. Subsea tiebacks will increase life of field and will use Aasta Hansteen’s infrastructure. The Snefrid North discovery will extend the plateau production and has an expected start-up toward yearend. Recoverable resources of Aasta Hansteen, including Snefrid Nord, are estimated at 55.6 billion standard cu m (scm) of gas and 600,000 scm of condensate (353 MMboe).

Gas from Aasta Hansteen and surrounding fields in the Vøring basin will be transported via the 482-km Polarled pipeline to the Nyhamna terminal in Norway, before onward export to the UK (OGJ Online, Jan. 8, 2013). Produced condensate will be loaded onto tankers and shipped to the market.

Equinor operates Aasta Hansteen with 51%. OMV (Norge) AS has 15%.

Marathon extends Bakken acreage with Ajax wells

Marathon Oil Corp. reported an average 30-day initial production of more than 2,400 boe/d (84% oil) from a four-well Middle Bakken pad in the Ajax area of the Williston basin in Dunn County, North Dakota.

“Strong early results in Ajax mark another important step forward in our ongoing efforts to extend the core of our Bakken acreage position, building upon recent successful core extension tests in Elk Creek and Southern Hector,” said Marathon Oil Pres. and CEO Lee Tillman. “Through enhanced area-specific completion designs,” he said, the company continues to “meaningfully uplift the quality of our inventory.”

The company’s two-well Lars pad in southern Hector achieved an average 30-day initial production of 1,810 boe/d (83% oil), as reported in third-quarter results.

CruzSur seeks test of old well in Colombia

A subsidiary of CruzSur Energy Corp., Vancouver, BC, wants to test an old well near a recent technical discovery on the Maria Conchita block in the Department of La Guajira, Colombia.

The subsidiary, MKMS Enerji Sucursal Colombia, is seeking modification to an environmental license that would allow it to test the Aruchara-1 well drilled by Texaco in 1980. MKMS operates the 60,076-acre block.

Test results would supplement information from its technical discovery, Istanbul-1, drilled while CruzSur’s name was PentaNova Energy Corp. (OGJ Online, Apr. 6, 2018).

The Istanbul-1, Aruchara-1, and Tinka-1, drilled by Ecopetrol in 1988, all have tested natural gas from Miocene strata on the block. MKMS has submitted an evaluation program to be completed within 1 year, which can be extended by a year with the drilling of a commitment well.

CruzSur said its subsidiary is studying options for reentering Istanbul-1 to test zones that appear to be gas-bearing but were not part of the original test. MKMS has notified the National Hydrocarbons Agency that it will not proceed with a third exploration phase, although it might do so after the evaluation program. It has relinquished 46% of the acreage not covered.

Novatek starts oil production at Yaro-Yakhinskoye

PAO Novatek started commercial crude oil production from Yaro-Yakhinskoye field in the Purovsky district of Russia’s Yamalo-Nenets Autonomous Region.

Oil production capacity of the field, which was developed by Arcticgas, a joint venture of Novatek and Gazprom Neft, is estimated at 1.2 million tons/year.

Before the start of production, construction was first completed on oil and gas gathering systems, a central oil treatment facility, and a 57-km external crude oil pipeline. Twenty-two production wells have been drilled on the crude oil portion of the field, and production drilling is under way.

Commercial production of natural gas and condensate from Yaro-Yakhinskoye began in April 2015. Field reserves under the Russian reserves classification totaled 206 billion cu m of gas and 32 million tons of liquids as of yearend 2017.

Cuadrilla stops fracing in Bowland shale

Privately owned Cuadrilla Resources Ltd. again stopped hydraulic fracturing operations at its Preston New Road natural gas drilling site in Lancashire, northwest England, after minor tremors were detected Dec. 11. Fracturing in the Bowland shale has been halted three times since October.

“A series of microseismic events in Blackpool have been recorded on the British Geological Survey web site…following hydraulic fracturing at our shale gas exploration site,” Cuadrilla said.

The largest tremor, of 1.5 magnitude, was recorded after fracturing already had been stopped, Cuadrilla said.

The Oil & Gas Authority issued a news release saying it was the largest seismic event at Preston New Road so far but that the tremor would have needed to more than 30 times greater for the possibility of superficial damage to property.

Tom Wheeler, OGA director of regulation, said, “Our regulatory regime is deliberately cautious with strict controls in place to manage and monitor seismicity. This pause in operations allows us to review the event.”

Cuadrilla, based in Bamber Bridge, UK, is running initial flow tests at two horizontal wells in the Bowland shale where it drilled the first well into Carboniferous Lower Bowland shale at 2,300 m and the second in Upper Bowland shale at 2,100 m (OGJ Online, Sept. 20, 2018).

It says the wells are the first horizontal shale exploration wells drilled onshore in the UK, where popular resistance against hydraulic fracturing is strong.

PROCESSINGQuick Takes

New Vietnamese refinery reaches full startup

Nghi Son Refinery & Petrochemical LLC (NSRP) has started full commercial operations at its 200,000-b/d refinery and petrochemical complex in Thanh Hoa Province in Vietnam.

Implemented to secure stable domestic supplies of petroleum products in Vietnam, the refinery began operating commercially on Nov. 14, stakeholder Idemitsu Kosan Co. Ltd. said.

Confirmation of the refinery’s full commissioning follows the start of diesel production at the site in May as well as the start of commissioning activities in early March after achievement of ready for startup (RFSU) status in late February.

Alongside its 200,000-b/d crude distillation unit, NSRP’s $9-billion refinery includes a 105,000-b/d residue hydrodesulfurization unit, an 80,000-b/d residue fluid catalytic cracking unit, and an aromatics complex equipped to produce 700,000 tonnes/year of paraxylene, Idemitsu said.

Designed to process Kuwaiti crude oil into products to help meet Vietnam’s rising demand for transportation fuels and petrochemicals, the Nghi Son refinery is a joint venture of PetroVietnam 25.1%, Idemitsu 35.1%, Kuwait Petroleum Europe BV 35.1%, and Mitsui Chemicals Inc. 4.7%.

Mexico plans new refinery, rehab work

President Andres Manuel Lopez Obrador of Mexico has announced a plan to rehabilitate six refineries and build a 340,000-b/d refinery a Dos Bocas, Tabasco.

After upgrade, the combined capacities of existing Pemex refineries at Cadereyta, Madero, Minatitlan, Salamanca, Salina Cruz, and Tula will be 1.54 million b/d, according to the plan. Lopez Obrador took office this month.

Pemex Chief Executive Officer Octavio Romero said Lopez Obrador’s National Refining Plan aims at rescuing the national oil industry and achieving energy independence.

“There will be no more privatization or dismantling of facilities, nor will the workers of the energy sector in our country be displaced to perform other activities,” Romero said.

The Dos Bocas refinery is to produce 170,000 b/d of gasoline and 120,000 b/d of ultralow-sulfur diesel.

Reliance plans expansion at Jamnagar refinery

Reliance Industries Inc., Mumbai, is evaluating a plan to expand one of the two refineries that form part of its nameplate 1.729 million-b/d integrated refining and petrochemical complex at Jamnagar in Gujarat, India.

The expert appraisal committee of India’s Ministry of Environment, Forest, and Climate Change (EFCC) considered environmental clearance for RIL’s project at a 2-day meeting in December, according to the EFCC meeting agenda.

The project proposes to expand production capacity of the 551,000-b/d Special Economic Zone refinery of the Jamnagar complex to about 823,400 b/d from its current production capacity of about 706, 900 b/d, the EFCC agenda said.

Kuwait considers new refinery in south

Kuwait National Petroleum Co. (KNPC) is considering construction of a refinery in the south of the country.

NKPC CEO Mohammed al-Mutairi said the proposed refinery comes as part of the country’s plan to expand its current crude processing capacity to achieve the country’s long-term sustainability goals, according to a news release from Kuwait’s Oil Ministry.

Mutairi said the country also is considering expanding capacity to produce more environmentally friendly fuels as part of Kuwait’s Clean Fuels Projects (CFP) under implementation at its existing refineries, as well as at recently formed KPC subsidiary Kuwait Integrated Petroleum Industries Co.’s grassroots 615,000-b/d Al-Zour integrated refining complex now under construction as part of the CFP in southern Kuwait.

Further details regarding the new refinery project and CFP capacity expansions were not disclosed.

The first unit of the Al-Zour refinery is scheduled to be completed by May, with pipelines for delivery of feedstock to the refinery to be ready by October 2019 (OGJ Online, Nov. 1, 2018).

TRANSPORTATIONQuick Takes

ExxonMobil, Imperial axe WCC LNG project

ExxonMobil Canada Ltd. and Imperial Oil Ltd. have withdrawn their proposal for the WCC LNG project in British Columbia (OGJ Online, July 10, 2013).

The affiliated companies, each with 50% of the project, had planned to build as many as six liquefaction trains with capacities of 5 million tonnes/year each in the Prince Rupert area.

They said they withdrew their proposal from environmental review by the provincial government.

Of as many as 20 liquefaction projects originally proposed for British Columbia, the 14 million-tpy LNG Canada venture led by Shell is the only one for which a final investment decision has been made (OGJ Online, Oct. 2, 2018).

Inpex gains interest in Ichthys LNG project

Inpex agreed to acquire an additional 4% interest in the Ichthys LNG project in Australia from Total SA for $1.6 billion, increasing the operator’s participating interest to 66.245% from 62.245%.

The first offshore condensate cargo was exported on Oct. 1, the first LNG cargo was exported on Oct. 22, and the first LPG cargo was exported on Nov. 16 (OGJ Online, Oct. 2, 2018; Oct. 23, 2018, Nov. 16, 2018). The two LNG trains are now fully operational.

At peak, the Ichthys project will produce as much as 8.9 million tpy of LNG, 1.65 million tpy of LPG, and 100,000 b/d of condensate.

“Ichthys is part of a wave of Australian LNG projects which have unfortunately experienced major cost overruns and delays during their construction phase,” said Arnaud Breuillac, Total’s president of exploration and production, noting Inpex’s final capital expenditure estimate of $45 billion compared with a 2017 estimate of $40 billion. The sale is meant to control the capital employed in Ichthys, Breuillac said, adding that Total remains committed to the project.

The transaction, which is subject to Australian regulatory approvals, reduces Total’s interest in the asset to 26%.