GENERAL INTEREST — Quick Takes
Brazil approves BP's purchase of blocks from Devon
Brazil's National Petroleum Agency (ANP) has given its final approvals for BP PLC to complete the purchase of 10 exploration and production blocks in Brazil from Devon Energy Corp.
"The completion of this acquisition delivers a material position in some of Brazil's most important hydrocarbon basins," said BP Chief Executive Bob Dudley.
Devon Pres. And Chief Executive Officer John Richels said Devon expects to close the deal later this week, adding that the company's focus "is now on its highly competitive North American onshore exploration and production business."
BP said the interests include eight license blocks in the Campos and Camamu-Almada basins in 100-2,780 m of water, as well as two onshore licenses in the Parnaiba basin.
The Campos basin blocks include four discoveries: Xerelete, presalt Wahoo, Itaipu, and Fragata. The blocks also include Polvo field, which is currently producing 25,000 b/d of oil.
BP becomes operator of Polvo, and of Blocks BM-C-32 (containing Itaipu) and BM-C-34 (consisting of Blocks C-M-471 and C-M-473, and containing Fragata) in the Campos basin; Block BM-CAL-13 in the Camamu-Almada basin; and onshore Block BT-PN-2 in the Parnaiba basin.
BP also gains nonoperating interests in Blocks BM-C-30 (containing Wahoo), BM-C-35 (containing Xerelete, and formerly called Block BC-2), all in the Campos basin; as well as onshore Block BT-PN-3 in the Parnaiba basin.
The blocks are part of the transaction between BP and Devon Energy announced in March 2010. Under the agreement, BP will obtain ownership of Devon Energy do Brasil Ltda., the Devon entity that owns interests in the blocks.
EOG Resources sells $637 million in assets
EOG Resources Inc. has sold $637 million worth of assets in its goal of divesting $1 billion worth of assets this year, EOG Chief Executive Officer Mark Papa said May 6, adding most of the assets sold were mature gas-producing properties in South Texas and New Mexico.
"Our shift from a natural gas to a liquids company is essentially complete," Papa said during a conference call on the company's first-quarter earnings. "At current prices, we expect approximately 70% of our North American revenue to emanate from crude oil, condensate, and natural gas liquids."
He also discussed how EOG is working to move some Eagle Ford crude oil production by rail instead of trucking it. EOG expects to move 20,000 b/d by rail by yearend, Papa said, adding this could be a temporary solution until a pipeline, now under construction, is finished.
EOG put together the Eagle Ford rail arrangements in 30 days as a short-term solution to bridge a transportation gap that has hampered Eagle Ford shale producers, Papa said.
Enterprise Products Partners LP is building a 140-mile, 24-in. oil pipeline that will move Eagle Ford crude oil to a Houston-area oil terminal. EPP expects the line to enter service during second-quarter 2012.
"Ultimately, the pipeline cost is going to be very pleasant relative to trucking or rail," Papa said of anticipated future transportation costs.
Oil India Ltd. expands biotechnology pact
Oil India Ltd. has signed a 10-year memorandum with the Energy and Resources Institute, New Delhi, to broaden an earlier agreement for research of petroleum biotechnology and new and renewable energy resources.
The state-owned oil company and institute are considering collaboration in the research of microbial enhanced oil recovery, removal of paraffin from oil-well tubing, microbial "bioprospecting" for oil, reduction of viscosity of heavy oil, mitigation of pollution through bioremediation, treatment of waste and produced water, establishment of a petroleum microbial laboratory in OIL, and new and renewable energy.
OIL said the parties might later agree to further expand the scope of their research.
The director general of the institute is R.K. Pachauri, chair of the Intergovernmental Panel on Climate Change.
Exploration & Development — Quick Takes
OTC: Nova Scotia maps play fairway
Nova Scotia is preparing to make public the results of 2 years of research into the complex geology of the province's Atlantic shelf and slope in a move to attract explorers to an offshore bid round to be held as early as late 2011.
The soon-to-be-released play fairway analysis is the product of $15 million in extensive geoscience research and may be the first time an effort of such scope has been applied outside an exploration company. The results are to be made available electronically without charge to oil and gas exploration companies, said R.A. MacMullin, director, Nova Scotia Department of Energy.
Beicip-Franlab, Paris, has integrated the inputs of research into plate tectonics, biostratigraphy, geochemistry, seismic reprocessing, salt structural interpretation, and reservoir quality into the finished analysis.
The group is about to publish a digital atlas of montages of maps derived from the various scientific analyses, MacMullin said May 4 at the Offshore Technology Conference in Houston.
Among other things, the research turned up solid evidence of two Jurassic source rocks, he said. The northeastern part of the 500-mile-long study area appears more gas-prone, while the southwestern part seems more oil-prone, he added.
A biostratigraphic project that is one of the 10 special projects in the play fairway analysis was undertaken by the Offshore Energy Technical Research Association, Halifax, said Jennifer Matthews, research manager.
Funds for the analysis came from the Department of Energy and originated as forfeiture payments made a decade ago by companies which, having drilled dry holes, relinquished exploration licenses before they expired. The department launched the play fairway analysis as it sought to explain the early departures and determine what might rekindle interest.
Oil find indicated near Oseberg South field
Statoil and two partners have drilled what appears to be an oil discovery with 12.5 to 56.5 million bbl of oil equivalent recoverable in the North Sea south of Oseberg South field off Norway.
The indicated discovery by Statoil, Det Norske Oljeselskap ASA, and Svenska Petroleum Exploration AS is at Krafla in Block 30/11. Six exploratory wells have been drilled on the block without commercial success, Statoil noted.
The Ocean Vanguard semisubmersible proved a column of good quality reservoir rock about 200 m thick. Data are still being collected, but "results so far clearly indicate that this is an oil discovery," Statoil said. "If this is the case, then we have unlocked the exploration potential of this area and have several follow-up opportunities."
When the well is complete, the rig will spud a planned sidetrack known as Krafla West. Krafla is Statoil's first operated well on the license. Krafla, 26 km south of Oseberg South, could be placed on production quickly and help extend the life of existing installations. It likely will be tied back to a subsea installation in the Oseberg area.
Licensees in PL035/PL272 are Statoil operator with 50% interest and DNO and Svenska 25% each.
The 30/11-8 S Krafla exploratory well went to 3,822 m true vertical depth below sea level in the Lower Jurassic Dunlin Group in 107.5 m of water in PL035, awarded Nov. 14, 1969. It proved hydrocarbons in the primary target Middle Jurassic Brent Group. Krafla West is a Brent Group target.
Krafla is 16 km from the Katla prospect, proven in 2009, for which Statoil recently submitted a plan for development and production.
Azerbaijan ratifies BP's Shafag-Asiman contract
BP PLC said Azerbaijan's parliament ratified the production sharing agreement between BP and State Oil Co. of Azerbaijan Republic (SOCAR) on joint exploration and development of the Shafag-Asiman deepwater structure in the Caspian Sea off Azerbaijan.
The unexplored block covers 1,100 sq km in 650-800 m of water 78 miles southeast of Baku and 38 miles south-southeast of Shah-Deniz gas field. Reservoir depth is 7,000 m, BP said.
Rashid Javanshir, BP's regional president, said, "We are particularly pleased that the PSA was ratified by a unanimous vote. This is a good demonstration of the country's acknowledgement of BP's track record here and trust in our long-term commitment to Azerbaijan. We look forward to working in partnership with SOCAR to expand our mutual cooperation in exploration and development."
The ratification follows the signing of the PSA in Baku in October 2010. Under the PSA, which is for 30 years, BP Exploration (Azerbaijan) Ltd. will be the operator with 50% interest, and SOCAR has 50%.
Drilling & Production — Quick TakesExxonMobil adds CO2 project at Means field
ExxonMobil Production Co. started the first phase of a new carbon dioxide enhanced oil recovery project at Means oil field in Andrews County, Tex.
Drilling rig on location at ExxonMobil's Means field in West Texas. The wells will inject CO2 in order to recover 5 million bbl of additional oil that until recently was technically and economically challenging to produce.
The project will involve drilling additional wells and construction of facilities at the field. The company expects CO2 injection to start by yearend. Potentially the first phase could recover as much as 5 million bbl of oil and lead to additional phases, according to ExxonMobil.
The Means San Andres was one of the earliest CO2 EOR projects in the Permain basin, with CO2 injection having started in 1983.
ExxonMobil discovered the field in the early 1930s and to date has produced more than 300 million bbl of oil from the field.
KMG EP withdraws from Iraq's Akkas gas field
Kazakhstan's KazMunaiGas Exploration Production (KMG EP) has informed Iraq's Ministry of Oil and Gas and Korea Gas Corp. (Kogas) of its withdrawal from participation in the Akkas gas field development project.
The field lies near the border of Syria in Iraq's Anbar province and holds an estimated 5.6 tcf of gas reserves (OGJ Online, Oct. 25, 2010).
In October 2010, KMG EP together with Kogas won a tender for developing Akkas with a $5.50/boe bid (OGJ Online, Oct. 25, 2010).
KMG EP said its negotiations with Kogas on a contract for the field's development with the government of Iraq "failed to resolve all issues which emerged at a late stage and it has not been possible to develop a consensus document that would fully meet the interests of all parties."
KMG EP stressed it still "believes Iraq to be an attractive area for investment."
BHP begins gas production from Angostura project
BHP Billiton said it started natural gas production from the Angostura Gas Project off Trinidad and Tobago, with the project delivering on schedule and budget.
"The Angostura Gas Project is an important addition to our portfolio," said BHP Billiton Petroleum Chief Executive J. Michael Yeager. "It will triple production at our Trinidad and Tobago business over the next year."
The export platform has a design capacity of 280 MMcfd of gas and is alongside the firm's existing facilities within the Greater Angostura field.
The development also includes modifications made to the existing Angostura facilities and the installation of flow lines.
National Gas Co. of Trinidad & Tobago Ltd. will take delivery of the gas and transport it into their 36-in. Northeastern Offshore Pipeline.
Greater Angostura field includes oil and gas discoveries at Aripo, Kairi, and Canteen. BHP holds a 45% interest in the field, with Total SA holding 30%, and Chaoyang, 25%.
PROCESSING — Quick TakesPunjab refinery to start in June or July
A joint venture of Hindustan Petroleum Corp. Ltd., Mumbai, and Mittal Energy Investment Pte. Ltd., Singapore, soon will start up a 180,000 b/d grassroots refinery in the northern Indian state of Punjab.
HPCL Chairman and Managing Director Subir Roy Choudhury told reporters in New Delhi that mechanical construction of the high conversion Guru Gobind Singh refinery near Bhatinda is complete and that crude runs will start in June or July.
Crude and vacuum distillation units are complete at the 180,000-b/d Hindustan Energy Mittal Ltd. refinery due to start soon at Bhatinda in Punjab, India.
Construction is nearly complete on a 1,014-km 28-30-in. pipeline that will carry crude to the refinery from Mundra on the coast of the central-western state of Gujarat. The project includes a crude oil terminal and single-point mooring with 17 km of 48-in. pipeline in the Gulf of Kutch at Mundra.
The Mundra-Bhatinda pipeline transits coastal plains and saline mud flats in Gujarat, dry cultivation fields and the eastern fringe of Thar Desert in Rajasthan, and the Ghagghar flood plains in Haryana. It includes 24 river and 51 canal crossings.
Key processes of the refinery include delayed coking, fluid catalytic cracking, diesel and vacuum gas oil hydrotreating, continuous catalytic reforming with naphtha hydrotreating and isomerization, propylene production, and hydrogen generation.
The refinery includes a 165 Mw captive power plant.
Each major partner holds a 49% interest in refinery operator Hindustan Mittal Energy Ltd., based in Noida, near New Delhi. Indian financial institutions hold the other 2%.
Foster Wheeler to upgrade Thai refinery
Thai Oil Co. Ltd. has let a contract to a Foster Wheeler AG subsidiary for an upgrade of its 193,000-b/d refinery at Sriracha, Thailand.
The Foster Wheeler unit will handle basic design engineering and engineering, procurement, and construction management of a project that will enable the refinery to run higher-sulfur crudes, convert fuel oil into lighter products, and lower emissions of sulfur oxides.
The firm will apply deep-cut vacuum technology and install sour-gas handling facilities including a sulfur recovery unit and a tail-gas treatment unit. It also will expand hydrogen production capacity, now about 28.8 MMcfd via steam reforming of methane, by installing a pressure-swing adsorption unit.
Gas plant in Avalon shale to restart
Nuevo Midstream LLC, Houston, will recommission its refrigerated Joule-Thomson processing and fractionator near Orla, Tex., in far West Texas.
The move is prompted, said the company, by the recent addition of a 6,500-acres in the Avalon shale trend, which gives the company "sufficient acreage, volume, and well commitments" to support the move.
Nuevo Midstream will also upgrade its Ramsey gas gathering system with increased treating and compression, 11 miles of 8-in. pipeline, and an interconnect with an Enterprise Products pipeline 9 miles south of the plant, bringing the total system to 141 miles of high and low-pressure pipeline.
The gathering system crosses through Eddy County in southeast New Mexico and Culberson, Loving, and Reeves counties in West Texas and currently serves 38 natural gas producers, said the announcement. The company expects to complete the plant recommissioning and expansions to the Ramsey gathering system by August.
The second phase of Nuevo's expansion plan anticipates the addition of 30-50 MMcfd of cryogenic processing at the Reeves County plant coming on line in October. Drilling projections from numerous existing and potential customers, said the company, will support further system extensions and capacity upgrades.
Nuevo Midstream LLC is a midstream company formed from private-equity firm EnCap Flatrock Midstream, Torch Energy Advisors Inc., and Petroleum Fuels Co. Inc.
TRANSPORTATION — Quick TakesOTC: Alaska would restore oil pipeline volumes
The state of Alaska is putting final touches on a plan to attract investment in order to restore trans-Alaska oil pipeline throughput to 1 million b/d within 10 years.
Alaska's North Slope is still considered sparsely explored, said Daniel S. Sullivan, commissioner of the state Department of Natural Resources. The trans-Alaska oil pipeline has shipped more than 16 billion bbl since 1977, but the ANS and adjacent offshore areas are still lightly drilled.
For example, about 500 exploratory wells have been drilled in an ANS area the size of the state of Wyoming, where more than 19,000 wells have been drilled, Sullivan said May 4 in Houston during the Offshore Technology Conference. Alaska's other main producing basin, Cook Inlet, is also considered to be underexplored, he said.
The pipeline has a capacity of slightly more than 2 million b/d, which was reached in 1988. But with declines at giant Prudhoe Bay field, Alaskan oil production had fallen to 628,000 b/d last month (OGJ, May 2, 2011, p. 133).
The state's five-part plan starts with ensuring that Alaska has a globally competitive investment climate, Sullivan said. The state plans to streamline permitting by enacting statutory and regulatory reforms. Specifics haven't been released.
The state will enact incentives to facilitate the next phase of ANS development, Sullivan said. That work will involve offshore and onshore heavy and viscous oil development, shale oil, and smaller pools of conventional oil and gas.
Alaska is one of a group of coastal states that seeks to improve liaison with federal agencies, Congress, and the president to promote constructive investment (OGJ Online, May 4, 2011).
Sullivan, who was Alaska's attorney general until December 2010, noted that Alaska's constitution provides for the maximization of the state's natural resources.
Golden Pass LNG terminal commissions Phase 2
Golden Pass LNG Terminal LLC, Houston, announced it has received approval from the US Federal Energy Regulatory Commission to place Phase 2 of the Sabine Pass, Tex., terminal's capacity into service.
The operator completed Phase 2 commissioning and performance tests in late April, having previously commissioned Phase 1 in early March (OGJ Online, Mar. 17, 2011). Also placed into service was the 69-mile Golden Pass takeaway pipeline to move gas from the terminal to downstream interstate markets.
Combined Phase 1 and 2 operations will enable nominal sendout capacity of more than 2 bcfd and regasification capacity of 15.6 million tonnes/year of LNG. The pipeline can move as much as 2.5 bcfd of natural gas.
Eagle Ford target of more pipeline, fractionation plans
DCP Midstream LLC, Denver, and Targa Resources Partners LP, Houston, have reached agreements that will, according to the joint announcement, provide a "long-term anchor commitment" to DCP Midstream's Sandhills Pipeline and an interconnect of the pipeline to a new delivery point with Targa's Cedar Bayou fractionators' plant at Mont Belvieu, Tex.
DCP is negotiating with several customers, it said, to sign long-term commitments to the Sandhills Pipeline.
Additionally, DCP and Targa reached a long-term anchor commitment by DCP for a new 100,000-b/d fractionation expansion at the Mont Belvieu plant, which Targa operates and of which it is majority owner.
According to Tom O'Connor, DCP Midstream's chairman, president, and chief executive officer, the agreements are to cover increased production of NGLs from West and South Texas.
In November 2010, DCP Midstream began an open season and is currently securing right-of-way and environmental permits for the Sandhills Pipeline. The new 700-mile system will move Y-grade NGLs from gas plants in the Permian basin and South Texas to various fractionators along the Gulf Coast along with the Mont Belvieu NGL hub.
The Sandhills Pipeline will serve NGL transportation needs at Targa's gas plants, existing DCP gas plants, and the 200-MMcfd DCP Eagle plant designed to serve Eagle Ford shale gas development. The Sandhills pipeline and CBF target first-half 2013 for completion of construction and start up.
Significantly, the Sandhills Pipeline along with CBF's new fractionation expansion will allow DCP to handle producers' increased liquid-rich natural gas production from the new Avalon Shale-Bone Springs areas, said the announcement, as well as the Eagle Ford shale area.
More Oil & Gas Journal Current Issue Articles
More Oil & Gas Journal Archives Issue Articles
View Oil and Gas Articles on PennEnergy.com
