GENERAL INTEREST Quick Takes
DTE unit to buy Haynesville assets for $2.25 billion
DTE Midstream, a non-utility business unit of DTE Energy, has agreed to acquire a gathering system and pipeline in the Haynesville shale formation of Louisiana for $2.25 billion in cash plus a $400 million milestone payment on completion of the gathering pipeline.
DTE Midstream will acquire 100% of the assets from Momentum Midstream LLC and Indigo Natural Resources LLC, the primary gas producer supplying the system. Acquired assets include an existing gathering system and a 150-mile gathering pipeline, still under construction, that is expected to be in service in the second half of 2020. The primary assets gather natural gas produced in the Haynesville and access multiple downstream pipelines, including those serving the Gulf Coast.
The acquired assets are fully contracted with a remaining tenor of 13½ years for the existing gathering system and a 10-year contract for the large-diameter gathering pipeline currently under construction.
The acquisition is in line with DTE Energy’s plan to invest $4-5 billion in DTE Midstream from 2019-23, the company said.
The transaction is expected to close in this year’s fourth quarter.
ADNOC, Russian agency to mull joint work
Abu Dhabi National Oil Co. has entered a strategic framework agreement to explore collaboration opportunities across the oil and gas value chain with the Russian Energy Agency, a governmental budgetary organization.
The agreement covers exploration and production concessions in Abu Dhabi.
ADNOC and REA also agreed to explore collaboration in refining and petrochemicals in the emirate and elsewhere; marketing, sales, and trading; LNG; and technical and operational support in artificial intelligence and other advanced technologies.
The agreement emerged during a state visit by Russian President Vladimir Putin to meet with Abu Dhabi Crown Prince Muhammed bin Zayed Al Nahyan.
Also as a result of Putin’s visit, Lukoil signed an agreement with ADNOC to acquire a 5% interest in the Ghasha Concession, where ADNOC and partners are developing nine shallow-water oil and gas fields (OGJ Online, Oct. 15, 2019).
President Petroleum to acquire block in Argentina
President Petroleum SA has conditionally agreed to acquire a 100% interest in the exploration contract covering a block known as Angostura in Rio Negro Province, Argentina, from Cia. General de Combustibles SA (CGC).
The 384-sq-km block is directly west of the President Energy subsidiary’s Las Bases concession.
The Angostura block produces 2.8 MMscfd of natural gas and 50 b/d of oil. The gas is compressed and dehydrated on the block then carried by pipeline to President’s Las Bases for connection to a pipeline operated by the company.
Rio Negro Province must approve the assignment, under which President will pay nothing but will assume liabilities and commitments along with income.
The first phase of the exploration contract expires in November, but President can request a second exploration period with a 15% royalty over production in the exploration phase.
The royalty will decline to 12% if the contract is converted into a 25-year exploitation concession. The provincial energy company then would take a 20% interest with a deferred carry.
CGC agreed to invest $1.825 million in President if the acquisition is completed by subscribing to new ordinary shares, to be purchased with a $500,000 initial investment followed by seven quarterly instalments.
Ecopetrol buys stake in Gato do Mato discovery
Ecopetrol SA subsidiary Ecopetrol Oleo e Gas do Brasil Ltda. has agreed to acquire 30% of the interests, rights, and obligations in two areas corresponding to the BM-S-54 concession agreement and the Sul de Gato do Mato shared production agreement offshore Brazil.
The farm-in of interest from Shell Brasil Petroleo Ltda.—in Brazil’s Santos basin in the presalt region where the Gato do Mato discovery was made—could incorporate some 90 million bbl of crude oil in contingent resources as of 2020, with production that could total some 20,000 b/d of crude by 2025, the company said.
Shell will reduce its stake from 80% to 50% and continue as operator. Total will retain the remaining 20%. The Brazilian government also participates in the shared production agreement, through Pre-Sal Petroleo SA (PPSA). After discounting this share, the consortium will proportionally maintain the above percentages.
Three wells that have discovered light hydrocarbons have been drilled on the two blocks. The consortium will continue executing activities and operations in order to initiate production in coming years.
Ecopetrol entered Brazil’s presalt region in a 2018 deal with Shell and Chevron to farm in to the Saturno block (OGJ Online, Dec. 21, 2018).
The agreement is subject to approvals by Brazil’s Ministry of Mines and Energy, the country’s National Agency of Petroleum, Natural Gas, and Biofuels, and other customary transaction conditions.
Neptune to buy interests off UK and Norway
Neptune Energy has agreed to buy Edison Exploration & Production’s upstream assets offshore the UK and Norway from Energean Oil & Gas, which has a conditional agreement to acquire Edison E&P (OGJ Online, July 8, 2019).
Neptune’s acquisition, with an initial cash consideration of $250 million, is contingent on completion of the Energean-Edison deal. Neptune might pay an additional $30 million related to future reserves additions at Glengorm or Isabella fields.
Neptune expects to acquire a total of 30 million boe of proved and probable oil and gas reserves.
The assets include:
- A 25% working interest in the Glengorm gas condensate discovery operated by CNOOC Petroleum Europe Ltd. in the Central UK North Sea, which is near the Seagull project operated by Neptune (OGJ Online, July 23, 2019).
- A 15% working interest in the Nova gas development operated by Wintershall Dea in the Norwegian North Sea, which is being developed as a subsea tie-back to Gjoa field operated by Neptune (OGJ Online, Aug. 6, 2019).
- A 10% working interest in Wintershall Dea’s Dvalin subsea gas development project in the Norwegian North Sea, to be tied back to the Heidrun platform (OGJ Online, Aug. 13, 2019).
Other fields in which Neptune will gain interests are Scott, 10.5%; Telford, 15.7%; Tors, 68%; Wenlock, 80%; and Markham, 3.1%.
Exploration & Development Quick Takes
Pantheon to buy Alkaid-Phecda ANS project interest
Pantheon Resources PLC agreed to acquire Halliburton Co.’s 25% working interest in the six leases jointly held on the Alaskan North Slope. In exchange, Pantheon will accept full responsibility for all future lease obligations.
With the deal, Pantheon will hold 100% working interest in the 22,804-acre Alkaid-Phecda project and 92% working interest in two additional adjacent leases covering 11,367 gross acres.
After closing the deal, subject to a customary approval process by the Alaska Department of Natural Resources, Pantheon will hold a 90-100% working interest in 177,000 gross acres containing potential for 1.2 billion bbl of recoverable oil nearby the Trans-Alaska Pipeline System and the Dalton Highway. In addition, Pantheon holds 10% working interest in the Winx acreage, which covers another 23,000 gross acres.
The Alkaid-Phecda project “contains an estimated 900 million bbl of oil in place, and a P50 technically recoverable resource estimated at 90-135 million bbl of oil based upon primary recovery assumptions of 10-15%,” said Jay Cheatham, Pantheon chief executive officer.
Cheatham said the 100% ownership is important to its farmout discussions and the location of the project “offers significant cost and timing advantages over other North Slope projects, with the possibility of year-round activity and targeted first production as early as 2020.”
Subject to a successful farmout, start of production from its Alkaid discovery is targeted as early as 2020, the company reported to investors.
March tests showed 450 ft gross pay, perforated 6 ft interval, flow tested 100 b/d of oil. No oil-water contact was found. Alkaid-Phecda were determined to be part of same accumulation.
LLOG signs subsea tree order for Shenandoah project
LLOG Exploration Offshore LLC, Covington, La., signed a subsea tree order with TechnipFMC for its Shenandoah project in deepwater of the Gulf of Mexico. The order is the first equipment order for the Shenandoah project and the first of its kind for trees designed for pressures up to 20,000 psi, the company said.
LLOG is operator of the Shenandoah Unit covering Walker Ridge Blocks 51, 52, and 53, some 200 miles south of New Orleans. Partners are Venari Offshore LLC, Navitas Petroleum, and Beacon Offshore Energy (OGJ Online, Apr. 26, 2018).
The leases are currently held under a suspension of production and will be developed using a new floating production system. The partnership will drill multiple wells to develop the estimated 100-400 million bbl targeting previously discovered oil-bearing Upper and Lower Wilcox reservoirs. The oil and rock qualities for the Shenandoah development are both best-in-class for the emerging Wilcox production trend, LLOG said.
Cairn updates exploration in UK North Sea
Edinburgh exploration company Cairn Energy PLC, operator of UK Continental Shelf license P2312, will plug well 03/17a-3 (Chimera) in the North Sea. The well is dry.
The well, drilled 40 km north of Kraken field 140 km east of Lerwick and 400 km north of Aberdeen in 135 ft of water, reached a vertical depth of 1,830 m subsea. The well, drilled by Stena Drilling’s Stena Don semisubmersible drilling rig, was terminated in the Lista formation in the Paleocene.
The objective of the well was to prove hydrocarbons in Paleocene Heimdal sandstones within the Lista formation.
Cairn subsidiary Nautical Petroleum Ltd. was awarded 100% operated interest in the license in the UK 29th Offshore Licensing Round in 2017. Cairn farmed out a 40% non-operated interest to Suncor Energy UK Ltd. in 2018 and a further 15% non-operated interest to DNO North Sea (UK) Ltd. this year.
Premier Tolmount step-out logs gas off UK
Premier Oil PLC, London, expects fast-track development of its Tolmount East natural gas discovery in the Southern Gas basin of the UK North Sea.
It’s integrating data from the 42/28d-14 well with a new 3D seismic data set in anticipation of project sanction in the second half of 2020.
The well, in P1330 on Block 42/28d, cut 241 ft of Permian Leman sandstone with 71% net pay, 16% porosity, and 82% gas saturation. It did not encounter a gas-water contact.
Premier acquired data from what it described as a full logging-while-drilling program and recovered 216 ft of core.
The well is 4 km east of Tolmount gas field, which is under development with production expected to start by the end of next year (OGJ Online, July 13, 2018).
Well tests gas and condensate in Pakistan
Kohat E.L., a joint venture operated by Oil & Gas Development Co. Ltd. (OGDCL) of Islamabad, has tested natural gas and condensate from two formations in its Togh No. 1 exploratory well in the Kohat district of Khyber Pakhtunkhwa Province, northwestern Pakistan.
Most recently, the discovery well flowed on test at the rates of 4.1 MMscfd of natural gas and 50 b/d of condensate through a 32/64-in. choke with wellhead flowing pressure of 760-823 psi from the Paleocene Hangu formation.
The well depth is 3,200 m.
In August, OGDCL said the well flowed 12.7 MMscfd of gas and 240 b/d of condensate through a 32/64-in choke with wellhead flowing pressure of 2,478 psi from the Lower Cretaceous Lumshiwal formation.
OGDCL didn’t disclose plans for the well.
Interests in the Kohat joint venture are OGDCL, 50%; Mari Petroleum Co. Ltd., 33.33%; and Saif Energy Ltd., 16.67%.
Another well in the Kohat area, Chanda D&PL Well No. 5, made the first discovery of oil and gas in the Permian Wargal formation in Chanda oil field, OGDCL reported last month.
Drilled to 5,440 m, the well tested 76 b/d of crude and 512 Mscfd of gas through a 32/64-in. choke with wellhead flowing pressure of 89-149 psi.
OGCL said the discovery opens potential for deeper-pool exploration in the region.
It operates the Chanda D&PL joint venture with a 72% interest. Other interests are Government Holdings (Pte.) Ltd., 17.5%; and Zaver Petroleum Corp. (Pte.) Ltd., 10.5%.
Drilling & Production Quick Takes
Gas field starts flow in Russian Arctic
Arcticgas, a joint venture of Novatek and Gazprom Neft, has started commercial production from East-Urengoyskoye+North-Esetinskoye natural gas and condensate in the Russian Arctic (OGJ Online, Dec. 20, 2017).
The field is in the Samburgskiy license area in the Purovsky district of the Yamal-Nenets Autonomous Region close to existing infrastructure.
Novatek said production capacities are more than 1 billion cu m/year of natural gas and 200,000 tonnes/year of condensate.
Fourth well to extend Chestnut field life
Spirit Energy and Dana Petroleum will drill a fourth production well to extend the life of Chestnut oil field in the UK North Sea by as much as 3 years.
Spirit, the operator, says the contract for Teekay’s Hummingbird Spirit floating production, storage, and offloading vessel has been extended by up to 3 years to 2023.
The field, 200 km northeast of Aberdeen, produces about 6,700 b/d of oil and 4.7 MMscfd of natural gas.
The well is to be spudded before the end of the year.
The partners drilled a third Chestnut production well in 2017.
PROCESSING Quick Takes
Sinopec Sabic Tianjin to expand ethylene production
Sinopec Sabic Tianjin Petrochemical Co. Ltd. (SSTPC), a 50-50 joint venture of China Petroleum & Chemical Corp. and Saudi Arabia Basic Industries Corp., is expanding ethylene production at its 1 million-tonne/year plant in Tianjin Province, China.
SSTPC has officially broken ground on the expansion project, which will raise overall ethylene production at the site to 1.3 million tpy, the operator said.
Alongside debottlenecking work, the expansion will include construction of a 200,000-tpy cracking furnace, a high-pressure fire pump station, cooling water tower, and cooling water pump.
Work also will involve revamping of a cracked-gas compressor, propylene compressor, and binary refrigerating compressor; replacement of ethylene and propylene column internals; and installation of a cold box, three sets of 2,000-cu m ethylene spherical tanks, a 1,500-cu m ethylene cryogenic tank, and a low-temperature ethylene loading system.
Scheduled for start-up in April 2021, the expansion project required a total investment of about 1.5 billion renminbi, SSTPC said.
TRANSPORTATION Quick Takes
Nigerian pipeline vandalism sets record
Pipeline vandalism in Nigeria set a record in July, reports Nigerian National Petroleum Corp.
The company said the number of “pulverized points” on oil pipelines leapt to 228 in July from 106 in June.
The Aba-Enugu corridor accounted for 35% of the breaches, Port Harcourt-Aba 22%, Ibadan-Ilorin 16%, the Lagos Atlas Cove-Mosimi Zone 12%, and other locations 15%.
Rangeland Midstream starts construction of Alberta line
Rangeland Midstream Canada Ltd. has begun construction of a crude oil and condensate pipeline system in the Marten Hills region of north-central Alberta (OGJ Online, Apr. 30, 2019). The Martin Hills Pipeline System will terminate at an interconnect with Plains Midstream Canada’s Rainbow Pipeline System, which serves the Edmonton, Alta., hub and refining market. The system is expected to come into service in second-quarter 2020.
The 85-km system is anchored by long-term transportation agreements with three regional crude oil producers who have committed a minimum volume of 40% of the system’s capacity as well as acreage dedications totaling 450,000 acres.
ARB Midstream reports start-up of Badger line
The Badger Pipeline, one of three large-diameter transmission lines currently being constructed by ARB Midstream LLC subsidiary DJ South Gathering LLC, started receiving crude oil this month.
With a throughput of 90,000 b/d, Badger transports crude oil production from southwestern Weld County, Colo., and delivers into 300,000 bbl of dedicated crude oil storage at Platteville, Colo.
Badger is one segment within the larger DJS system, which also includes the 220,000 b/d Matador Pipeline, Bennet Station, the 150,000 b/d bidirectional Freedom Pipeline and the Platteville storage and distribution network (OGJ Online, Sept. 12, 2019).
Matador is slated to be in service later this year. This large transmission line is the first and only line that links Platteville to the southern region of the DJ basin. Bennett Station provides truck and gathered barrel origination into Matador, and crude qualities are segregated into onsite tankage.
Freedom pipeline is the bidirectional, large-diameter transmission line that will link Platteville to Lucerne West. Lucerne West is the delivery point of ARB’s existing Platte River Gathering System in the northern DJ basin. At Platteville, DJS is developing a header system that interconnects with multiple long-haul takeaway pipelines and delivers crude oil to downstream markets.
ARB’s crude oil gathering systems include over 250 miles of new pipeline covering the core of the DJ basin, with over 625,000 b/d of planned and existing throughput capacity and 600,000 bbl of storage. At over 250,000 dedicated acres underpinned by long term, fixed-fee contracts with numerous customers, ARB is the largest privately held crude oil gatherer in the DJ basin.
Enterprise to proceed with ATEX ethane line expansion
Enterprise Products Partners LP will proceed with an expansion of its Appalachia-to-Texas (ATEX) ethane pipeline based on commitments received during a recent binding open season (OGJ Online, Aug. 26, 2019).
The 1,200-mile ATEX pipeline transports ethane from the Marcellus-Utica basin of Pennsylvania, West Virginia, and Ohio to EPP’s natural gas liquids storage complex in Mont Belvieu, Tex.
The current capacity of ATEX is 145,000 b/d. EPP is evaluating expansion alternatives that would add 45,000 b/d of incremental capacity through improvements and modifications to existing infrastructure. The expanded capacity is expected to be available by 2022.
PetroVietnam lets contract for Nam Con Son 2 Phase 2
PetroVietnam Gas has let an engineering, procurement, and construction contract to TechnipFMC for Phase 2 of the Nam Con Son 2 pipeline across Nam Con Son basin and Cuu Long basin in Vietnam.
The scope of the contract covers engineering and installation of 118 km of rigid pipe as well as the fabrication of subsea structures to tie back the existing Nam Con Son 2 Phase 1 gas pipeline to the Long Hai landfall station.
TechnipFMC values the contract at $75-250 million.
Total, Adani expand gas supply partnership in India
Total SA has expanded its partnership with the Adani Group, the largest energy and infrastructure conglomerate in India, to supply and market natural gas in India.
India has set a target of increasing the share of gas in its energy mix to 15% by 2030.
The 50-50 partnership between Adani and Total includes several assets across the gas value chain, notably two import and regasification LNG terminals: Dhamra in East India and potentially Mundra in the West, as well as Adani Gas Ltd., one of the four main distributors of city gas in India of which Adani holds 74.8% and of which Total will acquire 37.4%.
Adani Gas Ltd. aims to expand its distribution of gas in the next 10 years through its 38 concessions covering 7.5% of the Indian population and market natural gas to industrial, commercial, and domestic customers, targeting 6 million homes as well as through 1,500 retail outlets of natural gas for vehicles.
As part of the partnership, Total will bring its LNG and retail expertise and will supply LNG to Adani Gas. Total and Adani also will establish a joint venture to market LNG in India and Bangladesh.
To reach a 37.4% shareholding in Adani Gas in accordance with Indian stock market regulations and subject to regulatory approvals, Total will initially launch a tender offer to public shareholders to acquire up to 25.2% of equity shares before buying the remaining shares from Adani.
Taking into account the divestiture of the group’s interest in Hazira terminal earlier this year, the establishment of this partnership on gas in India represents a net acquisition cost for Total of $600 million over 2019-20.
