GENERAL INTEREST Quick Takes
Opedal to succeed Sætre as Equinor president, CEO
Equinor has appointed Anders Opedal as president and chief executive officer, effective Nov. 2, succeeding Eldar Sætre who will remain available to advise the new chief executive until Sætre retires Mar. 1, 2021, after 6 years as chief executive officer and more than 40 years at the company.
In a statement, the company said it is “entering a phase of significant change as the world needs to take more forceful action to combat climate change.” The board’s mandate “is for Anders to accelerate our development as a broad energy company and to increase value creation for our shareholders through the energy transition,” said Jon Erik Reinhardsen, chair of the board of directors.
Effective immediately, Opedal will step out of his role as executive vice-president of technology, projects, and drilling and Geir Tungesvik will step into the role as acting executive vice-president. Until commencement of the role as chief executive officer, Opedal will be executive vice-president reporting to Sætre and be part of the corporate executive committee.
Opedal joined Equinor as a petroleum engineer in 1997. He has served as executive vice-president and chief operating officer and as senior vice-president and country manager Brazil.
Oilex settles East Timor dispute
Oilex Ltd., Perth, has executed a deed of settlement and release with East Timor national company Autoridade Nacional Do Petroleo E Minerals (ANPM) to end lengthy arbitration proceedings arising from the termination of a production sharing contract in the Timor Sea by ANPM in 2015 (OGJ Online, May 15, 2015).
The settlement includes all claims and counterclaims between the parties.
Oilex said the permit referred to is in the joint petroleum development area between East Timor and Australia (the former JDPA 06-103) and execution of the deed provides an amicable conclusion to the proceedings.
The company has committed to a settlement of $800,000 payable in the 2021 and 2022 financial years.
In addition, Oilex has entered into an unsecured loan facility agreement with two of its JV partners which further provides the company with the option, at its sole discretion, to extend the settlement payments into the 2023-24 financial year.
Originally Oilex and its JV partners in the PSC were subject to a penalty claim of $17 million plus interest on a joint and several basis. The company subsequently lodged a counterclaim against the ANPM for $23.3 million plus interest for damages arising from what the JV claimed was the wrongful termination of the PSC (Aug. 21, 2019).
EnQuest to operate Bressay field with Equinor farmout
EnQuest PLC has acquired interest in and operatorship of Brassay oil field offshore UK from Equinor.
Equinor will farmout 40.8125% interest for initial consideration of GBP 2.2 million, payable as a carry against 50% of Equinor’s net share of costs, and a contingent consideration of $15 million following authority approval of a field development plan.
Bressay was discovered east of Shetland in 1976 and Equinor became operator in 2007. Concept selection for field development was deferred in 2016 due to challenging market conditions and the need to simplify the development concept.
Arne Gürtner, Equinor’s senior vice-president for UK & Ireland offshore said experience from existing Mariner and Kraken heavy oil developments will strengthen the project.
Production at Kraken, EnQuest’s largest single asset, began in June 2017, with the field development plan completed around the end of first-quarter 2019. More than 26 MMboe have been produced since first oil to end-2019. Equinor-operated Mariner began production in August 2019. Both Bressay and Mariner fields contain 11-14° gravity oil with a 64-550 cp viscosity.
The transaction, subject to customary conditions including partner and authority approval, is expected to close in this year’s fourth quarter. Following completion, EnQuest will hold 40.8125% interest and operatorship, Equinor will hold 40.8125%, and Chrysaor will retain 18.375%.
Exploration & Development Quick Takes
NOPSEMA accepts Shell Crux offshore project proposal
The National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) has accepted an Offshore Project Proposal (OPP) from Shell Australia to develop Crux gas field in the Browse basin offshore Western Australia. (OGJ Online, Feb. 5, 2019).
Consisting of a platform and five production wells, the proposed Crux development would connect to Shell’s Prelude floating LNG (FLNG) plant via a 165 km export pipeline. Originally discovered by Nexus Energy in 2000, Crux has an estimated resource of 2 tcf of gas and 66 million bbl of condensate.
The approval follows an assessment process of almost 2 years, including a public comment process. Development is subject to further regulatory approvals prior to proceeding, including an accepted environment plan, a well operations management plan and facility safety case.
In February 2019, Shell let a multimillion-dollar contract to Wood and KBR to deliver integrated front-end engineering and design for the gas-condensate development project (OGJ Online, Feb. 7, 2019).
Shell holds 82% of Crux with Seven Group Holding’s subsidiary SGH Energy holding 15% and Osaka Gas 3%.
Santos farms into Bengal Energy Cooper basin permit
Santos Ltd. has agreed to farm-in terms with Bengal Energy Ltd. for a portion of Bengal’s southwest Queensland permit ATP 934 in Cooper-Eromanga basin.
Santos will pay 100% of the costs of a one-well work program estimated at $2.7 million (Aus.) for the right to earn a 60% interest in 420 sq km in the southern portion of the permit. This area offsets recent successful Santos-operated exploration wells.
Santos will be operator of the farmin sector and drilling is expected to begin during second-half 2021, subject to access and rig availability.
The remainder of ATP 934 is not part of the deal and remains 100% Bengal-owned.
Bengal has mapped four prospects in the permit and the company hopes success with Santos will derisk future exploration outside the farmin area. Bengal also plans to reenter and recomplete four historic wells as part of its development plan.
Santos holds 100% interest in five production licenses surrounding ATP 934.
Hurricane Energy to downgrade West of Shetland reserves
Hurricane Energy PLC expects a material downgrade to Lancaster Early Production System estimated reserves and estimated contingent resources across the West of Shetland portfolio offshore UK based on re-examination of the range of possible geological and reservoir models.
Hurricane’s technical committee concluded that there is a reasonable probability that the oil water contact in Lancaster field is shallower than the range of oil water contacts envisaged in the 2017 Competent Person’s Report by RPS Energy.
The downgrade does not consider production enhancement options which are currently under evaluation (OGJ Online, Apr. 20, 2020).
Completion of the technical review is expected on or before Sept. 11, at which point the company expects to notify estimates of reserves and resources for Lancaster field, prepared in accordance with the Society of Petroleum Engineers’ guidelines.
On Aug. 2, the Aoka Mizu FPSO underwent a controlled shutdown to undertake an inspection. The inspection identified necessary repairs which have been on going and production is expected to restart soon. The field was producing about 17,000 bo/d before shutdown (OGJ Online, July 27, 2020).
Drilling & Production Quick Takes
Baker Hughes: International rig count down 38 units in July
The international rig count for July reached 743, a decrease of 38 units from June and down 419 units from the 1,162 counted in July 2019, according to Baker Hughes data (OGJ Online, June 2, 2020).
The international offshore rig count for July was 183, down 11 units from June, and down 72 units from the 255 counted in July 2019.
The worldwide rig count for July was 1,030, down 43 units from the 1,073 counted in June, and down 1,208 units from the 2,238 counted in July 2019.
The average US rig count for July was 255, down 19 from June, and down 700 from the 955 counted in July 2019.
Europe was down 5 unit with 105 in July and down 95 units year-over-year.
Latin America is up 3 units from the previous month with 74 units and down 127 units year-over-year.
The Asia-Pacific region is down 4 with 193 units month-over-month and down 33 units from its year-ago average.
The Middle East down 28 units month-over-month at 315 and down 109 units year-over-year.
The average Canadian rig count for July was 32, up 14 units from the 18 counted in June, and down 89 units from the 121 counted in July 2019.
DNO increases Kurdistan activity
DNO ASA increased activity in the Kurdistan region of Iraq due to stabilized oil prices and improved export payment terms. The company also will target 4-6 wildcat wells/year in the North Sea.
At the Tawke license, a fast-tracked well intervention campaign in June resulted in a month-to-month 15,000 bo/d production increase in July to 115,000 bo/d. In July, DNO commissioned the Peshkabir-to-Tawke gas reinjection project, the first enhanced oil recovery project in Kurdistan, to unlock additional oil volumes at Tawke while significantly reducing gas flaring and CO2 discharges at Peshkabir.
At the Baeshiqa license, DNO drilled the third exploration well on a second structure (Zartik) some 15 km southeast of the Baeshiqa-2 discovery well (OGJ Online, May 7, 2020). The rig has been released and testing will begin in August in Lower Jurassic and Upper Triassic zones and is expected to last 3 months. Evaluation of Baeshiqa-2 results to determine commerciality is ongoing.
Prompted by the tax changes in Norway, the company is working with partners to accelerate infill drilling at Ula, Tambar, and Brage producing fields; revisit development options for Brasse field, and actively evaluate Iris, Hades, Fogelberg, and Trym South discoveries.
For the second quarter, company working interest production stood at 89,700 boe/d (71,900 bo/d attributable to Kurdistan and 17,800 boe/d from the North Sea). Gross operated Tawke license production averaged 102,000 bo/d, including 58,100 bo/d from Tawke field and 43,900 bo/d from Peshkabir field, together down 11% from the first quarter as development activity dropped to preserve cash at a time of historically low and uncertain oil prices.
DNO is operator at Tawke (75%) with partner General Energy International Ltd. (25%). DNO has 32% interest and operatorship of Baeshiqa with partners ExxonMobil (32%), Turkish Energy Co. (16%), and the Kurdistan Regional Government (20%).
Empire Energy contracts rig for Beetaloo basin well
Empire Energy Ltd., Perth, has let a contract to Schlumberger for drilling of its Carpentaria-1 wildcat in Beetaloo basin permit EP187 in the Northern Territory.
The company expects to spud the well in mid-September with civil works to prepare the site starting in August.
Carpentaria-1 will be a vertical well drilled to a planned depth of 2,900 m with the aim of fully evaluating the target Velkerri and Kyalla shale reservoirs.
The program will focus on rock properties, hydrocarbon content, formation permeability, and reservoir pressure as they relate to the ability of the shales to produce.
The results will also be used to refine the seismic interpretation and further determine prospective hydrocarbon resource estimates (OGJ Online, Jan. 23, 2020).
Empire said the well design allows for future re-entry, fracture stimulation, and flow testing which is planned for 2021 following the coming wet season in northern Australia.
The drilling and testing of Carpentaria-1 is the precursor to Empire’s proposed multi-staged fracture stimulated and tested horizontal section which may be drilled from the same well bore.
PROCESSING Quick Takes
Turkmenistan adding new units at Turkmenbashi, Seydi refineries
Turkmenistan is proceeding with construction of new units at its Turkmenbashi Complex of Oil Refineries (TCOR), which includes it Turkmenbashi and Seydi refineries.
Westport Trading Europe Ltd. (WTL) is currently accelerating engineering, procurement, and construction (EPC) activities on a €120-million project to add a 900,000-tonnes/year (tpy) delayed coking unit (DCU) and 500,000-tpy solvent deasphalting unit (SDA) at the Turkmenbashi refinery, Turkmen state media said on Aug. 2.
The new DCU and SDA units—for which Bashgiproneftechim LLC served as design engineer and on which construction began in late 2019—are scheduled to be completed in 2022, EPC contractor WTL said.
TCOR also engaged WTL to execute a scoping and technology design study for integration of a needle coke production unit (NCPU) into the Turkmenbashi refinery’s new DCU, according to the service provider. While WTL confirmed it completed preparation of development documentation on technology for the proposed NCPU integration, details regarding the status of TCOR’s plan to move ahead with the project have yet to be revealed by either WTL or the operator.
Separately, the government of Turkmenistan said TCOR also has let a turnkey contract to WTL to deliver EPC on a new 1-million tpy atmospheric crude distillation unit (DCU) and accompanying new crude vacuum electric desalination unit (Unit 6) to be added at its Seydi refinery.
Confirmation of the proposed new DCU unit at Seydi—for which Bashgiproneftechim also provided design and engineering services—follows WTL’s completion in 2019 of a prefeasibility study for the project, according to WTL.
Details regarding the proposed scope and timeline of the Seydi project—which initially was to involve reconstruction of existing equipment at the refinery—have yet to be disclosed.
On July 13, the government of Turkmenistan said during first-half 2020, TCOR processed a combined 2.946 million tonnes of crude oil, exceeding the operator’s planned processing and production targets for the period as a result of previously completed projects designed to deepen processing capabilities at the two refineries.
Baofeng lets contract for methanol plant at Ningdong complex
Ningxia Baofeng Energy Group Co. Ltd. has let a contract to Johnson Matthey to provide technology licensing for a third methanol synthesis plant at its 600,000-tonnes/year coal-to-olefins (CTO) complex at Ningdong Energy Chemical Base in Yinchuan City, Ningxia Province, China.
As part of the contract, Johnson Matthey will deliver associated engineering, technical review, commissioning assistance, equipment, and catalyst for the proposed 7,200-tonnes/day plant, which will be equipped with Johnson Matthey’s proprietary Advanced Series Loop technology and radial steam-raising converters to produce stabilized methanol from a feedstock of coal-derived synthesis gas (syngas), the service provider said.
Baofeng Energy will use methanol production from the new plant—which, upon startup, will become the world’s largest single-train methanol plant—to produce olefins in one of the Ningdong complex’s downstream units.
This latest contract follows Baofeng Energy’s previous awards to Johnson Matthey for licensing of the Ningdong complex’s original 4,450-tonnes/day methanol synthesis unit started up in 2014 as well as its second unit commissioned in May 2020 (OGJ Online, June 29, 2020).
Johnson Matthey disclosed neither a value of the contract nor a timeframe for startup of the newly proposed third plant.
Baofeng Energy’s Ningdong CTO complex currently produces 4 million tpy of methanol, 1.2 million tpy of olefins, 4 million tpy of coke, and 780,000 tpy of specialty chemicals from coal-derived feedstock.
Ampol to restart Brisbane refinery
Ampol (formerly Caltex Australia) plans to restart production from its Lytton oil refinery in Brisbane in September despite the still low refining margins brought about by the COVID-19 crisis.
The refinery will resume production following an extensive period of maintenance work. Ampol brought forward the timing of the planned maintenance when the refinery shut in May because of the weak demand for transport fuels (OGJ Online, Apr. 6, 2020).
Lytton will restart in phase. While the refinery is unlikely to run at full capacity in the initial stages, Ampol hopes to be up to full capacity by the beginning of October.
Fuel demand in Australia is slowly rebuilding and analysts say there are indications that national sales of petrol were down only 11% in July compared with July 2019. Retail fuel margins are strong.
Ampol is taking a cautious approach, believing that forward market conditions for refining are still highly uncertain. The company will continue to review its refining operations and provide regular updates of its refining performance once operations restart.
TRANSPORTATION Quick Takes
Cameron LNG Train 3 starts commercial operations
Sempra LNG, a subsidiary of Sempra Energy, has begun full commercial operations under tolling agreements of its 5-million tonne/year (tpy) Train 3 at the Cameron LNG liquefaction plant in Hackberry, La. Cameron LNG achieved commercial operations of Train 1 and Train 2 in August 2019 and February 2020, respectively (OGJ Online, Mar. 2, 2020). The plant’s total capacity is now 15-million tpy.
Sempra LNG and its partners are also developing the 10-million tpy Cameron LNG Phase 2, previously authorized by the US Federal Energy Regulatory Commission (FERC). Project owners have signed memorandums of understanding for 100% of Phase 2’s offtake capacity with no change in equity ownership. Phase 2 will add two additional production trains and associate storage. Sempra earlier this year asked FERC for a 6-year extension (to May 2026) to complete construction of Phase 2.
Commercial operations of Train 3 mark the beginning of full run-rate earnings under Cameron LNG’s tolling agreements. The plant is expected to generate nearly $12 billion of after-debt service cash flows for Sempra Energy during the 20-year contract period.
Cameron LNG is jointly owned by affiliates of Sempra LNG, Total SE, Mitsui & Co. Ltd. and Japan LNG Investment LLC, a company jointly owned by Mitsubishi Corp. and Nippon Yusen Kabushiki Kaisha. Sempra Energy indirectly owns 50.2% of Cameron LNG.
Court to allow Dakota Access pipeline to continue operations during appeal
A federal appeals court ruled Aug. 5 that the US Army Corps of Engineers can allow the Dakota Access crude oil pipeline to continue operating while the court considers arguments over an easement that allows the line to pass under the Missouri River in North Dakota.
The US Court of Appeals for the District of Columbia Circuit said a district court had failed to follow proper procedure when it decided July 6 that the pipeline, in operation for 3 years, must be shut down while an environmental impact statement is prepared (OGJ Online, July 6, 2020).
The appellate court stayed the shutdown order but did not grant a stay of the accompanying decision that vacated the easement granted by the Corps of Engineers under the Mineral Leasing Act. That vacatur will be argued on appeal. The appellate court gave appellants until Aug. 26 to file briefs seeking to overturn the district court decision. Appellees will have until Sept. 16 to file a brief defending the decision. The case is Standing Rock Sioux Tribe v. US Army Corps of Engineers.
Energy Transfer LP operates the line through its unit Dakota Access LLC. The line carries 570,000 b/d of crude oil more than 1,000 miles from North Dakota to a pipeline hub at Patoka, Ill. Connections there take the oil as far as the Gulf Coast.
Mozambique LNG secures $15.9-billion financing
Total signed a $14.9-billion senior debt financing agreement for its 13.1-million tonne/year (tpy) Mozambique LNG project from eight export credit agencies (ECAs), 19 commercial bank facilities, and a loan from the African Development Bank. The liquefaction plant is expected to enter service in 2024.
The ECAs participating include Export Import Bank of the US, Japan Bank for International Corp., Nippon Export and Investment Insurance, UK Export Finance, Servizi Assicurativi del Commercio Estero of Italy, Export Credit Insurance Corp. of South Africa, Atradius Dutch State Business, and Export-Import Bank of Thailand.
Total had previously expected to receive $15-billion (R267-bn) of financing from a consortium led by South Africa-based Rand Merchant Bank (OGJ Online, June 1, 2020).
The project is the country’s first onshore LNG development. It includes development of Golfinho and Atum natural gas fields in Offshore Area 1 concession and the construction of a two-train liquefaction plant.
Total E&P Mozambique Area 1 Ltda., a wholly owned subsidiary of Total SE, operates Mozambique LNG with a 26.5% participating interest alongside ENH Rovuma Área Um SA (15%), Mitsui E&P Mozambique Area1 Ltd. (20%), ONGC Videsh Rovuma Ltd. (10%), Beas Rovuma Energy Mozambique Ltd. (10%), BPRL Ventures Mozambique BV (10%), and PTTEP Mozambique Area 1 Ltd. (8.5%).
