GENERAL INTEREST Quick Takes
ANWR lease sale draws almost no competition
The lease sale for oil and gas exploration tracts on the coastal plain of the Arctic National Wildlife Refuge (ANWR) drew no big oil companies and almost no competitive bidding Jan. 6.
The main bidder, with 11 bids, was the Alaska Industrial Development and Export Authority (AIDEA), a public corporation owned by the state government.
No other organization made more than one complete bid, while three incomplete bids were submitted. Regenerate Alaska Inc. offered the high bid on one tract, and Knik Arm Services LLC offered the high bid on another tract.
The lease sale was held by the Bureau of Land Management within the Interior Department.
The sale drew an aggregate of about $14 million in bids, almost all of it from the state government corporation. By contrast, the last sale of exploration leases in the Gulf of Mexico drew $135 million in bids and was dominated by large oil companies (OGJ Online, Nov. 18, 2020).
AIDEA offered the only complete bid on nine of the 11 tracts where it bid. An incomplete bid was offered on a twelfth tract.
A lease sale typically does not bind a bidder to develop a site alone, which means AIDEA potentially can turn around and offer investment stakes in its leases to companies, turning its individual bids into consortium operations. Such a strategy could invite the big oil companies into the arena.
But as of Jan. 6, no large oil companies were interested.
Lease sales on the coastal plain of ANWR were mandated by the Tax Cuts and Jobs Act of 2017. The law required that two lease sales be held within 7 years of its enactment. For each lease sale, the royalty rate was set at 16.67%, and the bonus, rent and royalty payments were to be equally divided between the state and federal governments.
ENI pauses Australian asset sale
ENI has reportedly paused the sale of its Australian oil and gas assets due to the absence of acceptable bids.
The assets include a 100% interest in Blacktip gas-condensate field in the Bonaparte Gulf, along with a 108 km pipeline to a shore-based processing plant at Wadeye on the northwest tip of the Northern Territory. ENI also has non-operating interests in Bayu-Undan gas-condensate field in the Timor Sea and the associated Darwin LNG plant.
The assets produced a total of about 10 MMboe in 2019 according the latest figures on the company’s website.
ENI engaged Citibank in May 2020 to organize the Australian exit as part of its strategy to rationalize its portfolio. However, the company said any sale would be dependent on an adequate value being received.
Estimates of value range from $600-780 million.
Blacktip, in production license WA-33-L and discovered in 2001, was brought on stream in 2009. The field’s initial reserves were estimated to be 150 MMboe contained in stacked reservoirs of Lower Triassic and Permo-Carboniferous age.
The company submitted environmental plans for a third production well on the field in March 2019 (OGJ Online, Mar. 21, 2019).
In December 2019, ENI (and Tap Oil) surrendered retention lease WA-34-R in the Bonaparte basin of Western Australia that contained the Prometheus and Rubicon gas discoveries after concluding that returns on potential developments were not sufficiently attractive when put against the costs and risks (OGJ Online, Jan. 7, 2020).
Magnetic Oil acquires Kazakhstan assets from OMV Petrom
Magnetic Oil Ltd. has agreed to acquire OMV Petrom’s 100% interest in Kom-Munai LLP (KOM) and Tasbulat Oil Corp. LLP (TOC) in Kazakhstan. KOM and TOC hold the production licenses for onshore fields Komsomolskoe, Aktas, Tasbulat, and Turkmenoi. Total daily production of the fields was 6,450 boe/d in 2019, roughly 4% of OMV group’s production.
The fields lie in the Mangistau region of West Kazakhstan near the Caspian Sea and cover a total area of 86.52 sq km, including 75 wells, production facilities, and 200 km of pipelines.
OMV Petrom will shift the focus of its international upstream business to the Black Sea. The company entered Bulgaria in September 2019 after acquiring OMV Offshore Bulgaria GmbH from OMV Exploration & Production GmbH and won an international tender in Georgia in June (OGJ Online, Sept. 1, 2020).
Subject to conditions including approval by the Kazakh Ministry of Energy, the deal is expected to close in first-half 2021.
ADNOC awards offshore Block 3 to Eni, PTTEP
Eni SPA signed a concession agreement for 70% acquisition in Exploration Offshore Block 3, located northwest of Abu Dhabi, UAE. Eni will operate the block with a wholly owned subsidiary of Thailand’s PTT Exploration and Production Public Co. Ltd. (PTTEP) as partner (30%). Block 3 covers about 11,660 sq km and was the largest area awarded by Abu Dhabi National Oil Co. (ADNOC) in May 2019 as part of Abu Dhabi’s second competitive block licensing round.
Under terms of the agreement, Eni will explore for oil and gas and appraise existing discoveries within the block. The exploration phase of the agreement has a maximum period of 9 years. Subject to successful exploration, the overall concession term for development and production will extend 35 years from commencement of exploration. ADNOC has the option to hold a 60% stake in the production phase.
New 3D seismic data has already been acquired for part of the block, which is near existing fields currently producing or under development. Block 3 will take advantage of nearby infrastructure to expedite exploration.
ADNOC last year awarded Offshore Blocks 1 and 2 to an Eni-PTTEP consortium, with ADNOC retaining a similar 60% production-phase option (OGJ Online, Jan. 14, 2020).
Exploration & Development Quick Takes
Total enters operated exploration permit in Egypt
An international consortium led by Total and the Egyptian Natural Gas Holding company (EGAS) have signed an exploration and production agreement for the North Ras Kanayis Offshore block in the Herodotus basin, offshore Egypt in the Mediterranean Sea.
This 4,550-sq km block extends 5-150 km from shore with water depths of 50-3,200 m. The basin is an underexplored area and the agreement includes a 3D seismic campaign during the first 3 years.
Total is operator of the consortium with 35%. Shell holds 30%, KUFPEC holds 25%, and Tharwa holds 10%.
ConocoPhillips makes Norwegian Sea discovery
ConocoPhillips made a new oil discovery in PL 891 on the Slagugle prospect, 14 miles north-northeast of Heidrun field in the Norwegian Sea. Preliminary estimates put recoverable resources at 75-200 MMboe.
The discovery well was drilled in 1,165 ft of water to a total depth of 7,149 ft by the Leiv Eiriksson drilling rig. Extensive data acquisition and sampling has been carried out in discovery well 6507/5-10, and future appraisal will be conducted to determine potential flow rates, the reservoir’s ultimate resource recovery, and potential development plan.
“This discovery marks our fourth successful exploration well on the Norwegian Continental Shelf in the last 16 months,” said Matt Fox, executive vice president and chief operating officer. “All four discoveries have been made in well-documented parts of the North Sea and the Norwegian Sea and offer very low cost-of-supply resource additions.”
ConocoPhillips Skandinavia AS is operator of the license (80%) with partner Pandion Energy AS (20%).
Repsol advances Yme development with rig install
Repsol Norge has moved Yme field development into the hook up, commissioning, and startup preparation phase following installation of the Mærsk Inspirer jack up (OGJ Online, Apr. 15, 2018). Production startup is expected this year. At plateau, the field is expected to produce about 38,000 b/d.
Yme lies in the southeastern part of the Norwegian sector of the North Sea, 130 km northeast of Ula field in water depths of 77-93 m.
Repsol is operator (55%) with partners Lotos Exploration and Production Norge AS (20%), OKEA ASA (15%), and Kufpec Norway AS (10%).
Petrobras confirms new discovery in Búzios field
Petroleo Brasileiro SA (Petrobras) confirmed oil at well 9-BUZ-48D-RJS in the extreme northwest of Búzios field, presalt Santos basin, 116 miles from Rio de Janeiro.
The well was drilled in 6,069 ft of water. Tests carried out from 18,175 ft confirmed an oil discovery of excellent quality and reinforce the potential of the presalt in Búzios (OGJ Online, May 11, 2020).
Petrobras plans to install four new floating production, storage, and offloading vessels (FPSO) in Búzios and drill about 100 new wells, for a total spend of about $55 billion.
Petrobras is operator at Búzios (90%). China National Offshore Oil Corp. holds 5% and China National Oil and Gas Exploration and Development Corp. holds the remaining 5%.
Drilling & Production Quick Takes
Santos makes FID on Bayu-Undan development drilling
Santos Ltd., Adelaide, operator of Bayu-Undan gas field in the East Timor jurisdiction of the Timor Sea, has made a final investment decision for the $235-million Phase 3C infill development program.
The program will involve drilling three production wells, two from the fixed platform and one subsea, with the aim of developing additional gas and liquids reserves from the reservoirs.
Sanction comes 6 months after Santos took over operatorship of the Bayu-Undan joint venture following the company’s acquisition of ConocoPhillips’ northern Australia and east Timor assets (OGJ Online, May 28, 2020).
The wells will be drilled with the Noble Tom Prosser jackup rig, with the first well to be spudded in this year’s second quarter. Production from this first well is expected during the year’s third quarter.
The infill program is expected to add more than 20 MMboe of reserves and production, extend the life of the field, and reduce the period that Bayu-Undan is offline before the new Barossa gas project is brought on stream and hooked into Darwin LNG facilities, the company said.
Santos has a 68.4% interest and operatorship of Bayu-Undan and Darwin LNG which will reduce to 43.4% upon completion of a 25% sell-down to Korean company SK E&S (OGJ Online, Mar. 25, 2020). Completion of the deal is advancing. Consent from the joint venture and the East Timor regulator was received in December 2020. Australian regulatory approvals are progressing.
The sell-down will complete upon the Barossa project final investment decision, which is expected in this year’s first half.
Reliance starts production from R Cluster
Reliance Industries Ltd. (RIL) and BP PLC started production from the R Cluster ultradeepwater gas field in Block KG D6, off the east coast of India. The field is expected to reach plateau gas production of about 12.9 million std cu m/d (MMscmd) in 2021. It is the deepest offshore gas field in Asia, according to RIL, at a water depth greater than 2,000 m.
Located about 60 km from the existing KG D6 control and riser platform (CRP) off the Kakinada coast, the field was brought online using a subsea production system tied back to CRP via a subsea pipeline.
RIL and BP are developing R Cluster, Satellites Cluster, and MJ in using existing KG D6 infrastructure. R Cluster is the first to come onstream. Satellites Cluster, is expected to come onstream in 2021 followed by the MJ project in 2022. The three projects combined are expected to produce around 30 MMscmd (1 bcfd) at peak production, meeting about 15% of India’s gas demand by 2023.
RIL is operator of KG D6 with 66.67%. BP holds the remaining 33.33%.
Kuwait Energy kicks off 2021 Abu Sennan drilling campaign
Kuwait Energy Egypt has commenced its 2021 drilling campaign with the spudding of the ASH-3 development well in Egypt’s Abu Sennan license on Jan. 4, said partner United Oil & Gas PLC in a Jan. 5 release.
ASH-3 is a vertical well targeting the producing Alam El Bueib (AEB) reservoirs at a depth of 3,600-3,950 m in an area of the ASH field up-dip of the ASH-2 production well. ASH-2 came onstream in January 2020 and has produced over 1 million barrels to date (gross) with current rates of 4,500 b/d of oil on a 48/64-in choke (OGJ Online, Apr. 2, 2020).
The ASH-3 well will be drilled by the EDC-50 rig, which has a history of drilling in the Western Desert. It is anticipated that the ASH-3 well will take up to 60 days to drill and test.
The second well in the drilling schedule will be the ASD-1X exploration well, targeting the Abu Roash reservoirs in the 4-way dip-closed Prospect D structure in the north of the license, close to the producing Al Jahraa field.
Kuwait Energy Egypt is operator of the license. United Oil & Gas holds a 22% working interest.
PROCESSING Quick Takes
Pemex investigating incident at Cadereyta refinery
Pemex Transformación Industrial (PTI), the processing arm of state-owned Petróleos Mexicanos (Pemex), is investigating the cause of two gas explosions that occurred on Dec. 10 at its 275,000-b/d Héctor R. Lara Sosa refining complex in Cadereyta Jiménez, Nuevo León, in northeastern Mexico.
The morning explosions—which stemmed from an accumulation of gas in the refinery and resulted in minor injuries to five contract workers at the site—were under control by 1:00 p.m. local time, the government of Nuevo León and Nuevo León Governor Jaime Rodríguez Calderón said in a series of posts to their official Twitter accounts.
In a separate post to its official Twitter account, Pemex said the incident—identified by the operator as a “roar” in a section of the refinery’s storm drainage system—did not cause any major personal injuries or material damages at the site.
The refinery is continuing to operate normally, and an investigation into the root cause of the incident is under way, Pemex said without disclosing additional details.
Report of the December upset at Cadereyta follows the government of Mexico’s confirmation earlier in the year that work under the National Refining Plan’s previously announced rehabilitation program—which includes upgrades and modernization projects at all six of Pemex’s refineries—had reached 87% completion at the Cadereyta refinery (OGJ Online, Dec. 13, 2018; Sept. 9, 2014).
As of Aug. 27, 2020, the Cadereyta refinery had completed 21 of 24 scheduled repairs under the rehabilitation program in projects that were budgeted for 2.4 billion pesos in 2019 and 2.1 billion pesos in 2020, the national government said in a release.
Following completion of repairs planned for site during 2020—which were scheduled to run from August to October—the government said it expected crude processing at the Cadereyta refinery to increase to 160,000 b/d in November from 115,000 b/d in July 2020.
In a separate Aug. 27, 2020 release, Pemex said during 2020 it would rehabilitate 11 processing plants at Cadereyta—the only refinery in Mexico’s refining system whose entire gasoline and diesel production completely conforms to ultralow-sulfur standards—at a cost of 4.125 billion pesos, with major repair works to be completed at a total of 26 of the Cadereyta refinery’s plants by yearend 2023 as part of the national rehabilitation program—to which Mexico has allocated an overall budget of 22.905 billion pesos for all six refineries.
The government of Mexico and PTI also are progressing with development activities for the country’s previously announced 340,000-b/d grassroots refinery targeted for a July-2022 startup in the Port of Dos Bocas, Tabasco (OGJ Online, Oct. 19, 2020; OGJ, Dec. 2, 2019, p. 18).
Strike launches ammonia-urea project based on Erregulla gas
Strike Energy Ltd., Adelaide, launched an ammonia-urea manufacturing development called Project Haber which will be supplied by gas from the company’s 50%-owned Erregulla gas field in the North Perth basin onshore Western Australia.
The news follows completion of a feasibility study of a 1.4 million ton/year plant by TechnipFMC.
Project Haber will secure over 628 petajoules of additional gas demand over 20 years for Strike’s Perth basin gas and will support the commercialization of the Greater Erregulla gas resources.
Approval has been granted for Strike to take an option on a long-term lease for more than 60 hectares of land near Geraldton on the Western Australian coast where there is existing port, rail, and road access.
Design of the new plant includes an 800,000 tonnes/year ammonia production train, 300,000 tonnes of onsite urea storage, power, utilities and stream generation, rail sidings for transport, and a 120 km raw gas pipeline from the Perth basin.
Erregulla field resources will be the backbone of the project which will consume 86 terajoules/day of gas. Strike says construction of a 10 Mw hydrogen electrolyzer will enable the company to take advantage of local wind energy to form a green hydrogen input stream.
Total development has an estimated cost of $1.8 billion and a life of 20-30 years. Fertilizer revenues from Project Haber are estimated to be $416-540 million/year.
Strike will begin formal offtake tender with several Australian and international urea consumers during this year’s second quarter.
The company plans to secure offtake agreements for up to 80% of the product prior to entering a front-end engineering and design phase.
TRANSPORTATION Quick Takes
Shell restarts Prelude LNG
Shell Australia has restarted LNG production at its Prelude floating project in the Browse basin offshore Western Australia.
The project has been shut in for 11 months because of technical issues. The company was forced to take the floating vessel offline in early February 2020 after an electrical trip. This was followed by a series of technical issues including a leaking seal in the turret assembly.
Prelude was brought back onstream early January and the first cargo following restart left for Japan aboard the LNG carrier Symphonic Breeze on Jan. 8.
The 488 m-long vessel first came on stream in December 2018 (OGJ Online, Jan. 7, 2019).
Prelude, permanently moored in 250 m of water 475 km off the coast, has the capacity to produce 3.6 million tonnes/year of LNG, 1.3 million tonnes/year of condensate, and 400,000 tonnes/year of LPG.
Shell has a 67.5% interest in the project. Partners are Inpex Corp. (17.5%), Kogas (10%), and CPC Corp. (5%).
Kenai LNG gets FERC import terminal approval
Marathon Petroleum Corp. subsidiary Trans-Foreland Pipeline Co. LLC has received US Federal Energy Regulatory Commission (FERC) approval to convert its Kenai LNG liquefaction plant in Alaska into an import terminal. FERC gave Trans-Foreland 2 years to complete the conversion.
Trans-Foreland would import up to four cargoes of LNG per year and use its boil-off gas management system to deliver imported gas to the 68,000-b/d Kenai refinery. LNG has not been exported from Kenai since 2015. The plant has been maintained in a warm idle state since 2018.
To convert the Kenai LNG plant to an import terminal, Trans-Foreland proposes to build a skid-mounted, electric-powered trim LNG vaporizer module consisting of 10 trim LNG vaporizers; a 1,000 hp, electric-driven boiloff gas booster compressor, a vaporizer feed pump, an LNG circulation pump; twelve new valves and minor piping rearrangements; and appurtenant equipment. All construction will occur within the boundary of the current Kenai LNG plant.
Roughly 1 month before in-service, Trans-Foreland plans to apply for authorization from the Department of Energy’s Office of Fossil Energy to import LNG at the Kenai terminal.
United completes Egypt’s ASH gas pipeline
United Oil & Gas PLC has completed the ASH natural gas pipeline in Abu Sennan license, Egypt. ASH gas pipeline links ASH field to existing gas processing at El Salmiya, within Abu Sennan, and is delivering an initial average of 5.45 MMscfd.
ASH pipeline will also deliver production from the ASH-3 development well upon the latter’s completion.
ASH-3 will be the first well drilled by Egyptian Drilling Co.’s EDC-50 rig in its 2021 campaign, targeting producing Alam El Bueib reservoirs in an area of ASH field updip of the ASH-2 production well (OGJ Online, Dec. 2, 2020). ASH-2 came onstream at the beginning of 2020.
United holds a 22% working interest in the license, which is operated by Kuwait Energy Egypt.
