GENERAL INTEREST Quick Takes
Shell withdraws from offshore UK licenses
Shell UK Ltd. has advised Egdon Resources PLC and the North Sea Transition Authority (NSTA) of its intention to withdraw from UK offshore licenses P1929 and P2304 containing Resolution and Endeavour gas discoveries, Egdon said in an Apr. 26 release.
In June 2020, Shell acquired a 70% working interest in and operatorship of the licenses, while Egdon retained a 30% interest (OGJ Online, June 8, 2020).
In January 2021, Shell advised Egdon that the marine 3D seismic survey, planned over the Resolution and Endeavour gas discoveries, was expected to be acquired in February 2022 rather than first-quarter 2021.
With Shell’s withdrawal, Egdon will now consider its options, including its ongoing commitment to the licenses and the potential for funding the forward work program—including a new farm-out—and will discuss these options with the NSTA.
Twelve companies awarded contracts for Strategic Petroleum Reserve oil
The US Department of Energy (DOE) awarded contracts for 30 million bbl from the Strategic Petroleum Reserve (SPR).
This second emergency sale was conducted as part of a coordinated action with international allies and partners to support American consumers and the global economy in response to the war in Ukraine, the department said in an Apr. 21 release.
A total of 16 companies responded to the April 1 sale notice, submitting 126 bids for evaluation.
Contracts were awarded to:
- Atlantic Trading & Marketing Inc. (2.1 million bbl)
- Chevron USA (1.025 million bbl)
- Equinor Marketing & Trading (0.7 million bbl)
- ExxonMobil Oil Corp. (3.6 million bbl)
- Glencore Ltd. (2.6 million bbl)
- Marathon Petroleum Supply and Trading LLC (2.375 million bbl)
- Mercuria (0.5 million bbl)
- Motiva Enterprises LLC (4.05 million bbl)
- Phillips 66 Co. (2.5 million bbl)
- Shell Trading (US) Co. (2.75 million bbl)
- Unipec America Inc. (0.95 million bbl)
- Valero Marketing and Supply Co. (6.85 million bbl)
President Biden has authorized the release of 1 million b/d from the SPR for the next 6 months. Collectively, 30 other International Energy Agency member countries agreed to release an additional 60 million bbl.
Combined with already-scheduled releases, these new contracts mean that the SPR is now scheduled to deliver 50 million bbl in May and June. The DOE plans to issue a third Notice of Sale on May 24 for an additional 40 million bbl and for delivery starting in June.
Of the 30 million bbl sold, 8 million bbl were sold from the SPR’s Bryan Mound site (near Freeport, Tex.), 9.6 million bbl from the West Hackberry site (near Hackberry, La.), 3.7 million bbl from the Bayou Choctaw site (near Baton Rouge, La.), and 8.7 million bbl from the Big Hill site (near Winnie, Tex.).
Delek Logistics expands Permian basin assets with 3Bear Energy acquisition
DKL Delaware Gathering LLC, a newly formed subsidiary of Delek Logistics Partners LP, agreed to acquire 100% of the equity interests of 3Bear Delaware Holding – NM LLC, an indirect subsidiary of 3Bear Energy LLC, related to 3Bear’s crude oil and gas gathering, processing, and transportation businesses in the northern Delaware basin in New Mexico.
The $624.7-million cash deal includes water disposal and recycling operations.
3Bear’s assets are anchored by about 350,000 dedicated acres and long-term fixed fee contracts, according to the Apr. 11 release. The asset base includes about 485 miles of pipelines, 88 MMcfd of cryogenic natural gas processing capacity, 120,000 bbl of crude storage capacity, and 200,000 b/d of water disposal capacity.
Delek’s existing Permian gathering system saw average daily volumes increase to 135,000 b/d exiting this year’s first quarter (last 7-day average) from 83,000 b/d in fourth-quarter 2021, providing confidence to move forward with the acquisition, said Uzi Yemin, chairman, president, and chief executive officer of Delek Logistics General Partner.
This transaction is expected to close mid-year, subject to customary regulatory approvals.
LUKOIL names interim president
PJSC LUKOIL appointed First Executive Vice-Pres. Vadim Vorobyev as interim president until a new executive is appointed at the May 30 Extraordinary General Shareholders Meeting.
The temporary appointment was made following the Apr. 21 resignation of Vagit Alekperov as chairman of the company’s management board now chaired by Vorobyev.
Alekperov sent notices of resignation Apr. 21. No official reason for the early resignation was disclosed. Alekperov had been sanctioned by the UK government Apr. 13 as the war in Ukraine continues.
A Mar. 3 statement by the board directed at shareholders, employees, and customers called for “the soonest termination of the armed conflict” in Ukraine, noting strong support for a “lasting ceasefire and a settlement of problems through serious negotiations and diplomacy.”
LUKOIL is Russia’s second largest oil company behind state-owned Rosneft and produces over 2% of the world’s crude oil.
Exploration & Development Quick Takes
ExxonMobil adds to discoveries offshore Guyana
ExxonMobil has increased its resource estimate for the Stabroek block offshore Guyana with three new discoveries made that will help inform future development plans for the southeast part of the block, the company said Apr. 26.
Discoveries at Barreleye-1, Patwa-1, and Lukanani-1—southeast of the Liza and Payara developments—bring the number of discoveries offshore Guyana by the operator so far this year to five and increase the block resource estimate to nearly 11 billion bbl.
Barreleye-1 well encountered about 230 ft (70 m) of hydrocarbon-bearing sandstone and was drilled in 3,840 ft (1,170 m) of water. Drilling at Patwa-1 encountered 108 ft (33 m) of hydrocarbon-bearing sandstone and was conducted in 6,315 ft (1,925 m) of water. Lukanani-1 encountered 115 ft (35 m) of hydrocarbon-bearing sandstone and was drilled in a water depth of 4,068 ft (1,240 m). Operations are ongoing at Barreleye-1 and Lukanani-1.
ExxonMobil currently has four sanctioned projects offshore Guyana. Liza Phase 1 is producing about 130,000 b/d using the Liza Destiny floating production storage and offloading (FPSO) vessel. Liza Phase 2, which started production in February, is ramping up to its capacity of 220,000 b/d using the Liza Unity FPSO. The third project, Payara, is expected to produce 220,000 b/d; construction on its production vessel, the Prosperity FPSO, is running about 5 months ahead of schedule with start-up likely before yearend 2023. The fourth project, Yellowtail, is expected to produce 250,000 b/d when the ONE GUYANA FPSO comes online in 2025.
At least six FPSOs with a production capacity of more than 1 million b/d of oil (gross) are expected to be online on Stabroek block in 2027, with the potential for up to 10 FPSOs to develop gross discovered recoverable resources.
Guyana’s Stabroek block is 6.6 million acres (26,800 sq km). ExxonMobil affiliate Esso Exploration and Production Guyana Ltd. is operator with 45% interest. Partners are Hess Guyana Exploration Ltd. with 30% interest, and CNOOC Petroleum Guyana Ltd. with 25% interest.
ConocoPhillips granted extension for Greater Ekofisk area licenses
ConocoPhillips has been granted an extension by the Ministry of Petroleum and Energy for operated production licenses in the Greater Ekofisk area offshore Norway to 2048.
The company is finalizing the plan for development and operation of the Eldfisk North project, expected to be submitted “shortly,” said Jan-Arne Johansen, general manager of operated assets Europe, in an Apr. 19 release.
The existing production licenses 018, 018 B, and 275 in the oil and gas province in the southwestern part of the North Sea were set to expire on Dec. 31, 2028.
In addition to Ekofisk field, the area consists of producing fields Eldfisk, Embla, and Tor (OGJ Online, Dec. 3, 2020).
ConocoPhillips Skandinavia AS is operator with 35.11% interest. Partners are TotalEnergies EP Norge AS 39.896%, Vår Energi AS 12.388%, Equinor Energy AS 7.604%, and Petoro AS 5%.
Wintershall lets contract for Maria revitalization project
Wintershall Dea Norge AS has let an integrated engineering, procurement, construction, and installation contract to TechnipFMC for its Maria revitalization project aimed at boosting production at Maria oil and natural gas field in the Norwegian Continental Shelf.
The contract—valued by the service provider at $75-250 million—includes subsea trees, spools, jumpers, and flexible pipes.
The revitalization project will tie in an additional lightweight six-slot integrated template structure. The two existing templates in Maria field are part of TechnipFMC’s installed base and began production in 2017.
The service provider’s involvement “helped reduce the carbon footprint of the revitalization project by modifying existing infrastructure, eliminating the need for an additional 4,000 meters of pipe,” said Jonathan Landes, president, subsea, TechnipFMC.
Maria is 20 km east of Kristin field and 45 km south of Heidrun field.
Cooper Energy awarded new offshore Gippsland permit
Cooper Energy Ltd., Adelaide, was awarded 100% interest in exploration permit Vic P/80 in the offshore Gippsland basin of eastern Victoria.
The permit is adjacent to oil and gas fields including Cooper’s Sole gas field to the east, Basker-Manta-Gummy oil and gas fields to the south, and Esso-BHP’s Kipper gas field to the west.
The award is for a 6-year term, the first 3 years of which include licensing 3D seismic and the conduct of geological and geophysical studies.
The permit contains the Leatherjacket oil discovery—a 25-m oil column in the Upper Latrobe group reservoirs of Tertiary age discovered by Esso-BHP in 1986.
Cooper has identified prospectivity in Golden Beach and Emperor subgroups. Nearby prospect analogues include Kipper, Manta, and Judith fields, Cooper said.
The key prospect is Wobbegong, which lies 5 km north of Manta and 8 km southeast of Kipper. The Golden Beach sub-group is the target reservoir.
Water depth is 80 m and the prognosed top of Golden Beach is 2,400 m subsea.
Cooper has estimated unrisked prospective resource potential at Wobbegong of 192 bcf of gas on a P50 basis.
The new permit adds to Cooper’s growing Manta gas hub potential and continues efforts to identify and bring new gas on stream to supply eastern Australia, said David Maxwell, managing director.
Drilling & Production Quick Takes
Petrobras starts production at Roncador
Petróleo Brasileiro SA (Petrobras) started production from the first two wells of the increased oil recovery (IOR) project at Roncador field in Campos basin, Brazil.
The two wells are the first of a series of IOR wells to reach production. Start-up is almost 5 months ahead of schedule and at half of the planned cost, partner Equinor Energy said in an Apr. 20 release. The wells add a combined 20,000 boe/d to Roncador, bringing daily production to about 150,000 bbl.
Through this first IOR project, the partnership will drill 18 wells which are expected to provide additional recoverable resources of 160 million bbl. Improvements in well design and partners’ combined technological experience are main drivers behind a 50% cost reduction across the first six wells, including the two in production.
Roncador is Brazil’s fifth largest producing asset and the second largest outside the presalt layer. It has about 10 billion boe reserves and has been in production since 1999.
Petrobras is operator (75%) with Equinor (25%) entering the project in 2018 as a strategic partner.
Norway production down slightly in March
Norway’s production averaged 1.960 million b/d in March, the Norwegian Petroleum Directorate (NPD) reported.
Norway’s production averaged 1.980 million b/d in February (OGJ Online, Mar. 22, 2022).
Average daily liquids production in March consists of 1.744 million b/o, 208,000 bbl of NGL, and 9,000 bbl of condensate.
Oil production in March is 5.9% lower than the NPD’s forecast and 3.6% lower than the forecast so far this year.
SapuraOMV to spud Kanga-1 in May
SapauraOMV expects to spud its Kanga-1 wildcat in Dampier subbasin exploration permit WA-412-P offshore Western Australia early May.
Finder Energy Holdings Ltd., the company’s Perth-based joint venture partner, said all regulatory and environmental approvals are in place and that the rig handover is on schedule to the first week of May.
Kanga-1 will be drilled by Diamond Offshore’s Ocean Apex semisubmersible rig. Water depths across the split permit are 125-275 m.
Kanga prospect is a large structure on trend to the northeast of Woodside group’s Goodwyn-Perseus-North Rankin gas and condensate fields, and to the west of Mutineer and Exeter oil fields.
The primary objective is the Jurassic-age Legendre formation. ERCE Australia Pty Ltd. has estimated best case prospective resources of 170 million bbl.
Finder farmed out the permit to SapauraOMV in December 2018 for a carry in the well which has been negotiated with a cap of $0.94 million for Finder’s contribution while retaining a 15% interest in Kanga-1.
SapauraOMV is operator with 70% interest. Fugro Exploration Pty Ltd. holds the remaining 15%.
Results of the well are expected in June.
Indonesia Energy begins Kruh block drilling
Indonesia Energy Corp. Ltd. (IEC) started drilling the first of its two back-to-back producing wells at Kruh block on Sumatra Island, Indonesia, where IEC is already producing oil from five existing wells.
K-27 was spudded Apr. 7. With a target total depth of 3,400 ft, it is expected to take about 45 days to complete drilling operations.
IEC plans to begin drilling the second well, K-28, immediately following completion of K-27. A third new well is expected to begin drilling in June or July, and likely a fourth new well before yearend.
The wells advance IEC’s campaign to complete 18 new production wells in Kruh block by end 2024.
If successful, K-27 and K-28 are expected to produce an average of over 100 b/d each over the first year. Each will cost about $1.5 million to drill and complete.
Kruh block covers 63,753 acres. Out of the total eight proved and potentially oil-bearing structures in the block, three (North Kruh, Kruh, West Kruh fields) have combined proved developed and undeveloped gross crude oil reserves of 4.99 million bbl (net crude oil proved reserves of 2.13 million bbl) and probable undeveloped gross crude oil reserves of 2.59 million bbl (net probable crude oil reserves of 1.12 million bbl) as of Jan. 1, 2019.
IEC holds 100% participating interest in the block.
PROCESSING Quick Takes
LyondellBasell to exit refining business by end 2023
LyondellBasell Industries NV will cease operation of its Houston refinery no later than Dec. 31, 2023 and will consider potential transactions and alternatives for the site.
In the interim, and before exiting the refining business to advance the company’s decarbonization goals, the company will continue serving the fuels market, which is expected to remain strong in the near-term, it said in a release Apr. 21.
LyondellBasell subsidiary Houston Refining LP’s 268,000-b/d full-conversion refinery on the Houston Ship Channel transforms crude oil into transportation fuels and other products including lubricants, chemical intermediates, and petroleum coke.
In September 2021, LyondellBasell said it was considering strategic options for the refinery, including a potential sale.
Refuel Energy lets contracts for proposed Ontario renewable fuels plant
Refuel Energy Inc. has let a contract to Topsøe AS to deliver process technology for a grassroots, standalone renewable fuels production plant to be built in southern Ontario, Canada.
As part of the contract, Topsøe will license its proprietary HydroFlex and H2bridge technologies to enable the proposed 3,000-b/d plant’s processing of a feedstock mix that would include waste fats, oils, and greases—such as regionally-sourced used cooking oil, animal fats, and nonedible crop oils—into sustainable aviation fuel (SAF) and renewable diesel, the service provider said.
To be known as Refuel YYZ, the proposed project—which could lower carbon-dioxide (CO2) emissions for end users by up to 80%—would supply its SAF and renewable diesel production to meet demand in the Greater Toronto area, as well as be available for potential export into markets in the northeastern US, according to Refuel Energy and Topsoe.
In a separate release on Apr. 19, Refuel Energy confirmed it has also let a contract to Fluor Corp. to provide front-end engineering and design (FEED) services, as well as detailed engineering, procurement, and construction management (EPCM) support for the Refuel YYZ project.
Scheduled for final investment decision in 2023, Refuel YYZ, if approved, would begin commercial production in 2025, Refuel Energy said.
TRANSPORTATION Quick Takes
Enterprise, Oxy to explore Gulf Coast CO2 transportation, sequestration solution
Enterprise Products Operating LLC, a subsidiary of Enterprise Products Partners LP, and Oxy Low Carbon Ventures LLC, a subsidiary of Occidental, executed a letter of intent to work toward a potential carbon dioxide (CO2) transportation and sequestration solution for the Texas Gulf Coast.
The joint project would initially be focused on providing services to emitters in the industrial corridors from the greater Houston to Beaumont-Port Arthur areas.
Enterprise would develop the CO2 aggregation and transportation network utilizing a combination of new and existing pipelines along its Gulf Coast footprint. OLCV, through its 1PointFive business unit, is developing sequestration hubs on the Gulf Coast and across the US, some of which are expected to be anchored by direct air capture facilities.
The companies have begun exploring the commercialization of the potential joint service offering with customers.
The deal marks another step toward Occidental’s long-term plans to build sequestration hubs in the Gulf Coast region and elsewhere in the US. Most recently, the company signed a deal giving OLCV the right to build and operate a carbon sequestration hub under Louisiana land owned by Weyerhauser.
PHP launches open season for expanded Permian basin takeaway
Permian Highway Pipeline LLC (PHP) launched a binding open season for shipper commitments for an expansion project that could increase PHP’s capacity by nearly 650 MMcfd.
While the project is subject to a final investment decision, a foundation shipper has already executed long-term binding transportation agreements for half of the expansion capacity. Pending additional customer commitments, the target in-service date is Oct. 1, 2023.
The project will involve primarily compression expansions on PHP to increase natural gas deliveries from the Waha, Tex. area to Katy, Tex., and various US Gulf Coast markets.
The binding open season began Apr. 25 and ends May 13.
PHP is jointly owned by subsidiaries of Kinder Morgan Inc., Kinetik Holdings Inc., and ExxonMobil. Kinder Morgan Texas Pipeline is operator.
Eni, Congo plan gas production, supply increase
Eni SPA and the Republic of Congo signed a letter of intent to increase gas production and export.
The agreement provides for the acceleration and increase of gas production in Congo, primarily through development of an LNG plant with start-up expected in 2023 and a capacity of over 3 million tonnes/year (tpy) (over 4.5 billion cu m/year) once fully operational.
The Republic of Congo and Eni also agreed to define initiatives to promote decarbonization and sustainable energy transition in the country, in particular in the areas of renewable energy, the development of an agricultural supply chain to produce feedstock for biorefining without competing with the food chain, the conservation and sustainable management of forests, the adoption of clean cooking systems, and the capture, use, and storage of CO2, Eni said in a release Apr. 21.