GENERAL INTEREST Quick Takes
OKEA to acquire North Sea shares from Wintershall
OKEA ASA will purchase interests in certain North Sea fields from Wintershall Dea Norge AS for an initial cash consideration of $117.5 million plus an additional contingent consideration based on an upside sharing arrangement subject to oil price and oil production during the period 2022-24.
The assets comprise three high quality oil fields, all in the Norwegian North Sea, with expected combined net production of 5,000–6,000 boe/d in 2022 and net 2P reserves of 13.2 MMboe, OKEA said in a release May 23.
Brage and Ivar Aasen are producing assets, while Nova field is expected to begin production in this year’s third quarter as a subsea tie-back to the Gjøa platform (OKEA 12% WI).
OKEA will acquire Wintershall’s entire 35.2% share in Brage and become operator. Wintershall will retain responsibility for 80% of OKEA’s share of total decommissioning costs related to the Brage unit, OKEA said in the release.
OKEA will increase its net interest in Aker BP-operated Ivar Aasen field to 9.2385% from 2.777%. The field has been developed with an integrated production, drilling, and accommodation facility with a steel jacket. Oil is transported by pipeline to Oseberg field and further through the Oseberg Transport System pipeline to Sture terminal. A gas pipeline is tied back to Statpipe.
Ivar Aasen lies in water depth of 110 m in the northern part of the North Sea, 30 km south of Grane and Balder. Development includes a production, drilling, and housing facility with a steel substructure and a separate jackup rig for drilling and completion. The field is powered by electricity from Edvard Grieg and will be supplied with power from shore as part of the joint development of Utsira High expected to begin late 2022.
Wintershall-operated Nova field lies in the northern part of the North Sea, 45 km west of Florø and 17 km southwest of Gjøa field in water depth of 370 m. Upon closing, OKEA will own 6% of Nova. Development consists of two four-slot subsea templates tied back to the Gjøa host platform where Nova will be provided with power from shore. The subsea installation scope was finalized in 2021. Upon production start, the well stream will be routed to the Gjøa platform for processing and export. Oil will be transported through Troll Oil Pipeline II to Mongstad terminal. Gas will be exported via the Far North Liquids and Associated Gas System pipeline to St Fergus in the UK.
Subject to approval, the deal is expected to close in fourth-quarter 2022.
Shell to acquire assets offshore Egypt from ExxonMobil
Shell PLC subsidiary BG International Ltd. signed a farm out agreement (FOA) with ExxonMobil Egypt (Upstream) Ltd. to acquire 100% stake in North East El-Amriya offshore area (Block 3) in the Mediterranean Sea. Upon deal completion, which is subject to government and regulatory approvals, BG International would become operator.
Shell Egypt vice-president and country chair Khaled Kacem, in a May 18 release, said the deal is in line with plans to build its gas position in Egypt and that the proximity of the block to the company’s existing assets and exploration blocks will help accelerate its offshore ambitions. Drilling of the first well could potentially begin in first-half 2023, he said.
ExxonMobil is operator of the Nile Delta block with 100% interest.
In 2020, Shell subsidiary BG Delta Ltd. acquired North Sidi Gaber Concession (Block 4) and North Al Fanar Concession (Block 6) in the West Nile Delta, as operator, in partnership with PICL (Egypt) Corp. Ltd. Seismic was acquired and portfolio maturation is under way, the release noted.
Centennial, Colgate to merge in Permian pure-play deal valued at $7 billion
In a deal valued at $7 billion, Centennial Resource Development Inc., Denver, and Colgate Energy Partners III LLC, Midland, Tex., agreed to merge to create a large, pure-play Delaware basin company, Centennial said in a release May 19.
The combine, which will operate under a new name to be announced prior to closing, will be headquartered in Midland. The Denver office will remain open “for the foreseeable future,” Centennial said. Together, the new company will hold some 180,000 net leasehold acres and 40,000 net royalty acres, with total current production of about 135,000 boe/d in the Permian basin sub-basin. Assuming the current drilling pace, the combine will hold over 15-years of drilling inventory.
Preliminary fourth-quarter production for the combine is estimated at 145,000 boe/d. Detailed forward-looking guidance is expected following the deal’s close (anticipated in this year’s second half subject to customary conditions and shareholder and regulatory approvals.)
Centennial holds about 75,000 net acres in the Delaware basin in Reeves County, Tex., and Lea County, NM (97% operated, 50% oil). Colgate has current production of 70,000 boe/d, with 105,000 net leasehold acres, and 25,000 net royalty acres in the Delaware basin, concentrated in Reeves and Ward Counties, Tex., and Eddy County, NM. The acreage is 90% operated with a 75% average working interest. The company is currently operating five rigs and two full-time completion crews.
The deal values Colgate at about $3.9 billion and is comprised of 269.3 million shares of Centennial stock, $525 million in cash, and the assumption of $1.4 billion of Colgate’s outstanding net debt.
Exploration & Development Quick Takes
Shell sanctions Crux gas field development
Shell Australia Pty Ltd. has made a final investment decision for development of Crux gas field in the Browse basin offshore Western Australia.
The field—620 km northeast of Broome—will be developed as a tie-in to Shell’s Prelude floating LNG (FLNG) vessel 160 km to the southwest.
Gas processing through the existing infrastructure will reduce development costs, making Crux commercially attractive, said Tony Nunan, Shell Australia chairman. Early engineering and design work has been completed.
The decision comes at a time of growing uncertainty about new oil and gas projects under the newly elected Labor Government in Australia and the potential influence of the Greens Party holding the balance of power in the Senate (upper house) in Canberra.
Nevertheless, the project has received regulatory approvals and environmental clearance. Production license AC/L10 has been allocated, transferred from retention lease AC/R9.
Crux development plans include a new offshore development platform operated remotely from Prelude. Five wells are expected in the initial stage along with laying of an undersea pipeline to connect the platform to the Prelude FLNG vessel.
Crux is designed to supply up to 550 MMcfd.
Construction will begin this year with first gas expected in 2027.
Shell is operator with 82% interest. Partners are SGH Energy (a division of Seven Group Holdings, Perth) with 15%, and Japan’s Osaka Gas with 3%.
Strike makes Waylering-6 gas discovery
Strike Energy Ltd. made a new conventional gas discovery in its Waylering-6 appraisal well in the onshore North Perth basin of Western Australia.
The well was drilled to a total depth of 3,551 m with confirmation of 21 m of net gas pay in the B and C sands in the Cattamarra sandstones.
Although of lower quality than Waylering-5’s A and B sand reservoirs, Strike said the B and C sands provide candidates for the proposed Wayerling-6 production testing.
The well also encountered a 4 m net pay section of the secondary target Cadda formation that was gas charged. The interval contained porosities averaging 20% and high permeabilities up to 220 md. Pressures were measured at 3,827 psi.
Strike collected samples of the gas and reservoir fluid to be sent for laboratory testing and compositional analysis. The Cadda reservoir will be included in the Waylering-6 flow test, Strike said.
The company has analyzed Waylering-5 test data and estimated a mid-case of 60 petajoules of gas in place across the A-D sands in the Cattamarra reservoirs.
Cattamarra results at Waylering-6 indicate a different hydrocarbon system and trapping geometry for the western fault block of the field compared to Waylering-5 results in the eastern fault block.
Because of this, each area of the field will be assessed individually and summed to generate a field-wide reserve and resource calculation.
Inclusion of the new Cadda gas discovery is incremental to the company’s expectations for pre-drill estimates of the western fault block.
Flow testing of Waylering-6 is expected to begin in June.
Waylering field lies in permit EP447. Strike is operator with 55% interest. Talon Energy has 45%.
Drilling & Production Quick Takes
Arrow Exploration to bring Llanos basin well online
Arrow Exploration Co. will bring Rio Cravo Este-2 (RCE-2) online on Tapir block in Llanos basin, Colombia.
The well was spud on Apr. 2, 2022, and targeted a large, three-way fault bounded structure with multiple high-quality reservoir objectives. The well was drilled to a total measured depth of 9,600 ft and encountered six hydrocarbon bearing intervals totaling 90 net ft of oil pay.
Zones Carbonera C7 and C7 Stringer tested at 2,000 b/d of oil peak rate of 28° API crude. The zone was tested for 19 hours at an average rate of 1,199 b/d of oil.
Initial testing of Zones Gacheta C, C1, and C2 indicates productive capacity of 300 b/d of 27° API crude. The zone was tested for 14 hours at an average rate of 115 b/d of oil. Reserves have not been assigned to this zone previously.
Gacheta D zone tested 680 b/d of oil peak rate of 14° API crude. The zone was tested for 33 hours at an average rate of 362 b/d of oil.
The C7 zone was targeted to be on stream by June, effectively doubling Arrow’s production. Production will be brought on slowly with production increases to best manage the oil reservoir.
The rig is being moved to the RCS-1 well, which is expected to spud before end May. Arrow’s current production exceeds 1,000 boe/d.
Production from existing tied-in wells combined with results from new drills in Colombia support Arrow’s objective of achieving a production rate of 3,000 boe/d within 18 months of its AIM listing (completed in October 2021).
Arrow Exploration is operator at Tapir (50%).
TMK Energy intersects gassy coal in Snow Leopard-2 in Mongolia
TMK Energy Ltd. intersected 70 m of coal from the upper coal seam at its Snow Leopard-2 (SL-2) in the Nariin Sukhait area Gurvantes XXXV coal seam gas project in the South Gobi basin of Mongolia.
SL-2 lies 5 km east of the Snow Leopard-1 (SL-1) drilled in April and is the second well in a four-well program planned in the region.
The coal intersection was made at 167 m. Preliminary results from a sampled core gas desorption test indicate the coal has a high gas content.
The result is encouraging considering the relatively shallow depth of the intersection where coal usually coal has lower gas content and lower gas saturation, the company said.
The company plans to drill SL-2 to about 600 m targeting the same formations intersected in SL-1. Downhole geophysical surveys and downhole permeability testing are also planned to acquire data on coal seam thickness and characteristics.
In the meantime, further testing in SL-1 has confirmed higher than expected gas content from the initial desorption samples while 41 remaining samples from the first well continue to produce gas. The overall gas content will be made when desorption rates decrease to the level required to make a final measurement.
Once all four wells are drilled and tested, TMK hopes the resulting data will enable it to convert a portion of the independently certified 5.96 tcf of gross prospective resource into a maiden contingent resource for the Nariin Sukhait area during second-half 2022.
The drilling program is being funded by farminee Talon Energy Ltd. under a $4.65 million deal agreed in 2021.
Initial funding of $1.5 million has been allocated to the current drilling and testing program. The second stage ($3.15 million) is budgeted to the pilot well program planned later this year should Talon elect to proceed.
PROCESSING Quick Takes
Borouge lets contract for fourth petrochemical expansion
Borouge 4 LLC, a subsidiary of Abu Dhabi Polymers Co. Ltd. (Borouge)—a joint venture of Abu Dhabi National Oil Co. (ADNOC) and Borealis AG—has let a contract to Worley Ltd. to provide project management consultancy (PMC) services for the fourth expansion of Borouge’s integrated 5-million tonnes/year (tpy) polyolefins complex in Ruwais, about 250 km west of Abu Dhabi City, UAE (OGJ Online, Nov. 17, 2021).
As part of the May 24 contract, Worley will deliver PMC specifically on the engineering, procurement, and construction (EPC) phase of the Borouge 4 expansion that—scheduled to become operational by yearend 2025—will boost the operator’s Ruwais sitewide production capacity of polyolefins—including polyethylene and polypropylene—to 6.4 million tpy to make it the largest single-site polyolefins complex in the world, the service provider said in a release.
Worley, which will execute the project from its Abu Dhabi office with support from its global offices, did not reveal a value of the PMC contract.
The contract follows the operator’s late-2021 contract award to a consortium of Technip Energies and partner Arabtec Holding PJSC’s Target Engineering Construction Co. LLC to provide EPC on the project’s more than 1.5-million tpy ethane cracker equipped with proprietary process technology from Technip Energies.
Technip Energies also will include evaluation of the cracker’s carbon footprint to minimize future emissions at the site.
Alongside the new ethane cracker, the $6.2-billion Borouge 4 will also include the addition of two polyethylene plants based on Borealis’ proprietary Borstar technology, as well as a cross-linked polyethylene plant, that together will produce 1.4 million tpy of polyethylene to help meet increased demand for polyolefins by manufacturers across the Middle East, Africa, and the Asia-Pacific.
Following startup, ADNOC said the Borouge 4 plant also will enable the next phase of growth of Ruwais’ broader industrial complex by allowing the Borouge partnership to supply feedstock to the TA’ZIZ Industrial Chemicals Zone, one of three special industrial ecosystems under development by ADNOC and UAE’s ADQ that specifically aims to anchor a host of petrochemical projects by both domestic and outside investors.
Petrobras inks deal to shed LUBNOR refinery, related assets
Petróleo Brasileiro SA (Petrobras) has signed a contract to sell its 10,400-b/d Lubrificantes e Derivados de Petróleo do Nordeste (LUBNOR) refinery in Fortaleza, Ceará, Brazil.
As part of the deal signed on May 25, Grepar Participações Ltda.—jointly owned by Grecor Investimentos em Participações Societárias Ltda., Greca Distribuidora de Asfaltos Ltda. and Holding GV Participações SA—will acquire Petrobras’s ownership interest the LUBNOR refinery and associated logistics assets for an overall purchase price of $34 million, $3.4 million of which was paid as a guarantee at the contract signing, with $9.6 million to be paid upon closing of the transaction and the remaining $21 million in deferred payments, pending compliance with precedent conditions, including final approval by Brazilian regulators the Administrative Council for Economic Defense (CADE), Petrobras said in a release.
The total sale amount, however, currently excludes payment of contractual adjustments not due until closing, the operator said.
One of Brazil’s leading asphalt production plants and the country’s only refinery equipped to produce naphthenic lubricants, LUBNOR processes ultra-heavy Brazilian crude oil from Espírito Santo basin and the Ceará cluster, according to the company’s website.
Partners advance grassroots Nebraska renewable diesel plant
Heartwell Renewables LLC, a 50-50 joint venture of Cargill Inc. and the Love’s Family of Companies has let a contract to Worley Ltd. to deliver related works for development of a proposed greenfield renewables diesel plant to be built in Hastings, Neb.
As part of the late-May contract award, Worley will provide detailed and field engineering services the renewables-based plant that, once operable, will use a feedstock of vegetable oils and tallow—a rendered animal-fat coproduct following protein processing—to produce about 302 million l./year (80 million gal/year) of renewable diesel for use as a drop-in fuel in diesel-powered vehicles without requiring engine modifications, the service provider said in a release.
Worley, which will execute the project from its Houston offices with support from the firm’s global integrated delivery team in India, did not reveal a value of the contract.
Award of the engineering services contract follows the JV’s announcement of the proposed Heartwell Renewables project in April 2021. Under the partnership, Cargill will supply the plant’s tallow feedstock as well as other low-carbon feedstocks (e.g., distillers corn oil), while Musket Corp.—Love’s commodity trading and logistics arm—will transport and market the finished renewable diesel product to US retail pumps, according to Heartwell Renewables’ website and separate Apr. 20, 2021, releases from Love’s and Cargill.
Upon announcing the project—which, as of late-April 2021, was slated to begin construction “in the following weeks”—the partners said Heartwell Renewables was scheduled for startup in spring 2023.
TRANSPORTATION Quick Takes
Venture Global sanctions Plaquemines LNG with $13-billion financial close
Venture Global LNG Inc. made a final investment decision on its second project, the 20-million tonne/year (tpy) Plaquemines LNG plant in Louisiana following closing of the $13.2-billion project financing for the project’s initial phase (upsized to 13.33 million tpy from 10 million tpy) and the associated 42-in. Gator Express pipeline.
Proceeds of the debt and equity financing fully fund the balance of construction and commissioning of the liquefaction project’s initial phase, Venture Global said in a May 25 release.
The plant is the first in the US to reach financial close since Venture Global’s Calcasieu Pass plant in August 2019, the company said. Calcasieu loaded its first LNG cargo earlier this year.
Plaquemines LNG, under construction in Plaquemines Parish, La., has received necessary permits, including FERC authorization and non-FTA export authorization from the US Department of Energy. Twenty-year sales agreements for 80% of the full export capacity have been signed.
Phase one customers include PGNiG, Sinopec, CNOOC, Shell, and EDF. Phase two customers thus far are ExxonMobil, PETRONAS, and New Fortress Energy.
Enbridge advances Venice Extension natural gas pipeline
Enbridge Inc. is advancing its Venice Extension project and Gator Express meter project to deliver 1.5 bcfd of natural gas to Venture Global Inc.’s 20-million tonne/year Plaquemines LNG plant under development in Plaquemines Parish, La.
The project will involve installation of 3 miles of 36-in. OD pipeline on affiliate Texas Eastern Transmission Co.’s Line 40 in Pointe Coupee Parish, La., abandonment of 2.2 miles of existing Line 40 pipe, and construction of a new 31,900-hp compressor station and metering also in Pointe Coupee. Venice Extension will also abandon-in-place two existing, inactive 19,800-hp compressor units—one each at compressor stations in Iberville Parish and Lafourche Parish, La.—and install one new 31,900-hp unit at each of these stations.
Enbridge expects the Gator Express meter project to enter service in 2023 and Venice Extension in 2024, at an estimated combined cost of $400 million, underpinned by long-term take or pay contracts.
Tellurian gets initial Driftwood pipeline environmental clearance
Tellurian Inc.’s proposed 37-mile Line 200 and Line 300 natural gas pipelines received a positive draft environmental impact statement from the US Federal Energy Regulatory Commission (FERC), advancing the project towards construction. The two pipelines would supply Tellurian’s 27.6-million tonne/year Driftwood LNG plant, which the company expects will deliver first LNG in 2026.
FERC staff determined that the project would result in some “adverse environmental impacts” but that these would not be significant if recommended mitigation measures were implemented. The review did not draw conclusions regarding the potential climate impacts of the project.
Line 200 and Line 300 would be dual 42-in. OD pipelines originating near the town of Ragley in Beauregard Parish, La., and running southward at a combined maximum capacity of 5.7 bcfd to Driftwood LNG, near Carlyss in Calcasieu Parish, La. The project will also include the new 211,200-hp Indian Bayou compressor station in Beauregard Parish, La.
Tellurian began construction of Driftwood LNG earlier this year.
