OGJ Newsletter

Sept. 4, 2023

GENERAL INTEREST Quick Takes

Occidental to acquire direct air capture technology company for $1.1 billion

An Occidental Petroleum Corp. subsidiary has agreed to acquire all the outstanding equity of Carbon Engineering Ltd. for cash consideration of about $1.1 billion, to be paid in three annual payments, the company said Aug. 15.

The deal provides Occidental, through its 1PointFive subsidiary, “the opportunity to rapidly advance [direct air capture] DAC technology breakthroughs and accelerate deployment of DAC as a large-scale, cost effective, global carbon removal solution,” the operator said.

Carbon Engineering’s DAC-based climate solutions utilize standardized processes and proven industrial equipment, and the two companies have been working together on direct air capture deployment since 2019, Occidental said.

Technology that 1PointFive will utilize for its first DAC plant, Stratos, under construction in Ector County in Texas’ Permian basin, is one developed by Carbon Engineering, which absorbs CO2 from the air using potassium hydroxide (KOH) solution (OGJ Online, Aug. 25, 2022).

Stratos is expected to begin operations in mid-2025 and capture up to 500,000 tonnes/year (tpy) of CO2 when fully operational. The first stage of construction, which includes site preparation and road work, has begun.

In addition to acceleration of technology advancements and DAC cost reductions, Occidental president and chief executive officer Vicki Hollub said the partnership adds new revenue streams in the form of technology licensing and royalties and “enables Occidental to catalyze broader development partnerships for DAC deployment in the most capital efficient and valuable way.”

Upon closing, expected before yearend subject to Canadian and US reviews and approvals, Carbon Engineering would become a wholly owned subsidiary of Oxy Low Carbon Ventures.

Strike Energy to buy Talon Energy

Strike Energy Ltd. has agreed to acquire Talon Energy Ltd., subject to the satisfaction of various conditions, by way of a scheme of arrangement.

Strike, which has agreed to provide Talon with a $6 million (Aus.) interim convertible funding facility to fund Talon’s capital requirements through the process, said the combined company could generate an initial annualized cashflow of $82 million (Aus.) or more from Western Australia’s Walyering gas field alone.

Strike and Talon are joint venture partners in onshore North Perth basin permit EP447 and made positive final investment decision (FID) to proceed with commercial development of Walyering in 2022 (OGJ Online, Aug. 15, 2022).

The project includes an up to 33 terajoule/day gas and 250 b/d condensate production plant at Walyering gas field following the successful appraisal of the field via the Walyering 5 and 6 wells, which delineated a gross 54 petajoules of 2P reserves and gross 32 petajoules of 2C contingent resources plus 0.8 MMboe of associated condensates.

Overall, the Strike-Talon combine is expected to have an aggregate 1,022 petajoules of independently certified Perth basin conventional gas 2P reserves and 2C resources.

In parallel with the deal, Talon will explore options to spin-out its 33% interest in the Gurvantes XXXV Project in Mongolia to Talon shareholders (OGJ Online, Nov. 9, 2022).

The acquisition of Talon by Strike is not conditional on completion of the Mongolian spin-out, and there is no guarantee that the Mongolian spin-out will be completed or that Talon shareholders will ultimately receive any value in respect of the Mongolian assets.

On closing, Talon shareholders will receive 0.4828 new Strike shares for each Talon share held. As a result of the transaction, Talon shareholders will own about 11% of Strike Energy.

INPEX, TotalEnergies acquire permit for long-term supply of Ichthys LNG

INPEX Corp. and TotalEnergies agreed to acquire 100% interest in the AC-RL7 permit off the northern coast of Western Australia from PTTEP with the aim of increasing long-term supply to the Ichthys LNG plant, in which both companies hold interest.

AC-RL7 covers about 418 sq km in the Timor Sea in water depth of 120-240 m. It lies about 250 km northeast of the Ichthys gas-condensate field, which supplies natural gas to the INPEX-operated Ichthys LNG project.

The permit to be acquired includes Cash and Maple gas and condensate fields, discovered in 2002 and 1989 respectively, and subsequently appraised by several wells. Field development is expected to contribute to long-term supply of the Ichthys LNG plant, in which TotalEnergies holds 26% while INPEX and other shareholders hold the remaining 74%.

The Cash-Maple project, which lies in the Ashmore Cartier territory about 680 km west of Darwin and 700 km northeast of Broome, contains an estimated 3.5 tcf of resources, according to PTTEP.

INPEX, through a newly established group company, INPEX Cash Maple Pty Ltd., will acquire operatorship and 74% of the participating interest held by PTTEP Australasia (Ashmore Cartier) Pty Ltd. in the block, the companies said in separate releases Aug. 21. TotalEnergies Exploration Australia Pty Ltd. will acquire the remaining 26% interest, in line with its equity in Ichthys LNG.

Completion of the deal is conditional on regulatory approvals.

Exploration & Development Quick Takes

Ecopetrol finds oil, gas in Putumayo basin

Ecopetrol SA discovered hydrocarbons in the Alqamari-2 exploration well in Orito, Putumayo, Colombia.

The well reached a total depth of 9,287 ft (2.8 km) in the Putumayo basin, where gas and light oil (31 degrees API) were found in Sand “N” of the Villeta Group, with a flow of more than 1,800 b/d of oil, the company said mid-August.

The rate of associated gas produced by the well reaches up to 825,000 cfd. The water cut is less than 1%, the company said.

Alqamari-2 is operated by Ecopetrol with 100% interest.

The discovery lies close to producing fields and existing infrastructure, the company said, and should the company advance toward the development stage, the discovered resources “could quickly migrate to reserves,” contributing to Colombia’s hydrocarbons, the company said.

Equinor discovers oil near North Sea Fram field

Equinor Energy AS and partners have made a commercial oil and gas discovery in the Troll-Fram area in the northern North Sea. The licensees will consider tie-back to other discoveries and existing infrastructure in the area. Volumes are estimated at 9-35 MMboe, mostly oil.

One exploration well and a sidetrack (35/11-26 S and 35/11-26 A) were drilled in the Crino-Mulder prospect about 4km west of Fram field and 130 km northwest of Bergen.

The well was drilled by the Deepsea Stavanger drilling rig in water depth of 356 m.

The primary exploration target for well 35/11-26 S was to prove petroleum in sandstone in the Heather formation from the Late Jurassic and the Brent Group from the Middle Jurassic, as well as to investigate reservoir properties in the Cook formation from the Early Jurassic.

The secondary exploration target was to collect reservoir data in the Lista formation from the Palaeocene.

The well was drilled to a vertical depth of 3,409 m and a measured depth of 3,770 m subsea. It was terminated in the Amundsen formation from the Early Jurassic. It encountered a 7-m gas column and a 26-m oil column in the Heather formation, in sandstone layers totaling 33 m with moderate to good reservoir quality. The oil-water contact was not encountered.

The Brent Group and the Cook formation were water-filled with moderate to good reservoir quality.

The secondary exploration target in the Lista Formation was not encountered.

Well 35/11-26 A was drilled to a vertical depth of 3,000 m and a measured depth of 3,421 m subsea. It was terminated in the Heather formation from the Late Jurassic. The well encountered sandstones of moderate to good reservoir quality in the Heather formation; the reservoir was aquiferous.

Oil and gas were also proven in shallower intra-Heather sandstones in both wells.

Equinor is the operator of production license 90 with 45% interest. Partners are Vår Energi ASA (25%), INPEX Idemitsu Norge AS (15%), and Neptune Energy Norge AS (15%).

TotalEnergies lets contract for Girassol project offshore Angola

TotalEnergies EP Angola has let a contract to TechnipFMC to install flexible pipe and associated subsea structures for the Girassol Life Extension project (GIR LIFEX) in deepwater offshore Angola.

TechnipFMC was awarded the engineering, procurement, and supply of subsea flowlines and connectors for GIR LIFEX last year. The company also built the subsea tree systems for the original Girassol development. As part of the new project, the flexible pipes are expected to extend the life of the field by bypassing the rigid pipe bundles installed before production began in December 2001.

The service provider values the contract at $75-250 million.

TotalEnergies is operator of producing Block 17 and its four major hubs (Girassol, Dalia, Pazflor, and CLOV). The block lies about 150 km off the Angolan coast in water depths of 600-1,400 m. Girassol field, discovered by then-TotalFinaElf in unconsolidated Miocene and Oligocene sands in 1996, was the first Block 17 deepwater field to produce.

Drilling & Production Quick Takes

Shell delivers first gas from Timi field offshore Malaysia

Sarawak Shell Berhad achieved first gas at Timi field in Block SK318, about 252 km north-west of Bintulu, Sarawak, in 143 m of water.

Timi field has a new wellhead fixed platform, the deepest fixed platform to date in Malaysia, connected to the F23 production hub via an 80-km pipeline. The field can produce up to 50,000 bo/d of gas at peak production, the operator said in a release Aug. 28.

Both the topside and substructure were fabricated in Malaysia, designed to be unmanned and powered by a solar and wind hybrid power energy system. It is about 60% lighter in weight than a conventional tender-assisted drilling wellhead platform that relies on oil and gas for power and can produce up to 300 MMscfd using less than 5 kw of continuous power generation, Shell said.

Sarawak Shell Berhad is operator at the block with 75% interest. Partners are PETRONAS Carigali Sdn. Bhd. (15%) and Brunei Energy Exploration Sdn. Bhd. (10%).

Wintershall starts production from Dvalin gas field

Wintershall Dea has started production from Dvalin gas field in the Norwegian Sea, providing new gas volumes to the European market.

The field, in the Haltenbanken area some 260 km north of Kristiansund, has been shut-in since late 2020 after measurements of high levels of mercury in the well stream. Since then, mercury removal units have been installed at the onshore processing plants at Nyhamna and Tjeldbergodden in Norway.

Dvalin gas field was developed through a single subsea template with four production wells connected to the nearby Heidrun platform. It is also the tie in point for Wintershall-operated Dvalin North subsea gas development, which was approved by the Norwegian government in 2023 and is currently under development (OGJ Online, Jan. 10, 2023).

Dvalin field has an estimated lifetime until 2038 including Dvalin North field. Dvalin holds expected recoverable gross reserves of at 113 MMboe of which the majority will be gas. Wintershall Dea is operator of Dvalin field with 55% interest. Partners are Petoro (35%) and Sval Energi (10%).

Vår Energi increases production at Balder-Ringhorne

Vår Energi ASA increased production from equipment improvements and new drilling at Balder and Ringhorne fields 220 km from Stavanger in the Norwegian continental shelf.

Output was positively impacted by the restart of the riser at Ringhorne in May. This was temporarily shut in during the first quarter and will be permanently replaced in the third quarter during the planned Balder FPU turnaround.

A new well at Ringhorne was brought on stream during the quarter and production efficiency for Balder-Ringhorne improved to 83% from 80% in the previous 3 months.

The upgrade of the Jotun FPSO for the Balder X development project (a combination of the Balder Future project and Ringhorne IV project) is ongoing and refloat of the vessel out of dry-dock occurred in late June. This enabled completion of the heavy-lift installation of the turret, turntable, and gantry in July. Upgrade of the FPSO is on schedule and should sail-away in second-quarter 2024 with production start-up in third-quarter 2024.

Balder X drilling activities are progressing with seven out of 15 wells completed. The project’s subsea equipment has been delivered and the majority is already installed.

Vår Energi is operator of Balder X (90%) with Kistos Energy Norway AS (KENAS) holding the remaining 10% after acquiring Mime Petroleum AS.

PROCESSING Quick Takes

Indian Oil selects provider for new unit at Panipat refinery

Indian Oil Corp. Ltd. (IOC) has awarded a letter of acceptance (LOA) to Linde India Ltd. to set up a new unit as part of the operator’s project to expand crude oil processing capacity and petrochemical production at its 15-million tonne/year (tpy) integrated Panipat refining and chemical complex in Haryana, India, north of New Delhi.

Under terms of the LOA dated Aug. 22, Linde India has agreed to build and operate a new air separation unit (ASU) that will produce and deliver instrument air, plant air, and cryogenic nitrogen to support IOC’s Panipat refinery expansion (P-25) project, the service provider said in a regulatory filings to BSE Ltd. and the National Stock Exchange of India Ltd.

After completing construction and performance testing of the ASU, Linde India said it plans to enter additional agreements with IOC that will allow the service provider to operate and maintain the unit for a period of 20 years following the ASU’s first delivery of industrial gases to the refinery.

This latest preliminary agreement for work on the P-25 project follows IOC’s July award of a contract to thyssenkrupp AG’s thyssenkrupp Industrial Solutions (India) Private Ltd. (tkIS) for delivery of engineering, procurement, and construction (EPC) of a 60,000-tpy polybutadiene rubber (PBR) plant to be included as part of the expansion (OGJ Online, July 31, 2023).

Alongside supporting IOC’s ongoing program of establishing a more robust petrochemical presence, the P-25 project will increase crude processing capacity of the Panipat refinery by 10 million tpy to 25 million tpy.

Designed to improve operational flexibility of the refinery to help meet domestic energy demand, the P-25 project—which includes installation of a polypropylene unit—would also increase production of petrochemicals and value-added specialty products to elevate margins and derisk IOC’s companywide exposure to its conventional fuel business via addition of new units at the integrated olefins and aromatics complex (OGJ Online, Sept. 8, 2022).

Budgeted at an estimated cost of 329.46-billion rupees, the Panipat capacity expansion remains scheduled for commissioning by September 2024, the government of India said in June.

OMV Petrom wraps coke-drum replacement project at Petrobrazi refinery

Petrom SA, Bucharest, has installed new coke drums to ensure long-term upgrading capabilities of coking operations at its 4.5-million tpy Petrobrazi refinery in southeast Romania, near Ploiesti City.

Completed as of Aug. 23, the project involved installation of four coke drums to replace existing drum equipment at the refinery, the operator said.

Manufactured in Romania, the new 6-m wide, 30-m tall drums—each weighing nearly 200 tonnes—are designed to operate at full capacity under high-temperature conditions for at least the next 20 years to transform heavier hydrocarbon components into higher-value products at the site, OMV Petrom said.

Replacement of the coke drums also will improve efficiency and safety of operations at the Petrobrazi refinery to enable its ongoing provision of high-quality fuels to the Romanian and regional markets, according to Radu Ca˘pra˘u, OMV Petrom executive board member responsible for the operator’s downstream business.

Initiated in 2021 and executed during the refinery’s planned turnaround during second-quarter 2023, the coke-drum replacement project—which was completed at an investment of about €70 million ($76 million)—comes as part of OMV Petrom’s ongoing modernization of the Petrobrazi refinery to help meet regional demand for conventional and alternative transportation fuels, as well as reduce the site’s environmental impact in line with the company’s broader Strategy 2030 program to support a cleaner energy future in Romania (OGJ Online, Oct. 13, 2022).

Originally scheduled to last for 42 days, the Petrobrazi refinery’s 2023 turnaround was extended by 2 weeks following discovery of additionally required maintenance work during the initially planned 8-week turnaround period, OMV Petrom said in its second-quarter 2023 earnings report to investors.

Ongoing projects currently still under implementation at the refinery include installation of a new crude oil tank and a new aromatics unit, the company said.

TRANSPORTATION Quick Takes

Chevron to increase Wheatstone production rates

Chevron Australia plans to add capacity from the Wheatstone domestic gas plant near Onslow, Western Australia, following technical enhancements and plant modifications to increase production rates.

The official nameplate capacity of the Chevron-operated plant will increase to 215 terajoules/day from 205 terajoules/day, an increase of 5%, the company said in a release Aug. 23. 

Unspecified plant modifications and subsequent high-rate production trial undertaken over the past year confirmed the plant was able to maintain safe and reliable domestic gas production at increased rates across a range of temperature conditions and operating environments, said Mark Hatfield, Chevron Australia managing director. 

Further work will be undertaken over the coming months to test even higher domestic gas production rates, he continued. 

Wheatstone a joint venture between the Australian subsidiaries of Chevron (64.14%), Kuwait Foreign Petroleum Exploration Co. (KUFPEC) (13.4%), Woodside Energy Group Ltd. (13%), and Kyushu Electric Power Co. (1.46%), together with PE Wheatstone Pty Ltd., part-owned by JERA (8%).

Tivoli Midstream acquires NTX Gathering System from Phillips 66

Tivoli Midstream LLC, through subsidiary Tivoli Services LLC, closed a deal to acquire a crude oil pipeline system in Northern Texas (NTX) from affiliates of Phillips 66 Co. (PSX).

NTX consists of about 140 miles of crude oil gathering and transportation pipelines and storage capacity in the Barnett shale area of Northern Texas. The system, which extends through portions of Young, Archer, Clay, Jack, Palo Pinto, Wichita, and Stephens Counties, will be underpinned by a long-term transportation services agreement with Phillips 66, Tivoli said in a release Aug. 28.

In conjunction with the acquisition, Tivoli closed on an investment by Intrepid Investment Management LLC. Proceeds were used to fund the NTX acquisition and to provide growth capital.

Delfin advances FLNG vessels development with Wison contract

Delfin Midstream Inc., Houston, let a design and engineering contract to Wison Offshore & Marine to develop floating LNG (FLNG) vessels for application on Delfin’s Deepwater Port projects currently under construction in North America.

Delfin is accelerating development of the remaining FLNG vessel slots at the Delfin LNG project, a brownfield Deepwater Port off the coast of Louisiana requiring minimal additional infrastructure investment to support up to four FLNG vessels each capable of producing 3.5 million tonnes/year (tpy) of LNG and each connected to existing offshore pipelines.

Hartree Partners LP is conducting marketing operations to Chinese LNG buyers and Delfin is progressing development of additional Deepwater Port projects in North America in cooperation with its existing midstream and financial partners. Teaming up with Wison will allow Delfin to construct new FLNG vessels to support these projects and the export of US natural gas to worldwide markets, the company said in a release Aug. 23.

The company has submitted updated project-related information to the Maritime Administration and US Coast Guard for review and approval. It has secured commercial agreements for LNG sales and liquefaction services and is advancing towards a final investment decision (FID) on its first two FLNG vessels.

“Wison’s goal is to continue into a full FEED later this year such that FLNG vessel construction can start at their shipyard in mid-2024,” said Delfin’s chief financial officer Wouter Pastoor.