GENERAL INTEREST — Quick Takes
AGA urges responsible US gas resource development
The American Gas Association released a set of natural gas development principles outlining both the benefits of developing the resource in the US and the importance of doing so sustainably and responsibly. AGA also added a section to its web site including extensive development information about hydraulic fracturing and gas-bearing shale formations.
"Recent technological advancements associated with horizontal drilling and hydraulic fracturing have made it increasingly cost-effective to produce shale gas in new resource areas—a boon to our economy and consumers across the nation—and it's our responsibility as an industry to help ensure these new resources are developed in a safe and environmentally sound fashion," AGA Pres. Dave McCurdy said.
McCurdy said the principles address a foundation for sustainable and responsible development of all US gas resources and underscore the commitment of local distribution companies, which comprise most of AGA's membership, to their communities.
"We want what our customers want—the safe and environmentally sound extraction, transport, and delivery of affordable natural gas," he said, adding, "Developing this abundant and clean energy resource in America can and should be realized in a responsible manner."
AGA's announcement came as the Canadian American Business Council and the Consumer Energy Alliance held a conference about shale gas development and its economic implications for the Canadian and US economies. One of the speakers, Dow Chemical Co. Energy and Climate Change Policy Director Seth Roberts, cited an American Chemistry Council report, "Shale Gas and New Petrochemicals Investment: Benefits for the Economy, Jobs, and US Manufacturing."
The March report said a hypothetical, but realistic, 25% ethane supply increase for the petrochemical industry would generate 17,000 new knowledge-intensive, high-paying jobs for the chemical industry; 395,000 more jobs outside that industry; $4.4 billion in additional federal, state, and local tax revenue; a $32.8 billion increase in US chemical production; $16.2 billion of capital investments for new petrochemical and derivatives capacity; and $132.4 billion in US economic output.
Anadarko liable for share of gulf oil spill
Anadarko Petroleum Corp. is liable under US oil pollution laws for environmental damage caused by the April 2010 blowout of the Macondo well and the oil spill that followed in the Gulf of Mexico, according to a court filing by US government lawyers.
"Defendants are liable as a matter of law," federal lawyers argued after Anadarko E&P, which owned most of the company's 25% stake in the BP PLC-operated well, asked a federal judge in New Orleans to dismiss it from a Department of Justice lawsuit.
In April, Anadarko E&P asked to be dismissed from the lawsuit, saying that it had no interest in the lease at the time of the accident. Anadarko E&P told the court that its interest in the lease had been assigned to the parent company prior to the well's blowout.
However, government lawyers asked US District Judge Carl Barbier to deny Anadarko E&P's motion, asking instead for the court to find both the parent company and its affiliate liable under the Oil Pollution Act and the Clean Water Act.
"Liability under the OPA and the CWA is so straightforward here that the court—rather than dismissing the complaint—should enter summary judgment in favor of the United States," government lawyers said in their filing.
They said any owner of an offshore lease that causes oil pollution is liable for damages or fines resulting from the accident, noting that Anadarko held a 2.5% stake and the exploration unit a 22.5% stake in the lease when the Macondo well blew out and the oil spill began.
"These two sets of facts alone suffice to establish liability under both the CWA and OPA, because the elements of liability are few, liability is strict, and defenses are limited," the government filing said.
The federal lawyers said an assignment of an offshore lease or interest "is ineffective unless it is approved" by federal regulators.
They said the assignment to Anadarko E&P's parent was not approved by federal regulators until Apr. 28, 2010, which therefore made the exploration unit "a lessee on the day the discharge commenced and OPA liability accrued."
Government lawyers further argued that the court should not view Anadarko and Anadarko E&P unit as separate entities with different liabilities. They said that claims against either company "should not be dismissed on any ground until the relationships between the two Anadarko defendants is more fully explained."
An Anadarko spokesman said the company is reviewing the filing.
Last December, the US Department of Justice and Environmental Protection Agency jointly sued to recover damages from the Apr. 20 Macondo well accident, which claimed 11 lives, and subsequent oil spill into the gulf.
Eni, PetroSA sign MOU on cooperation
Eni SPA and state-owned Petroleum Oil & Gas Corp. of South Africa (PetroSA) have signed a memorandum of understanding for cooperation in upstream projects in South Africa and elsewhere.
According to a press release, "The parties will evaluate the eventual acquisition by either party of participating interests in upstream projects for the development of both conventional and unconventional hydrocarbons. Moreover, the parties will evaluate the opportunity to participate jointly in projects in other African countries."
The MOU also has a provision that would allow Eni to supply crude and oil products to South Africa.
The companies will evaluate the leasing of an oil storage facility at Saldanha on South Africa's west coast and study long-term LNG supply by Eni to PetroSA.
Exploration & Development — Quick Takes
ExxonMobil hits large Keathley discovery
ExxonMobil Corp. has a natural gas discovery and two oil discoveries in the deepwater Gulf of Mexico, one of which is among the largest gulf discoveries in the past decade.
The company estimated more than 700 million bbl of oil equivalent, more than 85% oil, to be recoverable on Keathley Canyon blocks 919 and 918 about 250 miles southwest of New Orleans and 90 miles north of Mexican waters.
The KC919-3 wildcat, ExxonMobil's first postmoratorium deepwater exploratory well in the gulf, confirmed the presence of a second oil accumulation in Keathley Canyon 919. The well cut more than 475 ft of net oil pay and a minor amount of gas in predominantly Pliocene high-quality sandstone reservoirs. The well, which is still drilling, is in 7,000 ft of water.
Drilling in early 2010 encountered oil and gas at Hadrian North in KC919 and extending into KC918, with more than 550 ft of net oil pay and a minor amount of gas in high-quality Pliocene and Upper Miocene sandstone reservoirs.
ExxonMobil encountered 200 ft of gas pay in Pliocene sandstone reservoirs at its Hadrian South prospect in Keathley Canyon 964 while drilling in 2009.
"We estimate a recoverable resource of more than 700 million boe combined in our Keathley Canyon blocks," said Steve Greenlee, president of ExxonMobil Exploration Co. "We plan to work with our joint venture partners and other lessees in the area to determine the best way to safely develop these resources as rapidly as possible," Greenlee said.
ExxonMobil is operator of KC918, KC919, KC963, and KC964 with 50% working interest. Eni Petroleum US LLC and Petrobras America Inc. each holds a 25% working interest in KC919, KC963, and KC964, and Petrobras America holds 50% in KC918. The blocks are near the southwestern part of the Walker Ridge planning area.
ExxonMobil has drilled 36 deepwater wells in the gulf the past decade in 4,000-8,700 ft of water.
"As one of the largest lease holders in the Gulf of Mexico with interests in over 370 leases, we are committed to the continued safe exploration and development of this important national resource," Greenlee said.
NIS to seek Tertiary gas in Hungary Mako Trough
Nafta Industrija Srbije jsc Novi Sad, 51% owned by Russia's Gazprom Neft, will drill three wells to Tertiary formations in Hungary's Mako Trough by the end of 2012 under an agreement with Falcon Oil & Gas Ltd., Denver.
NIS is to acquire an interest from Falcon's Hungary subsidiary TXM Oil & Gas Exploration Kft in Falcon's 955 sq km Mako production license from a depth of 2,300 m down to the base of the Algyo formation. TXM will retain all rights deeper than the base of the Algyo formation such as the Szolnok and Endrod formations.
The Algyo formation is a prospective, pervasive, hydrocarbon-bearing sandstone found predominantly between 2,500 and 3,500 m below surface. A letter of intent calls for NIS to pay TXM $1.5 million upon signing a participation agreement. Each well is to test an independent Algyo prospect.
NIS will earn a 50% interest in production from each prospect if the discovery well is tied in and placed on production at its expense. After drilling the three wells, NIS has the right to acquire a 50% interest in production from the entire agreement area by paying TXM a further $2.75 million. If NIS does not fulfill its drilling obligations, TXM will retain 100% interest in the agreement area.
If the NIS earn-in is completed, NIS and TXM will share future exploration, appraisal, and development costs and production in the agreement area in accordance with their participating interests held under a joint operating agreement. TXM will be the operator under the participation and joint operating agreements.
TXM said NIS is an active player in Serbia and has a growing presence in the region, including exploration in the same type of targets addressed in the agreement, to which North American technology will be applied in Hungary. NIS said the joint project with TXM will bring NIS closer to achieving the strategic goal of hiking reserves to 50 million tons and production of oil and gas to 5 million tons of oil equivalent in 2020.
NIS noted that Serbia has a huge potential of shale gas exploration and that cooperation with Falcon in Hungary will allow it to learn and prepare its geologists and engineers for further deep exploration in Serbia.
Logs at Tajikistan Afghan-Tajik well indicate net pay
Tethys Petroleum Ltd. said logs at its East Olimtoi-09 exploratory well in the Afghan-Tajik basin in southwestern Tajikistan confirm the probable presence of movable hydrocarbons at 3,341-3,500 m in the Eocene Alai interval.
Independent petrophysical interpretation indicates as much as 32 m of net hydrocarbon-bearing pay with porosities of up to 17% in the section, which produced live oil and gas to surface at high formation pressures during drilling (OGJ Online, May 27, 2011). No oil-water contact was interpreted. Alai is a secondary objective at the well. The potential closure covers more than 10 sq km in the East Olimtoi prospect alone.
The well is drilling ahead at 3,544 m in the Lower Eocene Suzak shale, which separates the Alai from the Paleocene Bukhara limestone. Depending on formation pressures it is planned to set 7-in. casing at the base of the Suzak shale prior to drilling through the Bukhara.
Tethys plans to production-test all zones of interest after the drilling is complete in 3-4 weeks.
Mapping shows three additional structures around the salt piercement that could be drilled following completion of the EOL09 well. There are other similar prospective structures in the area.
Drilling & Production — Quick TakesPetrobras christens Marlim Sul P-56 production unit
Petroleo Brasileiro SA (Petrobras) christened on June 3 the P-56 semisubmersible production unit at the BrasFELS Shipyard, in Angra dos Reis in Brazil.
The $1.5 billion unit will produce oil and associated gas from Marlim Sul Module 3 in the Campos basin, about 120 km off Brazil. Petrobras expects production from the field to start in August after P-56 undergoes testing and final adjustments.
Petrobras signed the construction agreement for the unit with Keppel FELS and Technip in October 2007.
P-56 will be anchored in 1,670 m of water and be connected to 10 producing and 11 injection wells. The unit can accommodate 70 risers. The designed production capacity of the unit is 100 million bo/d and 6 million cu m/day of gas.
The hull of P-56 was built entirely in Brazil and the topsides have a 72.9% Brazilian content. P-51, with an identical design to P-56, was the first unit built entirely in Brazil.
P-56 weighs a total 54,685 tons and is 125 m long, 110 m wide, and 137 m high. The unit will accommodate 200 people.
P-56 has a modular construction that includes the deck box and hull modules. Keppel FELS assembled the four process and utilities modules at the BrasFELS shipyard.
The process modules include:
• Two power generation modules (100 Mw) built by Rolls Royce in association with UTC Engenharia at UTC's site in Niteroi, Brazil.
• Two compression modules built by Nouvo Pignone (GE) at the Porto Novo Rio site in Rio de Janeiro.
The deck box was also built at BrasFELS, where the modules were integrated. Mating of the topsides and hull occurred in October 2010. A pipeline will transport produced oil from P-56 about 20 km to the P-38 floating production, storage, and offloading vessel and another line will take the gas 15 km to the P-51 semisubmersible production unit.
Statoil gets Kakuna stake, says drilling set
Drilling is set begin in the second half of 2011 on the deepwater Kakuna prospect in the Gulf of Mexico, according to Statoil, which has taken a farmin from operator Nexen Inc.
Timing depends on approval of permits by the US Bureau of Ocean Energy Management, Regulation, and Enforcement. Statoil said the bureau has approved the exploratory unit comprising all or parts of Green Canyon Blocks 416, 460, 504, 505, 548, and 549. Statoil, with a 27.5% interest, said a well on Block 504, about 180 miles southwest of New Orleans, would test the Miocene structure. Nexen holds the remaining 72.5% stake.
Last year Nexen disclosed plans to drill three deepwater exploratory wells in the gulf—on the Angle Fire and Cypress prospects in addition to Kakuna—and three appraisal wells (OGJ Online, Nov. 16, 2010).
Noble joins Senegal-Guinea-Bissau exploration
Noble Energy Inc. has joined a venture that is exploring the AGC Profond block off Senegal and Guinea-Bissau in West Africa.
The unexplored AGC Profond block, covering more than 2 million gross acres in as much as 11,500 ft of water, is in a designated cooperation area between the two countries. The venture has identified a number of prospects and leads on the acreage, and 45% of the block is covered by 3D seismic.
The first target to be drilled is the Kora prospect in the northern part of the block, nearly 65 miles offshore in 8,600 ft of water. Kora has a Cretaceous oil target with gross resources estimated at 450 million bbl of oil equivalent. Noble Energy estimates the chance of success at Kora at 20%.
The Maersk Deliverer rig is to spud in late June and drill to a total depth of 15,200 ft by the end of August.
Ophir AGC Profond Ld. will operate the Kora-1 exploratory well and, in the event of a discovery, Noble Energy will become the operator for appraisal and development.
PROCESSING — Quick TakesShell planning Appalachian ethylene plant
Shell has preliminary plans to build a large ethylene plant in the Appalachian region of the US based on ethane from natural gas produced from the Marcellus shale.
The company hasn't identified a site for the plant, which would include production of derivatives yet to be determined. "The leading option is polyethylene," Shell said in a news release. The news release treated the plans as indefinite and didn't report capacity. But it described the prospective ethane cracker as "world-scale."
Shell entered the Marcellus shale play last year with its acquisition of privately owned East Resources of Warrendale, Pa., for $4.7 billion (OGJ, June 7, 2010, Newsletter). Its leasehold in the play is now about 700,000 acres.
Shell's US ethylene capacities are 1.18 million tonnes/year at Deer Park, Tex., and 1.45 million tonnes/year at Norco, La.
Shell sees start-up of joint Qatar GTL project 'soon'
Royal Dutch Shell PLC expects oil product output to start in weeks at its $18-19 billion Pearl gas-to-liquids project, the world's largest GTL facility, jointly owned with Qatar Petroleum.
In March, Shell announced that it had started production from natural gas wells offshore, allowing the first sour gas to flow through a subsea pipeline into the giant GTL plant onshore (OGJ Online, Mar. 23, 2011).
Once fully operational, Pearl will produce 1.6 bcfd of gas from North field, which will be processed to generate 120,000 b/d of condensate and NGLs and 140,000 b/d of GTL products.
According to Shell, Qatar will lead the world in producing GTL kerosine starting in 2012, when the first commercial quantities from Pearl GTL are to be produced.
Pearl will produce about 1 million tonnes/year, "enough to power a typical commercial airliner for half a billion kilometers," the company said (OGJ Online, Jan. 11, 2010).
TRANSPORTATION — Quick TakesTotal to sell stake in Norway's Gassled joint venture
Total SA said it has agreed to sell its entire 6.4% stake in Gassled joint venture, the Norwegian Gas Transportation Network, and related entities to Silex Gas Norway AS, a unit of German insurer Allianz SE, for 4.64 billion kroner ($870 million).
"Ownership of Norwegian midstream gas transportation assets is no longer a core business, and so this sale constitutes part of the group's ongoing optimization of its portfolio," said Patrice de Vivies, Total senior vice-president, exploration and production, northern Europe.
"Total remains fully committed to its long term presence in the exploration and production of oil and gas in Norway," de Vivies added.
Gassled, a JV formed in 2003, owns the integrated gas transportation grid and processing facilities on the Norwegian Continental Shelf. Gassled transports gas from the producing fields to consumers on the European continent and in the UK.
Separately, Solveig Gas Norway AS agreed to buy a 24.1% direct and indirect stake in Gassled venture from Statoil for $3.25 billion (OGJ Online, June 6, 2011).
Australian CSG pipeline engineering awarded to KBR
The McConnell Dowell-CCC joint venture, on behalf of clients Queensland Curtis LNG (QCLNG) and Asia Pacific LNG, selected KBR to execute engineering design services for three coal-seam gas pipelines designed to carry CSG from fields in central Queensland to an export facility on Curtis Island.
KBR will execute engineering design services including pipeline design, process, civil and structural, mechanical, and electrical engineering, and instrument controls for the three CSG pipelines. For QCLNG, KBR will design a more than 580-km pipeline system from central Queensland to the coast, including a 42-in. OD CSG pipeline (374 km); a 42-in. OD CSG collection header pipeline (169 km); and six 12-24 in. OD collection laterals (5.4 km).
QGC Pty. Ltd. placed an order with ABB for pipeline automation equipment for this pipeline in April (OGJ Online, Apr. 11, 2011).
A second pipeline for QCLNG and a third pipeline for APLNG will both consist of a 42-in. OD high pressure transmission pipeline from the main line valve on the Queensland mainland, across the narrows to the Curtis Island delivery station. QCLNG and APLNG had earlier agreed to jointly contract to design, build, and deliver the two narrow pipelines.
Bahamian terminal awards tank contract
Bahamas Oil Refining Co. International Ltd. (Borco), Freeport, Bahamas, has awarded a $40 million storage tank contract to CB&I, Houston. The scope of work includes engineering, procurement, fabrication, and construction of 14 oil storage tanks to hold about 3.5 million bbl in Freeport, Grand Bahamas. Completion is set for second-quarter 2012.
Borco, according to parent company Buckeye Partners, is the largest storage terminal in the Caribbean, with 21.6 million bbl of capacity. The site can store, blend, and transship bunker fuel oil, crude, and various petroleum products from its position along the Northwest Providence Channel off the southern tip of Grand Bahama Island.
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