Oil giant Chevron Corp. has given the green-light on the initial $7.5 billion development of the Jack/St. Malo project, its first operated project located in the Lower Tertiary trend in the deepwater US Gulf of Mexico.
Several potentially large hydrocarbon reserves have been located by the industry in recent years, but terrain compared to that of the Grand Canyon coupled with extreme depths have held back production. Chevron, recently ranked No. 2 behind ExxonMobil in net income, spending, total revenue and assets in the OGJ150 (OGFJ, August 2010, p.56), made a giant move to unlock the potential of the Lower Tertiary just days after the deepwater moratorium was lifted.
George Kirkland, vice chairman of Chevron Corp., commented: "The Lower Tertiary is recognized as a huge resource with the potential for long life projects of up to 30 to 40 years and the opportunity to enhance recoveries through technology."
The Jack and St. Malo fields are located within 25 miles of each other roughly 280 miles south of New Orleans, Louisiana, in water depths of 7,000 feet. Initial development is expected to be comprised of three subsea centers tied back to a hub production facility with a capacity of 170,000 barrels of oil and 42.5 million cubic feet of natural gas per day with a startup date in 2014.
Gary Luquette, president, Chevron North America Exploration and Production Co. said the company will take what it has learned from its operating interest in the 2009 Buckskin discovery (55% owned and operated by Chevron) and its participating interest in the Perdido Regional Development and apply it to Jack/St. Malo.
In March, Royal Dutch Shell-operated Perdido became the first Lower Tertiary project to begin production. Chevron holds a 37.5% stake in the project.
The Jack and St. Malo fields are estimated to contain combined total recoverable resources in excess of 500 million oil-equivalent barrels. Seven exploration and appraisal wells have been drilled at these fields since 2003, including a record-setting well test in 2006 which was drilled to a total depth of 28,175 feet. Chevron has operating interests of 50% in the Jack field, 51% in the St. Malo field, and 50.67% in the host facility.
Chevron is one of the top leaseholders in the Gulf of Mexico, averaging net daily production of 149,000 barrels of crude oil, 484 million cubic feet of natural gas and 14,000 barrels of natural gas liquids during 2009. In the deepwater Gulf of Mexico specifically, the company averaged net daily production of 97,000 barrels of crude oil, 56 million cubic feet of natural gas and 6,000 barrels of natural gas liquids in 2009.
Shares of the company were up 1.2% at $84.99 Thursday morning after the announcement
— Mikaila Adams
Apache plans Balnaves development following appraisal wells, signs Wheatstone LNG deal with Chevron, Tokyo ElectricApache Corp. is moving forward operations in Western Australia after three successful appraisal wells and a recent LNG sales agreement from its Wheatstone project.
Development planning
In the development arena, the Houston-based company is working towards development planning of the Balnaves oil accumulation in the Mungaroo formation that lies in a separate reservoir beneath the large gas reservoirs of the Brunello gas field.
The company believes development plans by Apache Jumilar Pty Ltd. are in order following a successful series of gas exploration and appraisal wells in the Julimar-Brunello complex, including the Balnaves discoveries. The Balnaves-1 discovery, drilled in 2009 in License WA-356-P, encountered 64 feet of net oil pay in the B20 sand — a light, high-quality oil accumulation at about 10,600 to 10,700 feet below sea level. The Balnaves-2 was a sidetrack from the discovery.
The recent Balnaves-3 appraisal well test-flowed 9,076 barrels of oil and 13 million cubic feet of natural gas from a 16-foot perforated section. The Balnaves-4 was a sidetrack from Balnaves-3.
Thomas M. Maher, Apache's region vice president and managing director in Australia said estimates of gross recoverable oil "could be in the range of 14 million to 19 million barrels."
The Julimar and Brunello fields are large gas discoveries that will be developed to provide gas for the Wheatstone liquefied natural gas development operated by Chevron Corp. subsidiary Chevron Australia Pty Ltd.
LNG sales
Further, Apache Julimar Pty Ltd. signed an agreement with a Chevron Corp. subsidiary and Tokyo Electric Power Co. (TEPCO) regarding sales of liquefied natural gas (LNG) from the Wheatstone project.
Chevron and TEPCO announced in December 2009 a Heads of Agreement (HoA) to deliver 3.1 million tons per annum (mtpa) of LNG from Wheatstone for up to 20 years. The Apache and Kufpec subsidiaries will provide about 25% of the LNG.
Under a separate equity HoA also signed in December 2009, TEPCO intends to acquire equity interests in Chevron's Wheatstone field licenses and the Wheatstone natural gas processing facilities from which TEPCO intends to lift approximately 1 mtpa of LNG - its equity share of production.
"We are very pleased to sign this agreement, which provides a road map for integrating Apache and KUFPEC into Chevron's and TEPCO's LNG HoA and signifies the beginning of a long relationship between Apache and TEPCO," said Janine J. McArdle, Apache's senior vice president - gas monetization.
Apache Julimar Pty Ltd has a 65% interest in offshore license WA-356-P, which contains the Julimar and Brunello fields, and a 16.25% equity interest in the LNG facility.
KUFPEC Australia (Julimar) Pty Ltd. owns the remaining interest in the offshore license and an 8.75% interest in the LNG facility. The LNG facility's first phase will consist of two processing trains with a combined capacity of approximately 8.6 mtpa and a domestic gas plant. The onshore facilities will be located at Ashburton North near Onslow in Western Australia. A final investment decision on the first phase of the project is slated for the second half of 2011.
Total makes new gas, condensate discovery in Block B offshore BruneiTOTAL E&P Borneo and its partners, affiliates of French oil major Total, made a new gas and condensate discovery in Block B offshore Brunei.
Well ML-5, located in a water depth of 213 feet and around 31 miles from the coastline, was drilled roughly 5 miles to the south of the Maharaja Lela / Jamalulalam field in a new, deep fault panel. It discovered gas with condensate in High Pressure / High Temperature formations (HP/HT).
With a total vertical depth of 18,583 feet, the well is the deepest ever drilled in Brunei. Ten million cubic feet of gas and 220 barrels per day of condensate were produced during the test from a limited zone situated at a depth of 17,552 feet, marking the deepest successful test in South-East Asia.
ML-5 is the third positive well of an exploration campaign which started in 2007, targeting the deep, HP/HT horizons of the Maharaja Lela structure. The development of the new resources and production through the existing facilities is currently being studied.
Present in Brunei since 1986, Total operates the Maharaja Lela / Jamalulalam field, located in Block B with a 37.5% interest. Its average production of gas and condensate is over 28,000 boe/d in 2009. Following the Deed of Amendment signed on the offshore PSA block CA-1, Total, operator with a 54% interest, will resume soon its exploration operations on the block.
Flat or softer market conditions expected in the energy insurance market for the next yearA poll of delegates at Aon's 10th Middle East Energy Conference found that 41% expect premium prices in the energy insurance market to remain flat for the next 12 months. A further 37% expect prices to decline slightly.
The findings confirm a general consensus among energy insurance market experts that while there was a rapid price increase in the energy insurance market in response to the significant losses endured by the industry earlier in the year, the effect was short lived and previous trends have been reasserted. The same survey found that more than half the respondents (53%) thought that it would take a further US$5 billion+ energy loss to bring an end to the current market cycle.
After the economic challenges of the last two years, insurance market security rating is still a key issue for everyone involved in the sector, with 37% saying that they saw it as the most important factor in their choice of insurance partner. Technical capability (26%) was the second most important factor, while competitive pricing was also a significant concern (23%).
Latif Alrayes, chairman and CEO of Aon in the Middle East commented: "While the energy industry has weathered many storms over the past few years, barring any disastrous losses, the industry should be able expect flat or even declining insurance premiums over the next year. This should provide the sector with a level of relief and certainty around their operations and investments."
Aon Corp. is a global provider of risk management services, insurance and reinsurance brokerage, and human capital consulting.
BP to sell upstream Venezuela, Vietnam businesses to TNK-BPBP has reached agreement to sell its upstream businesses and associated interests in Venezuela and Vietnam to TNK-BP for a total of $1.8 billion. TNK-BP, Russia's third largest oil company, is owned equally by BP and the AAR Consortium (comprising Alfa Group, Access Industries and Renova).
The agreement includes BP's interests in the Petroperijá, Boquerón and PetroMonagas joint ventures in Venezuela and, in Vietnam, BP's 35% operating interest in the Lan Tay and Lan Do gas fields and associated pipeline and power generation interests.
The sales are part of BP's plan, announced in July 2010, to divest up to $30 billion in assets by the end of 2011 to meet its financial obligations arising from the Gulf of Mexico oil spill. Previously, the company agreed to sell assets in Egypt, Canada, and the US to Apache for $7 billion and to sell its Colombian exploration, production and transportation business to Talisman and Ecopetrol for $1.9 billion.
Bob Dudley, BP group chief executive, said: "These are robust businesses which offer both existing production and potential opportunities for future growth. We believe they will offer TNK-BP a solid foundation as it builds its business outside Russia."
Mikhail Fridman, CEO TNK-BP commented: "The acquisitions in Venezuela and Vietnam mark a milestone in TNK-BP's strategic expansion in the global energy market."
TNK-BP will pay BP a deposit of $1.0, with the balance due on completion of the sales. Subject to regulatory and other third party approvals, and other customary conditions, the parties anticipate completing both sales in the first half of 2011.
BP will retain an economic interest in these assets through its 50% in TNK-BP.
BP's interests included in the agreement for the Venezuelan sale are a 16.67% stake in the PetroMonagas SA heavy oil joint venture in the Orinoco basin, a 40% interest in the Petroperijá SA joint venture, and a 26.67% in the Boquerón SA joint venture, all of which are operated by Venezuela's state oil company, Petróleos de Venezuela SA. BP's total net production from Venezuela is some 25,000 barrels of oil equivalent (boe) a day.
BP's interests included in the agreement for the Vietnamese sale are a 35% interest in offshore block 06.1, currently operated by BP, approximately 230 miles offshore south-east Vietnam and containing the Lan Tay and Lan Do gas fields. In addition, BP has a 32.67% interest in the 230 miles Petrovietnam-operated Nam Con Son pipeline that transports gas onshore from the Lan Tay and Rong Doi fields, and a 33.3% interest in the joint venture that owns and operates the 739MW Phu My 3 power plant in Baria Vung Tau province. BP's current net entitlement to production from Vietnam is approximately 15,000 boe per day.
BP's net booked reserves associated with all these assets total some 270 million boe.
It is expected that a majority of BP's 140 employees in the Vietnam business and the 35 in Venezuela will transfer to TNK-BP.
Anadarko Petroleum hits 416 net feet natural gas pay offshore MozambiqueAnadarko Petroleum Corp. has encountered more than 416 net feet of natural gas pay in multiple high-quality sands from the Barquentine exploration well in the Offshore Area 1 of Mozambique's Rovuma Basin.
Specifically, the discovery well encountered more than 308 net feet of pay in two Oligocene sands age-equivalent to those encountered in Anadarko's Windjammer discovery. The well also found an additional 108 net feet of gas pay in the Paleocene sands, and the seismic data indicates this deeper pay section is contiguous and appears to be connected to the 75 net feet of pay encountered at the Windjammer discovery, located 2 miles to the southwest.
"With the Windjammer, and now Barquentine discoveries, we have identified a substantial natural gas resource and proven that two distinct trap styles are working in this region of the Rovuma Basin, which is very positive for our ongoing exploration program," said Bob Daniels, senior vice president, Worldwide Exploration.
The company is designing an appraisal program to delineate the areal extent of the accumulation.
The Barquentine exploration well was drilled to a total depth of approximately 16,880 feet, in water depths of approximately 5,200 feet. Once operations are complete at Barquentine, the partnership plans to mobilize the Belford Dolphin drillship approximately 16 miles to the south to drill the Lagosta exploration well, also located in the Offshore Area 1 of the Rovuma Basin.
Anadarko currently holds more than 2.6 million acres in the basin where it has identified more than 50 prospects and leads.
Anadarko is the operator with a 36.5% working interest. Co-owners in the area are Mitsui E&P Mozambique Area 1 Ltd. (20%), BPRL Ventures Mozambique BV (10%), Videocon Mozambique Rovuma 1 Ltd. (10%) and Cove Energy Mozambique Rovuma Offshore Ltd. (8.5%). Empresa Nacional de Hidrocarbonetos ep's 15% interest is carried through the exploration phase.
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