GENERAL INTEREST — Quick Takes
US Congress to pass pipeline safety reauthorization
The US Congress is poised to pass legislation reauthorizing the federal pipeline safety act by yearend 2011, predicted the Interstate Natural Gas Association of America's vice-president for legislative affairs.
"It's notable that this debate has been so bipartisan," Martin E. Edwards told reporters during a Sept. 12 briefing. "The issue appears to be one of the few in this Congress attracting a high degree of cooperation."
Edwards' observations came 4 days after the US House Transportation and Infrastructure Committee approved HR 2845, a pipeline safety bill that sponsors said would impose tougher penalties and improve operations. Edwards said that the next likely step will be for the House Energy and Commerce Committee to work on its own draft and seek a conference with the Transportation and Infrastructure Committee to formulate a final bill to send to the House floor.
That could press the Senate to clear the way for floor consideration there of its pipeline safety bill which cleared the Commerce Committee this summer and awaits unanimous consent, he continued.
Edwards noted Rep. Bill Shuster (R-Pa.), the Transportation and Infrastructure Committee's Railroads, Pipelines, and Hazardous Materials Subcommittee Chairman who sponsored HR 2845, expressed frustration that Congress was delegating so much authority to regulatory agencies without providing a basic framework.
"A lot of stakeholders are pushing to get this done," said Edwards. "It's Congress's opportunity to weigh in, instead of simply letting [the US Pipeline and Hazardous Materials Safety Administration] move forward. It always makes more sense for Congress to establish primary policies on performance expectations and timelines."
He wants Congress to address pipeline regulation in high-consequence areas in several ways. INGAA has committed to managing integrity management programs to 100% of US interstate gas systems by 2030, and would like to see it occur in a logical and organized manner that gets the most benefit for the effort, according to Edwards.
The association and its members hope to have IMPs in place in 70% of the high-consequence areas close to where people live by 2020, he said.
BLM plans new guidelines for categorical exclusions
The US Bureau of Land Management plans to start a process to establish new guidelines for using categorical exclusions that will include an extensive public comment period, BLM Director Mike Pool told a US House subcommittee on Sept. 9.
Pool's announcement came during a hearing of the Natural Resources Committee's Energy and Minerals Subcommittee on US Department of the Interior interpretation of onshore CXs established under Section 390 of the 2005 Energy Policy Act.
Nancy D. Freudenthal, chief judge for US District Court for Wyoming, in an Aug. 12 decision overturned CX instructions BLM and the US Forest Services issued to their field offices in late May and early June under US Sec. of the Interior Ken Salazar's direction.
"Her decision vacated those instructions. They will not be re-proposed," Pool said. He did not indicate when BLM would publish a notice of possible rule-making.
His announcement came as two Democrats on the committee, Ranking Minority Member Edward J. Markey (Mass.) and Rush D. Holt (NJ), the subcommittee's ranking minority member, asked the US Department of Justice to appeal Freudenthal's decision.
Other witnesses at the hearing testified that uncertainty about BLM's approach to CXs has reduced production, discouraged onshore oil and gas development, and stymied government revenue.
European Commission seeks common energy policy
The European Commission has launched a drive to prevent individual member states of the European Union from negotiating their own individual energy agreements.
"It is perfectly clear the success of any energy policy is dependent on a successful common external energy policy on behalf of the EU and its member states," said Energy Commissioner Guenther Oettinger.
Oettinger's proposes the EU's 27 member states share information on energy agreements they make with non-EU countries. He said better information sharing on existing and planned bilateral energy contracts is needed to improve energy security and ensure new agreements follow European law.
A notification requirement already exists for gas agreements, but the new information-sharing mechanism would extend the requirement to other energy sources, including renewables.
"This means the commission will be aware before negotiations start and how negotiations are going," said Oettinger. "If we speak with one voice, I think we've got a completely different weight."
Oettinger's plan essentially envisions the EC acquiring the right only to monitor negotiations and scrutinize draft agreements.
But member state diplomats still expressed doubts over the plan, saying that it posed "problems" for member states.
Despite such criticism, Oettinger said he was "optimistic" of obtaining the necessary support of EU energy ministers, who are scheduled to consider his proposal in late November.
Exploration & Development — Quick Takes
Falklands Sea Lion oil production start seen in 2016
Rockhopper Exploration PLC said it will invest about $2 billion to start oil production from the North Falkland basin in early 2016.
The company said its Sea Lion discovery in PL032 could be producing 120,000 b/d by 2018. The company has conceived a development plan on the basis of producing a 350 million bbl resource using a leased floating production, storage, and offloading vessel.
Rockhopper expects to complete concept engineering studies in first-quarter 2012 and shortly thereafter to begin front-end engineering design. FEED is expected to be completed and submitted to the Falkland Islands government in first-quarter 2013, by which time the company would expect to have awarded the contracts to the FPSO provider and subsea contractor.
Accounting for all outstanding payments for well 14/10-6, the previous well drilled, the company estimates that it will have $170 million in cash. It reckons that it is therefore fully funded to complete 14/10-7, the current well, and the remaining two committed drilling slots that it has with the Ocean Guardian. It is considering its position as to whether it will take up any additional options with the rig.
The company said the 14/10-7 well, 3.3 km northwest of the 14/10-2 discovery well, was successful. Total depth is 2,696 m. The well derisked areas of lower amplitudes in the main complex, but further work is needed to determine the extent of the main complex SL20 lobe north of the well.
Rockhopper has a 100% interest in the PL023, PL024, PL032, and PL033 production licenses that total 3,800 sq km. It has also farmed into a 7.5% working interest in PL003 and PL004 operated by Desire Petroleum.
Testing of the Sea Lion discovery in September 2010 and June 2011 represented the first oil to flow to surface in Falkland Islands waters (OGJ Online, May 19, 2010).
Rockhopper hired two seismic vessels to shoot a 3D seismic survey over parts of PL024, PL032, and PL033 not previously defined by 3D and over adjacent areas. Data over the southern parts of PL032 and PL033 has been fast-track processed, and an initial interpretation has been completed. The rest of the new 3D data is expected to be available for interpretation by yearend.
Falkland fields to yield waxy crude, gas-condensate
The subsurface and well characteristics of the Sea Lion main complex, including the 450-m water depth and remote location 200 km north of the Falkland Islands, lend themselves to an FPSO development concept with subsea wells, said Rockhopper Exploration PLC.
The company noted that it has several more exploratory wells to drill in the North Falkland basin. It estimated that it will have spent about $2.5 billion exploring the area by the time it starts oil production from Sea Lion in 2016. Ultimate recovery is estimated at 350 million bbl of oil.
The Sea Lion main complex covers 68 sq km with little faulting. Large, continuous sand layers vary in thickness from 25 to 90 m with 21% porosity and 200 md permeability. The reservoir is undersaturated at 100 bar pressure with a low gas-oil ratio of 280 at about 2,400 m true vertical depth subsea.
The complex has a water leg that provides ease of application of pressure support through water injection. Flow rates of 9,000 b/d are achievable from vertical wells in thicker sections.
The company has the ability to drill the reservoir sections with horizontal wells or wells deviated 70-85° from vertical.
The as yet unsubmitted development plan calls for 24 production wells on four subsea manifolds producing a combined 108,000-120,000 b/d of oil. Water would be injected at 135,000-150,000 b/d through 12 wells and produced at 120,000 b/d and gas injected at 25-30 MMscfd.
Electric submersible pumps would be used to lift the waxy crude from the normally pressured reservoir.
Sea Lion crude is 29.2° gravity, 0.21% sulfur, and has a pour point of 30° C. Wax content is around 20% with a low total acid number of 0.25%. Rockhopper believes Sea Lion crude to be attractive to refiners in several locations and lists typical time to market by tanker of 20 days to the US Gulf Coast, 25 days to Northwest Europe, and 35 days to the Far East.
The oil would likely sell in a range of 10% discount to a 5% premium to Brent Blend, Rockhopper said. The company estimates 1.086 billion bbl of oil in place in the Sea Lion main fan and lists a total expenditure through June 30 of 26¢/bbl.
Rockhopper has also assessed potential development of the Shell 14/5-1 Johnson gas-condensate discovery in 500 m of water with recovery potential of 3 to 30 tcf of gas, although it used 5-10 tcf in scoping studies. The studied scenarios include floating and onshore liquefied natural gas. Condensate volumes range from 125 million to 1 billion bbl.
Well capacities would range to 50-60 MMscfd and average 20 MMscfd over a 20-year field life. The onshore scenario includes a 30-in. gas pipeline.
Total analyzing Montelimar subsurface shale data
Total SA has submitted a report required by French authorities concerning the work program for the large Montelimar shale gas exploration license in the Languedoc Roussillon area of southeastern France.
Total said French authorities required that the company submit the report to maintain the right to explore the acreage, awarded in March 2010 for 5 years (OGJ Online, Jan. 31, 2011). The company said its work program "does not envisage the use of the hydraulic fracturing technique."
Total said it is completing the preliminary study phase, begun in 2010 under the original program. The company is analyzing subsurface data and is conducting no field operations.
If results are encouraging, the next phase involves core drilling to collect samples. The company will analyze any oil or gas deposit encountered, conventional or unconventional, but will conduct no production tests.
If Total confirmed a deposit of significance, it would consider a third and final exploratory phase would to evaluate the reservoir's production capacity. Production testing techniques would be in line with the properties of the reservoir(s) identified and the techniques available at that time and permitted under the prevailing laws, the company said.
Drilling & Production — Quick Takes
Indonesia's producers surpass government output targets
Indonesia's upstream oil and gas regulator BPMigas said 14 of the 56 production-sharing contract holders operating in the country have exceeded their government targets for natural gas production.
ExxonMobil Corp. topped the list of producers with production of 417 MMscfd, 89.18 MMscfd higher than its target.
Chevron Indonesia Co. came in second with 141 MMscfd, surpassing its production target of 87 MMscfd.
Premier Oil Natuna Sea BV followed with production of 145 MMscfd, 18 MMscfd higher than its target.
Santos (Madura Offshore) Pty. Ltd. produced 119 MMscfd, 16.87 MMscfd higher than its target.
Pertamina Hulu Energi-West Madura Offshore produced 157 MMscfd compared with its target of 149 MMscfd.
Other companies producing above their targets include: Energy Equity EPIC (Sengkang) Pty. Ltd.; Kalila (Bentu) Operator Pty. Ltd.; Triangle (Pase); JOB P-PetroChina East Java; JOB P-Costa Int. Group Ltd, PHE–ONWJ; Medco E&P Ind. (S&C Sumatra); Kangean Energy Ind. Ltd.; and PetroChina Int. (Bermuda) Ltd.
Indonesia's gas production stands at 8,460 MMscfd, about 700 MMscfd higher than the target of 7,769 MMscfd.
Pemex leaves 2011 output target unchanged
Mexico's state-owned Petroleos Mexicanos, which announced a boost in oil output for August, will keep its 2011 crude oil production target of 2.6 million b/d unchanged at yearend.
Pemex said its production for the month of August rose by 22,000 b/d over July, bringing the firm's average production to 2.55 million b/d for the first 8 months of 2011.
The increase, Pemex said, was "in line with the production target set at the start of 2011." But it lagged the 2.559 million b/d produced in August 2010.
This year's increased output is considerably lower than in 2004 when Mexico produced 3.38 million b/d. The drop off since 2004 is attributed to falling production at offshore Cantarell.
However, Pemex hopes boost oil output this year to 2009 levels by increasing production at other fields, especially at Ku-Maloob-Zaap which it said produced an average of 839,200 b/d in 2010.
Pemex also underlined progress made at the firm's Chicontepec onshore development in the state of Veracruz, which has seen a 39% increase in production in 2011 over 2010.
The state oil company said output at Chicontepec rose to 58,000 b/d at end-August from 44,000 b/d at the beginning of the year, attributing the increased production to improved technology and better operational practices.
Statoil selects concept for heavy oil development
Statoil selected a steel jacket production, drilling, and quarters platform with a floating storage unit for developing Mariner heavy oil field on Block 9/11a offshore the UK.
The company expects to make a final investment decision in late 2012 and produce first oil in late 2016.
Mariner heavy oil requires pioneering technology, Statoil said. It explained that because of the expected low well flow rates and early water breakthrough, the development will need many wells, artificial lift, and a process designed to handle large liquid rates and oil-water emulsions.
Because of the limited number of well slots on the platform, Statoil plans to use multibranch wells, sidetracks, and reused slots to reach 145 production and injection targets.
The field, discovered 30 years ago, had previously been the subject of several development studies by various operators.
The company also has slated the development of Bressay heavy oil field 1 year after Mariner to ensure transfer of the learning and synergies from the Mariner project, Statoil said. Bressay lies in UK Blocks 3/27b, 3/28 a and b, and 9/2a and 3a.
Statoil expects to invest £6 billion in developing Mariner and Bressay.
Bressay and Mariner fields contain 11-14° gravity oil with a 64-550 cp viscosity.
Statoil has extensive heavy oil experience, including the development of Grane field off Norway and Peregrino field off Brazil.
PROCESSING — Quick Takes
Sasol announces study of first US GTL plant
South African energy and chemicals group Sasol has chosen southwestern Louisiana for the site for its planned gas-to-liquids plant, the company announced today. The project is to be the first in the US to produce GTL transportation fuels and other products.
Over 18 months, Sasol will undertake a feasibility study to evaluate the viability of a GTL venture in Calcasieu Parish. The study will consider a 2-million tons/year plant or a 4-million-tpy plant.
Calcasieu Parish encompasses several natural gas and liquids pipelines to move feed gas into a GTL plant and to move produced liquids to petrochemical plants or refineries west in Southeast Texas or east near New Orleans.
This prospect for a GTL plant in North America follows a steady drumbeat of industry speculation for nearly a year, driven by continued projections of far more natural gas production from shale developments that the region can consume. The last year has also seen several proposals to install gas liquefaction at US LNG terminals and at least one grassroots LNG plant on the West Coast of Canada.
In a similar "first-of-a-kind" announcement in December 2010, Sasol announced plans for the world's first ethylene tetramerization unit, also to be built in Calcasieu Parish.
UOP, Foster Wheeler units share refinery contract
Foster Wheeler AG's Global Engineering and Construction Group, through an agreement with Honeywell's UOP, recently received a contract from Oman Refineries and Petrochemicals Co. to provide basic engineering design for a solvent deasphalting unit at the Sohar refinery in Oman.
The SDA unit is a major part of the Sohar refinery expansion project, which will increase the refinery's production of such petroleum products as LPG, naphtha, jet A-1 fuel, gasoline, diesel, and propylene. The unit will be designed to process 2.5 million tonnes/year of vacuum residue of Oman Export Blend crude oil to produce deasphalted oil and asphalt for road bitumen production.
Midstream operator hikes NGL takeaway
Eagle Rock Energy Partners LP, Houston, has amended its long-term NGL marketing agreement with Oneok Hydrocarbon LP to increase Oneok's volume takeaway commitment from processing plants in the Texas Panhandle.
The amendment increases Eagle Rock's NGL transportation and fractionation capacity by about 58%, said the announcement, to occur in phases that coincide with expansion of its Phoenix-Arrington Ranch plant and installation of its Woodall plant, both in Hemphill County, and serving the Granite Wash play in Hemphill and Wheeler counties.
OGJ data shows the Phoenix-Arrington plant with 40 MMcfd of inlet capacity at yearend 2010 (OGJ, June 6, 2011, p. 88). The new $67-million Woodall plant will have an initial inlet capacity of 60 MMcfd (OGJ Online, Aug. 1, 2011). Oneok Hydrocarbon is a unit of Oneok Energy, Tulsa.
Joseph A. Mills, Eagle Rock's chairman and CEO, said that upon installation of the Woodall plant, expected to be completed in first-quarter 2012, Eagle Rock will have processing capacity of about 190 MMcfd serving the Granite Wash.
TRANSPORTATION — Quick Takes
Enbridge to twin Athabasca oil pipeline
Enbridge Inc. will build a second pipeline beside the existing southern section of its Athabasca crude oil pipeline from Kirby Lake, Alta. to the Hardisty, Alta., hub. Enbridge estimates the cost at $1.2 billion, bringing total planned expansion or additions to its Regional Oil Sands System to $3.6 billion during 2011-15.
The twin line will add about 450,000 b/d of capacity between these points, with low-cost expansion potential to 800,000 b/d, according to Enbridge. Enbridge expect initial shipments by early 2015 and full initial capacity to be available by 2016.
The new line will use roughly 345 km of 36-in. OD pipeline largely within the existing Athabasca Pipeline right-of-way.
Enbridge described the new line as addressing the need for additional capacity to serve Kirby area oil sands growth, beyond already announced plans to expand the existing 30-in. OD pipeline to its maximum 570,000 b/d capacity.
Transferring existing Kirby area volumes to the new 36-in. line from the existing 30-in. line will also free up the latter to accommodate additional long-haul volumes from the Cheecham or Athabasca terminals further upstream on the Athabasca System, Enbridge said.
Enbridge agreed in September 2010 to provide pipeline and terminaling services through Cheecham to the Husky Energy-operated Sunrise Oil Sands Project (OGJ Online, Sept. 10, 2010). Sunrise Phase 1 construction is scheduled for 2010-14 (OGJ Online, Feb. 7, 2011), while Phase 2 is in pre-engineering and cost review. Husky expects Phase 1 to produce 60,000 b/d and has regulatory approvals in place for 200,000 b/d total production.
Nord Stream natural gas pipeline begins line fill
Nord Stream gas pipeline has begun line fill of its 27.5 billion cu m/year Line 1. Fill will continue for about 4 weeks, with commercial operations slated to start in October.
Construction of the 1,200-km line, extending through the Baltic Sea from Vyborg, Russia, to Greifswald, Germany, began Apr. 9, 2010. Russia's Gazprom expects Line 2, a parallel line of the same capacity, to follow in 2012. Saipem SPA's Castoro 6 and Castoro 10 as well as Allseas Group SA's Solitaire conducted pipe lay for Nord Stream.
Last month Nord Stream completed connection to the newly built 470-km OPAL gas line, which will move Nord Stream gas across Europe as far as the Czech Republic. The last welding seam connecting the first line of Nord Stream and OPAL occurred on the grounds of the gas transfer station in Lubmin near Greifswald, where the Nord Stream makes German landfall.
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