GENERAL INTERESTQuick Takes
US House Dems plan hearings on climate early in 2019
Responding to what they consider years of Republican indifference, the top Democrats on three key US House of Representatives committees said they will hold 2 days of hearings on climate change and its consequences early in 2019.
“Our rapidly changing climate, and the Trump administration’s efforts to take us in the wrong direction, seriously jeopardize our future,” Reps. Frank Pallone Jr. (NJ), Raul M. Grijalva (Ariz.), and Eddie Bernice Johnson (Tex.) jointly announced.
The three lawmakers now are ranking minority members, respectively, of the Energy and Commerce Committee, Natural Resources Committee, and Science, Space, and Technology Committee. They are in line to become chairs of those committees once Democrats assume majority control of the House in January.
“We plan to hit the ground immediately with a series of hearings early in the next Congress on how best to combat this growing global crisis,” they said. “Our committees plan to work closely together to aggressively assess the public health, economic, and environmental impacts of climate change and to explore the best solutions to combat this challenge.”
They indicated that hearings will examine threats raised in recent reports from the National Academies of Science, Engineering, and Medicine; the World Health Organization; and the United Nations Intergovernmental Panel on Climate Change.
The three committees also will explore how other countries and state and local governments are addressing climate change at a time when the Trump administration has pulled out of the 2015 Paris Agreement and rolled back the Clean Power Plan.
Trump to nominate acting EPA chief as administrator
US President Donald Trump said he intends to nominate acting US Environmental Protection Agency Administrator Andrew R. Wheeler as the agency’s administrator. The announcement came during a Nov. 16 Medal of Freedom ceremony at the White House attended by Wheeler and other administration officials.
Wheeler has been the agency’s acting administrator since July 5 when Trump named him to the position after then-EPA Administrator E. Scott Pruitt resigned. Wheeler, who was the agency’s deputy administrator at the time, must be confirmed by the US Senate before he takes over as administrator.
He previously was a special assistant in EPA’s Pollution Prevention and Toxics office during George H.W. Bush’s presidency. Wheeler also was co-chair of the Energy and Natural Resources team at the Faegre Baker Daniels law firm, which he joined as counsel in 2009.
Cimarex to buy Resolute Energy for $1.6 billion
Cimarex Energy Co., Denver, agreed to acquire Resolute Energy Corp. in a cash-stock transaction worth a total of $1.6 billion, including $710 million of Resolute’s long-term debt.
Thomas E. Jorden, Cimarex chairman, president, and chief executive officer, said the acquisition fits the company’s existing Reeves County, Tex., position in the Permian basin.
Cimarex expects the combined companies will generate free cash flow in 2020. The acquisition will increase Cimarex’s Delaware basin assets by 21,100 acres.
Upon closing, Cimarex shareholders will own 94.4% of the combined company with Resolute shareholders owning the rest.
The transaction is expected to be completed early next year.
Aethon III to buy QEP’s NW Louisiana gas assets
Aethon III, a unit of Dallas private investment firm Aethon Energy Management LLC, agreed to buy Haynesville-Cotton Valley natural gas assets from QEP Resources Inc. of Denver.
QEP Pres. and Chief Executive Officer Chuck Stanley said the pending $735-million sale is “an important next step in our process of becoming a Permian pure-play company.”
Proceeds will finance development of QEP’s core Permian assets and reduce debt. The transaction includes producing properties, undeveloped acreage, and associated gas gathering and treating systems.
Aethon III agreed to assume all firm gas transportation agreements associated with these assets.
The effective date of the transaction is July 1, with closing expected in January 2019. The transaction is subject to closing conditions, including regulatory approval.
Equitrans Midstream launches as standalone company
EQT Corp., Pittsburgh, completed the spin-off of Equitrans Midstream Corp., a company formed to hold EQT’s midstream business in the context of the separation of EQT’s upstream and midstream businesses, all in the Appalachian basin (OGJ Online, Feb. 21, 2018). The separation took effect on Nov. 12 through a pro rata distribution of 80.1% of the outstanding common stock of Equitrans. EQT retained 19.9% of Equitrans’ outstanding common stock.
“We are laser-focused on the execution of our inflight projects, including the Mountain Valley Pipeline, which are expected to drive more than 50% growth in [earnings] over the next 3 years,” said Equitrans Midstream COO Diana Charletta.
At the deal’s close, Robert J. McNally became president and chief executive officer of EQT Corp. (OGJ Online, Aug. 9, 2018).
Brazos Midstream, Williams form Permian basin JV
Brazos Midstream, with an 85% interest, will operate a newly formed joint venture in the Delaware basin with Williams Cos. Inc. Under terms of the agreement, Williams will contribute its existing Delaware basin assets to the partnership in exchange for a 15% minority position.
The pro-forma combine assets include 725 miles of gas gathering pipelines, 260 MMcfd of natural gas processing, 75 miles of crude oil gathering pipelines, and 75,000 bbl of oil storage across Reeves, Loving, Ward, Winkler, Pecos, and Culberson counties in Texas. In addition, Brazos is currently constructing its 200 MMcfd Comanche III gas processing plant to be fully operational by first-quarter 2019, bringing the partnership’s total operated processing capacity in the Delaware basin to 460 MMcfd of gas (OGJ Online, Jan. 3, 2018).
The JV will be supported by more than 500,000 acres of long-term dedications now under full-field horizontal development from major and independent oil and gas producers.
Exploration & DevelopmentQuick Takes
UK licensing round draws 36 applications
Operators submitted 36 applications for 164 frontier-area offshore blocks in the UK’s 31st Licensing Round, the Oil and Gas Authority reported (OGJ Online, July 10, 2018).
Blocks on offer cover more than 370,000 sq km in the Atlantic Margin, East Shetland Platform, Mid North Sea High, and English Channel. The authority plans to offer licenses as early as possible in the second quarter of 2019.
It also plans to launch the 31st Supplementary Round in the Greater Buchan Area of the Outer Moray Firth in the first quarter of 2019 (OGJ Online, Oct. 23, 2018).
Santos, Shell JV to explore Queensland permit
Santos Ltd., Adelaide, in joint venture with Shell Australia, Melbourne, has been appointed preferred tenderer to explore a new permit in southeast Queensland’s Surat and Bowen basins.
The permit, PLR201718-2-5, covers 400 sq km and lies 19 km east of Surat. It was released by the Queensland government specifically to boost local gas supply on Australia’s east coast.
The acreage is immediately south of the major Wallumbilla hub enabling the joint venture to take advantage of existing infrastructure in the event of a discovery. This will lower development costs and accelerate delivery to the domestic gas market.
Santos, which will be operator in the 50-50 JV with Shell, says exploration in the new permit will target deep sandstone reservoirs in the Bowen basin that underlie the Surat basin sediments.
Santos is no stranger to the region and has reduced connected well costs in Queensland by 84% since 2015. The company is on track to supply about 70 petajoules of gas to Australia’s east coast this year, equating to about 13% of expected demand.
ADNOC awards Eni 25% of Ghasha concession
Abu Dhabi National Oil Co. and the government of Abu Dhabi have awarded Eni a 25% stake in the Ghasha concession, covering development of offshore Hail, Ghasha, and Dalma sour gas fields (OGJ Online, Nov. 5, 2018).
The Arab basin fields are expected to produce more than 1.5 bcfd of gas and 120,000 b/d of oil and condensate when on stream in the middle of the next decade.
The concession term is 40 years.
ADNOC is negotiating with other potential partners for the other 15% of the Ghasha concession available to international oil and gas companies.
It said the project will use digital technologies to provide remote access to key activities on natural and artificial islands, platforms, and wellhead towers. Remote facilities will be operated from a control center in Al Manayif.
Novatek reports gas-condensate discovery
Novatek-Yurkharovneftegas discovered natural gas in the Nyakhartinskiy license area of Russia’s Yamalo-Nenets Autonomous Area. The PO-1 exploration well flowed more than 300,000 cu m/day of natural gas and condensate from Lower Cretaceous sediments, according to Novatek, of which the operator is a wholly owned subsidiary.
Well tests continue, Novatek said. Nyakhartinskoye field is near the company’s Yurkharovskoye field.
Cadogan’s shallow Ukraine well noncommercial
Cadogan Petroleum PLC said its shallow Vovche-2 well on the Bitlyanska license in Ukraine is noncommercial (OGJ Online, Sept. 27, 2018).
During tests, the well flowed oil with water at noncommercial rates from one interval and limited amounts of an oil and water emulsion from another interval. A third interval was dry.
TransGlobe to develop oil strike in Egypt
TransGlobe Energy Corp., Calgary, plans to develop an oil discovery made by its South Ghazalat (SGZ) 6X exploration well in Egypt’s Western Desert (OGJ Online, Oct. 24, 2018).
During tests, the well flowed at a combined rate of 3,840 b/d of light oil from Late Cretaceous Upper and Lower Bahariya intervals.
A 42-ft perforated interval in Lower Bahariya flowed 2,437 b/d of 38° gravity oil, 21 b/d of water, and 1.4 MMcfd of natural gas on a 40/64-in. choke. The zone produced 918 bbl of oil and 7 bbl of water during the 10-hr test.
A 23-ft perforated interval in Upper Bahariya flowed 1,403 b/d of 35° gravity oil, 210 b/d of water, and 1 MMcfd of gas on a 64/64-in. choke. Total production during an 8-hr test was 456 bbl of oil and 65 bbl of water. The company also used nitrogen to lift a small amount of formation water to surface from 8 ft of perforations in Middle Bahariya.
TransGlobe said it will begin development planning and evaluate additional exploration and appraisal drilling “to accelerate potential early development options.”
Drilling & ProductionQuick Takes
ADNOC to upgrade, expand Bu Hasa field capacity
Abu Dhabi National Oil Co. (ADNOC) announced it plans to upgrade and expand giant Bu Hasa field as it ramps up onshore crude oil production capacity. The investment will enhance Bu Hasa’s production, deliver greater efficiencies, and maximize value from a mature oil field, ADNOC said.
Production capacity from Bu Hasa field will increase to 650,000 b/d from 550,000 b/d by Dec. 31, 2020, in line with ADNOC’s 2030 strategy to increase its overall oil production capacity to 4 million b/d by 2020.
An engineering, procurement, and construction contract was let to Tecnicas Reunidas SA by ADNOC subsidiary ADNOC Onshore, which operates Bu Hasa. The work is expected to take 39 months.
The contract signing took place on ADNOC’s stand at the Abu Dhabi International Petroleum Exhibition and Conference.
The asset upgrade and expansion include facilities, new pipelines, and production hubs. In addition to the incremental oil production from Bu Hasa, the project will streamline water handling, implement a second gas lift recovery phase, and improve the overall production efficiency while reducing the number of inactive wells.
PetroTal starts flow from oil find in Peru
PetroTal Corp., Calgary and Houston, is moving a rig to Bretana field on Block 95 for a three-well program beginning next year after starting production from the Bretana Norte discovery well.
The company said the well is producing more than 2,000 b/d of 19.2° gravity oil after the commissioning of water-injection facilities.
Since the start of a long-term production test on June 1, the well has produced naturally more than 100,000 bbl of oil. Flow was restricted until water-injection facilities were in place.
A second phase of water-injection work will allow production to increase.
Gran Tierra Energy Inc., Calgary, made the discovery in 2013 (OGJ Online, Feb. 21, 2013).
Gran Tierra spun out its Peruvian unit to Sterling Resources Ltd., last December. Sterling Resources became PetroTal in a reverse takeover this year.
Tonalli spuds Tampico-Misantla basin well
Tonalli Energia has spudded the first conventional horizontal well on its onshore Tecolutla block in Mexico’s Tampico-Misantla basin (OGJ Online, Aug. 8, 2018).
The TEC-11 is to penetrate the Cretaceous El Abra reef at about 2,310 m with a horizontal leg as long as 1,000 m.
International Frontier Resources Corp., Calgary, a partner with Grupo IDESA in the Tonalli joint venture, said the well is the first in a multiwell plan to develop the northern extension, identified with 3D seismic interpretation, of Tecolutla oil field in Veracruz.
Tonalli is conducting an extended production test of its TEC-10 well in the southwestern part of the block.
Lukoil reports flow from new Caspian well
A second production well completed from the wellhead platform installed during second-phase development of Yury Korchagin oil field flowed at an initial rate of 600 tonnes/day of crude oil, reports Lukoil (OGJ Online, July 25, 2018).
The horizontal was drilled to 2,736 m MD in the eastern part of the field in the Caspian Sea offshore Russia. An intelligent completion system used for the first time allows real-time control of valves in the well’s lateral, Lukoil said. Work has begun on the third well to be drilled from the platform.
PTTEP’s Montara field production halted by NOPSEMA
Oil production from Thai company PTTEP’s Montara field in the Timor Sea has been halted following several potentially injurious safety incidents and cannot resume until cleared by Australia’s offshore safety regulator, the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA).
In the latest incident, attempts to start oil production from the unmanned Montara platform had resulted in risk of fire or explosion. The field produces 10,000 b/d.
NOPSEMA said workers had gone out to the platform to pump pressurized lift gas into the well to start oil flowing despite a safety valve failing a leak test the previous day. Gas had leaked into the well’s outer annulus and the pressure there was high. To get the oil flowing, more lift gas was introduced to the well and this increased the pressure in the outer annulus to nearly four times the allowable level.
Workers then vented gas to reduce the pressure after which PTTEP voluntarily halted production on Nov. 1.
NOPSEMA’s report welcomed this action and continued to monitor the company’s steps, but then told PTTEP that it could not restart production until the company demonstrated it could operate safety equipment properly and had proper safety management systems in place.
Montara field was the scene of a wellhead blowout and rig fire in 2009 that spilled oil into the Timor Sea.
More recently, in September, PTTEP received four notices that included running equipment too hot with potential to cause an explosion and for leaky, corroded pipework.
In the same month, Jadestone Energy completed a $195-million acquisition of Montara field, but PTTEP remains as operator until a handover to Jadestone is approved by NOPSEMA.
Little to succeed Williams as Suncor CEO
Mark Little, chief operating officer of Suncor Energy Inc., has been appointed president and will become chief executive officer when CEO Steve Williams retires next May after 16 years with the company. Little, who has been with the company 10 years, became chief operating officer in 2017.
PROCESSINGQuick Takes
HollyFrontier agrees to acquire Sonneborn
A unit of independent refiner HollyFrontier Corp., Dallas, has signed a definitive agreement to buy Sonneborn US Holdings Inc. and Sonneborn Cooperatief UA for $655 million, including working capital estimated at $72 million.
Sonneborn, of Parsippany, NJ, makes specialty hydrocarbon products such as white oils, petrolatums, and waxes in North America and Europe.
In a statement, HollyFrontier said the acquisition “will advance HollyFrontier’s downward integration strategy into high-margin specialty products and significantly grow the rack-forward business segment.”
Alberta due sour gas processing plant
Tidewater Midstream & Infrastructure Ltd., Calgary, has let a contract to the Canadian subsidiary of WorleyParsons Ltd. to build a sour gas processing plant near Grande Prairie, Alta.
As part of the contract, WorleyParsonsCord Ltd. will provide fabrication and construction services for Tidewater’s 100-MMcfd Pipestone sour, deep-cut gas plant with acid gas injection, which also will have the capability to process 20,000 b/d of NGLs, the service provider said.
WorleyParsons disclosed neither a value of the contract nor a timeframe for its work on the project.
Tidewater, which is developing its Pipestone gas storage operations near Grande Prairie, recently received approval from the Alberta Energy Regulator to build and operate a 120-km natural gas pipeline connecting Tidewater’s Brazeau River complex to TransAlta Corp.’s generating units at Sundance and Keephills, the operator said.
The pipeline—which will have initial capacity of 130 MMcfd and may be expanded to about 440 MMcfd—is supported by a 15-year take-or-pay commitment from TransAlta and is scheduled to begin construction in late November to meet a projected in-service date in third or fourth-quarter 2019.
Tidewater also said on Oct. 30 that it has executed a total of six crude oil infrastructure agreements to date to deliver crude oil to six end markets, including direct to three unidentified refiners.
Phillips 66 lets contract for Sweeny refinery
Phillips 66 has let a long-term contract to Linde PLC subsidiary Praxair Inc. to supply high-purity hydrogen to the 256,000-b/d Sweeny refinery in Old Ocean, Tex.
As part of the contract, Praxair will extend its 310-mile US Gulf Coast hydrogen pipeline system, which currently extends from Freeport, Tex., to Lake Charles, La., to connect with the Sweeny refinery, as well as build, own, and operate a new steam methane reformer (SMR) that will connect to the pipeline system at a location still to be determined, the service provider said.
Alongside supplying the Sweeny refinery, the new SMR—which will become the largest hydrogen production unit in the US upon completion in 2021 and increase Praxair’s total USGC hydrogen capacity to more than 1.5 bcfd—also will enable Praxair to meet hydrogen demands of other new unidentified refining customers along the Upper Texas Coast.
Praxair said hydrogen supplies to Sweeny will start in early 2021.
The precise volume of hydrogen supplies to be delivered under the contract was not disclosed.
TRANSPORTATIONQuick Takes
FERC issues draft EISs for LNG export projects
The US Federal Energy Regulatory Commission issued draft environmental impact statements (EIS) for two proposed LNG export operations: one for Eagle LNG Partners’ project near Jacksonville, Fla., and another for Kinder Morgan Inc.’s Gulf Liquefaction Project in Jackson County, Miss.
FERC determined that construction and operation of the Eagle LNG project would have some limited adverse environment impacts that would not be significant with implementation of the mitigation measures proposed by Eagle LNG and those recommended by FERC.
Factors leading to this conclusion included the project’s location in an area currently zoned for industrial use, and along an existing, maintained ship channel in the St. Johns River.
“Eagle LNG would minimize impacts on natural and cultural resources during construction and operation of the project by implementing its project-specific Upland Erosion Control, Revegetation, and Maintenance Plan and Wetland and Waterbody Construction and Mitigation Procedures, and other project-specific plans,” FERC said in the draft EIS.
In its findings for the Gulf Liquefaction Project’s draft EIS, FERC noted that while approval would have some adverse environmental impacts, these would be avoided or reduced to less-than-significant levels with certain mitigation measures.
It noted that the project would expand an existing, operating LNG terminal with working storage tanks and berthing and loading-unloading facilities.
“Gulf LNG’s compensatory wetland mitigation plan would adequately address impacts on wetlands,” FERC said. “Gulf LNG would implement its Project-specific Upland Erosion Control, Revegetation, and Maintenance Plan and its Project-specific Wetland and Waterbody Construction and Mitigation Procedures to minimize construction impacts on soils, wetlands, and waterbodies.”
