World of Oil and Gas

Vol. 234 No. 7

WORLD OF OIL AND GAS

MELANIE CRUTHIRDS, NEWS EDITOR

DISCOVERIES

Statoil strikes Canadian light oil discovery off Newfoundland

Statoil has discovered light oil offshore Newfoundland, the latest find in Canada’s Atlantic region, a fast-growing petroleum play that’s often overshadowed by the country’s western oil sands developments. Statoil said it made a discovery of light, high-quality oil in the Flemish Pass basin at its Harpoon prospect. The field is about 300 mi northeast of St. John’s, the provincial capital of Newfoundland and Labrador. Statoil made the find, drilling in about 3,600 ft of water, some 6 mi from the company’s Mizzen discovery. Statoil estimates that the field holds as much as 200 MMbbl of oil, a significant new deposit discovered at a time when larger operators have struggled to find them. Statoil
operates both Harpoon and Mizzen fields with partner Husky Energy.

Noble Energy hits Karish discovery offshore Israel

Noble Energy struck a natural gas discovery at the Karish prospect offshore Israel. The discovery well was drilled to a TD of 15,783 ft, and encountered 184 ft of net natural gas pay in high-quality lower Miocene sands. The Karish well, in the Alon C license approximately 20 mi northeast of Tamar field, is in 5,700 ft of water. Discovered gross resources, combined with the de-risked resources in an adjacent fault block on the license, are estimated to range between 1.6 and 2.0 Tcf, with a gross mean of 1.8 Tcf, based on 75th and 25th percentile probabilities. Karish is the fifth discovered field, with an estimated gross mean resource size over 1 Tcf, and the seventh consecutive field discovery for Noble Energy and its partners in the Levant basin. The Ensco 5006 will relocate from the Karish well to Cyprus, where it will spud an appraisal well at the Cyprus A discovery.

New oil field discovered in Colombia

GeoPark Holdings, a Latin American oil and gas explorer, operator and consolidator, with operations and producing properties in Chile, Colombia, Brazil and Argentina, has successfully drilled, tested and put into production the Tarotaro 1 exploration well on the Llanos 34 Block in Colombia. GeoPark operates and has a 45% working interest in the block. GeoPark drilled and completed Tarotaro 1 to a TD of 3,175 m. A test conducted with an ESP in the Guadalupe formation, at approximately 2,955 m, resulted in a production rate of about 2,239 bpd of 15.5° API oil, with a 0.6% water cut, through a 14.3-mm choke with a wellhead pressure of 250 psi. Further monitoring of production history will be required to determine stabilized flowrates and the extent of the reservoir. Surface facilities are already in place, and the produced oil from Tarotaro 1 is now being marketed and sold. A new development well, Tarotaro 2, has been spudded to further appraise the field.

Dana Gas hits discovery with
Begonia-1 well in Egypt

Dana Gas has struck a new gas discovery on the West El Manzala concession in the Nile Delta, Egypt. The Begonia-1 discovery well encountered 15 m of net pay in a good-quality sandstone reservoir of the Lower Abu Madi formation. On test, the formation produced 9.4 MMcfgd, with 133 bcpd. The evaluated resources for the Abu Madi Lower pay zone are between 7 and 15 Bcf, and around 100,000 bbl of condensate. It is anticipated that Begonia-1 will be tied into the existing South Abu El Naga field flowline, which will take the gas to the El Wastani gas processing plant. Once fully developed, the field will add around 1,600 boed of production. The company’s average output for the first five months was 33,600 boed in Egypt. Begonia-1 marks Dana’s 25th successful gas discovery in Egypt since 2007.

REGULATORY

Israeli government approves gas exports

Israeli officials approved the export of 40% of the natural gas from the country’s offshore Leviathan reserve, opening the way for an inflow of billions of dollars into the economy. Finance Minister Yair Lapid said exports are expected to bring in $60 billion for the country’s economy over 20 years. Leviathan field contains an estimated 19 Tcf of gas, and the export quota does not apply to the smaller Tamar field, which contains about 9 Bcf of gas. Before the announcement, there was some fear in the market that, if Israel didn’t grant permission to export a significant amount of gas, the few foreign firms working there (that have been instrumental in developing the industry) would leave. Woodside Petroleum recently signed an agreement to acquire a 30% stake in Leviathan. The other major player in Israel’s emerging gas sector is Noble Energy, which holds stakes in several fields.

Peru seeks at least $1 billion in auction of parcels

Peru’s government aims to attract more than $1 billion in investments, in an upcoming public auction of 26 oil concessions in the country’s Amazon region, a top government official said. The chairman of governmental agency Perupetro, Luis Ortigas, said that exploration investments in each concession will be between $40 million and $50 million. In late May, Perupetro launched an auction for nine offshore oil concessions, its first international auction in about three years. The government has said that more than 20 companies are interested in this auction, which is expected to bring in total investments of at least $450 million during exploration phases. Perupetro decided to go ahead with the auction for the offshore concessions, and postpone offering the blocks in the Amazon, because of a new law that requires the government to consult with indigenous communities prior to the development of natural resource projects.

ExxonMobil proposes to export Canadian LNG from Pacific coast site

ExxonMobil has asked Canadian officials for a permit to export LNG from the Pacific coast, marking the fifth such proposal for tapping into the country’s large natural gas reserves. The proposed project would liquefy up to 4 Bcfpa for export via tanker from one of several sites under consideration, according to an application with Canada’s National Energy Board. If approved, and the company decides to move forward with the project, it could begin shipments as early as 2021.

BG Group applies for Canadian LNG export license

BG Group has applied with Canadian authorities for a license to export LNG, part of a plan to leverage abundant supplies of North American gas by shipping it to markets overseas. BG submitted its application for a multi-year license to Canada’s National Energy Board. The move comes as BG mulls whether to commit to a multi-billion-dollar investment. Its planned facility is one of a dozen different proposals for new LNG plants on the remote, largely undeveloped coast of British Columbia. The company has recently filed plans with the Canadian Environmental Assessment Agency, outlining the scope of the project and its likely impact on the surrounding area. Known as Prince Rupert LNG, the proposal calls for the first two of three planned liquefaction “trains,” capable of processing 3.3 Bcfgd, to start up by 2021. Construction may start as early as 2016, at a site on Ridley Island, near the small coastal city of Prince Rupert in British Columbia.

PRODUCTION

Angola ships first-ever cargo of LNG to Brazil

Angola successfully shipped its first cargo of LNG, following delays of more than a year that plagued the country’s flagship LNG project, Angola LNG said in a press statement. The first cargo was bought by state oil company, Sonangol, and is being shipped to Brazil, the company said. The venture, a 5.2-MMtpa LNG project led by Sonangol and Chevron, was supposed to begin commercial shipments in early 2012. However, the start of exports was delayed several times. In addition to the delays, the large LNG project has faced challenges, due to the growth of the indigenous natural gas market in the U.S. Originally the plan had been to deliver the LNG from the plant to the U.S. market, but the shale gas boom in the country has forced the company to look for new customers in Asia and Europe.

Shell to extend life of Mars B to 2050 with new TLP

During a presentation near the construction site of Shell’s latest tension leg platform (TLP) set for deployment to the deepwater Gulf of Mexico’s Mars B field, company officials said they expect to see production from the platform as early as 2014. The Olympus TLP will be Shell’s largest structure deployed to the region, and raises the company’s floating structure count in the Gulf to six, said Executive V.P. for Deepwater John Hollowell. The deployment of the Olympus TLP marks the first time that a new platform has been sent to an existing field, said Derek Newberry, the project’s business opportunity manager. Peak production for the platform is expected to be 100,000 boed, targeting Shell’s recent West Boreas and South Deimos discoveries. The company estimates the reservoir depth associated with this project to be up to 22,000 ft, with development at a 3,100-ft water depth. With the new platform, Shell looks to extend the life of the deepwater giant Mars B field, originally estimated to hold 700 million boe in 1989, to more than 1 billion boe, to at least 2050.

EIA estimates global recoverable shale oil resources
at 345 billion bbl

In the recently released U.S. Energy Information Administration (EIA) report on Technically Recoverable Shale Oil and Shale Gas Resources, covering 42 countries, including the U.S., there are an estimated 345 billion bbl of technically recoverable shale oil resources in formations in every continent, except Antarctica. The assessed resources represent 10% of the world’s technically recoverable crude oil resources, said EIA, which are resources that can be produced using current technology without reference to economic profitability. More than half of the identified shale oil resources outside the U.S. are concentrated in four countries: Russia, China, Argentina and Libya. The U.S. ranks second in the world, following Russia, for shale oil resources. Shale oil resource estimates are highly uncertain and become more accurate, only when the resources are extensively tested with production wells.

BUSINESS

Aker Solutions and Statoil cancel Cat B rig contract

Aker Solutions and Statoil have cancelled a contract for delivery of a semisubmersible rig capable of year-round well intervention services on the Norwegian Continental Shelf. In April 2012, the companies agreed that Aker Solutions would build the Category B (Cat B) rig, and use it to provide Statoil with a range of well intervention and drilling services for an initial eight years, starting in 2015. The technology development needed to build the rig has since proven to be considerably more demanding than initially anticipated, and, on June 24, the parties mutually agreed to terminate the contract with immediate effect.

Delonex Energy announces $600-million investment

Delonex Energy, a new E&P company focused on Central and East Africa, has announced that an affiliate of Warburg Pincus, a global private equity firm focused on growth investing, has agreed to lead an investment of up to $600 million in the company. Delonex is led by CEO Rahul Dhir, the former CEO of Cairn India, who led the company from its inception, through to its $2-billion IPO and ultimate sale to Vedanta Resources. Under Dhir’s leadership, Cairn India increased its market value to close to $13 billion, with an operated production of more than 200,000 boed. Dhir was also recently an executive-in-residence at Warburg Pincus, where he worked in close collaboration with the firm over the past several months to formulate Delonex’s business plan. At Delonex, Dhir is joined by a technical team, including David Ginger, executive director of Exploration and Subsurface, who formerly led Cairn India’s exploration efforts in the Indian sub-continent. The company said it is focused on leveraging technology, execution and market access to discover, develop and commercialize hydrocarbons efficiently and effectively.

EXPLORATION

Noble Energy succeeds with Gunflint appraisal

Noble Energy said that the second appraisal well at Gunflint successfully encountered 109 ft of net pay within the primary reservoir targets. Results of drilling, wireline logs and reservoir data have confirmed an estimated gross resource range of 65 to 90 million boe in the primary structure, which was in line with company expectations. The Mississippi Canyon 992 #1 well, 1 mi west of the original discovery well in the Gulf of Mexico, was drilled to a TD of approximately 32,800 ft, in a water depth of 6,100 ft. Commercial hydrocarbons were not encountered in the deeper exploration objective. Additional exploration potential remains in an adjacent three-way structure to the north, a candidate for future exploration, following development of the confirmed resources. Once operations are completed, the well will be suspended for future use. Noble operates Gunflint with a 31.14% working interest.

Oryx Petroleum spuds Navitas Land and Mineral drills record well in northwestern Kentucky’s Webster County

Navitas Land and Mineral Corporation recently completed drilling, cementing and casing a 7,008-foot oil well in Poole, Ky. According to the Kentucky Geological Survey, the Otho Babb #2 is the deepest oil well ever drilled in Webster County with producible oil. Deeper wells drilled previously were dry and abandoned. Navitas has drilled five wells near Otho Babb #2 in the Illinois basin, one of which, Pruitt #4, is already producing oil. Navitas reached TD on Otho Babb #2 on April 29, 2013, after weeks of round-the-clock drilling. Upon completion, the well log recorded 17 hydrocarbon shows of both oil and gas. Four hydrocarbon shows above 4,000 ft are known to be producible, and multiple shows below 4,000 ft look promising, the company said.

Oryx Petroleum spudsexploration well in Kurdistan

On June 10, 2013, Oryx Petroleum’s Sakson Hilong 10 rig spudded the AAS-1 well in the Hawler license area, in the Kurdistan region of Iraq. The AAS-1 well is targeting the Ain Al Safra prospect, which is estimated to contain 225 MMbbl of unrisked gross prospective oil resources (risked: 44 MMbbl), based on evaluations as of March 31, 2013, made by Netherland, Sewell & Associates. The AAS-1 well is targeting the deeper light oil potential in the lower Jurassic and Triassic, and heavy oil potential in the Cretaceous.

ACQUISITIONS & EXPANSIONS

CNPC, Total join Tethys in Tajikistan’s Bokhtar project

CNPC and Total have finalized an agreement with Tethys Petroleum to develop oil and gas assets in Tajikistan, with China cited as a key market for future exports. The venture is another piece in a jigsaw of projects being put together by China’s state oil companies to diversify their energy supplies through investments in domestic and foreign oil and gas assets, and the construction of a global network of refineries, pipelines and receiving terminals. Tethys first announced plans to bring in partners for its Bokhtar project in Tajikistan last October. In December, it revealed a draft farm-out agreement and production-sharing pact with CNPC and Total, each taking a one-third stake in the concession, which Tethys has said may contain 3.22 Tcm of gas and 8.5 billion bbl of oil.

Schlumberger acquires oil solutions firm

Schlumberger has acquired Gushor Inc., a Canada-based petroleum geochemistry and fluid analysis company that provides E&P solutions for heavy oil and oil sands projects. A University of Calgary spin-off, formed in 2006, Gushor specializes in the integration of geology, fluid properties, petroleum geochemistry and reservoir engineering information. Gushor is based in Calgary and operates worldwide, with a track record of more than 300 projects, completed with various oil and gas companies, on all major continents.

GE and Rosneft announce JV to modernize
Russia’s oil and gas sector

GE and Rosneft have signed a strategic agreement to establish a JV focused on developing local expertise and technology solutions for Russia’s growing oil and gas sector. The agreement is part of GE’s plan to invest $1 billion in Russia’s oil and gas industry by 2020. GE Chairman and CEO Jeff Immelt and Rosneft Management Board President and Chairman Igor Sechin signed the strategic cooperative agreement at the St. Petersburg International Economic Forum 2013. The agreement expands on the parties’ memorandum of understanding (MOU), signed in June 2012, and covers four main business activities: monetizing gas, refining gas and petrochemicals, developing offshore and subsea technologies, including Arctic activities; and enhancing production, including the use of artificial lift technologies. As part of the agreement, GE and Rosneft also will pursue two other key initiatives: the establishment of an R&D center and an application engineering and training center in Russia.