World of oil and gas
EXPLORATION |
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Barents Sea exploration campaign completed |
Statoil has completed its 2013-2014 exploration program in the Barents Sea. This represents an all-time high for exploration activity, as well as 10% of all exploration wells drilled in the Barents Sea since its opening in 1980. “A commitment of this size and complexity requires geological, technological and organizational muscle, and the data collected are important for the future understanding of the oil and gas potential in the Barents Sea,” says Statoil’s Irene Rummelhoff, senior V.P. for exploration on the Norwegian Continental Shelf. “It has been argued that the exploration program has had limited success. Indeed, we have made fewer commercial discoveries than we had hoped for. However, there are a number of things that I take pride in. We have tested a great variety of geological plays in frontier areas and dramatically increased our knowledge with the huge amount of subsurface data we have collected,” Rummelhoff added. |
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Petrobras finishes first appraisal well in Libra Consortium area |
Petrobras has finished drilling the first appraisal well—3-BRSA-1255 (3-RJS-731)—in the Libra Consortium area. Situated in the northwestern portion of the Libra Block, in the pre-salt layer of the Santos basin, the well is approximately 4 km southeast of discovery well 2-ANP-2A-RJS. The well reached a final depth of 5,734 m and is 185 km off the coast of Rio de Janeiro, at a water depth of 1,963 m. The drilling results confirmed an oil column of approximately 290 m, and a reservoir that shows good porosity and permeability. Samples have confirmed that the 27°API oil is the same as that found in the discovery well. A formation test is expected in the oil-bearing zone to verify its characteristics and the reservoir productivity. The Libra Consortium—which is composed of Petrobras (operator, 40%), Shell (20%), Total (20%), CNPC (10%), CNOOC Limited (10%) and state company Pré-Sal Petróleo S.A. (PPSA)—will proceed with the activities set forth in the exploratory plan approved by Brazil’s ANP. |
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Tullow slashes exploration spending |
Tullow Oil will slash its spending on exploration in favor of producing assets and existing discoveries next year. While the company “remains exploration-led,” such spending will be “significantly reduced” in 2015, the company’s CEO, Aidan Heavey, said. During 2014, Tullow spent about $1 billion on exploration and appraisal. However, next year, the company is forecasting expenditures of $300 million. Expectations regarding the price of oil are among factors that have made deepwater exploration wells less attractive, Tullow said. By 2017, the company’s assets in West Africa—which include the TEN and Jubilee developments—should be contributing 100,000 bopd, net, to Tullow, Heavey said. As such, they will receive the greatest share of capital in 2015. |
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| UK names winners in one of its most successful licensing rounds in 50 years |
The UK has named the winners in one of the nation’s most fruitful licensing rounds in five decades. However, critics say a lack of drilling commitments demonstrates the need for measures to encourage investment on the UKCS. On Nov. 6, the Department of Energy and Climate Change (DECC) announced the award of 134 licenses as part of the country’s 28th offshore licensing round. A further group of applications will be decided later, after environmental assessments, the department said. Oil and Gas UK, the representative body for the nation’s offshore industry, welcomed the announcement, but noted that the awards only include commitments for a small number of wells. According to DECC, licensees have committed to six firm wells and four contingent wells. Most licenses were awarded on the basis of obtaining or reprocessing 2D and 3D seismic data, Oil and Gas UK said. “It is extremely important to ensure the award of these licenses translates into the drilling of more successful wells on the UKCS,” Oil and Gas UK’s Oonagh Werngren said. |
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GOVERNMENT/REGULATORY |
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| EIA: U.S. crude oil, lease condensate production at highest volume since 1986 |
Crude oil and lease condensate production in the U.S. exceeded 8.6 MMbpd in August, a production volume not observed since July 1986, according to EIA’s latest Petroleum Supply Monthly. More than half of total U.S. production was accounted for by record output from three basins in three states. Production from the Permian basin in Texas and New Mexico accounted for 1.66 MMbpd, while the Eagle Ford shale in the Western Gulf basin produced 1.57 MMbpd. The Bakken shale in North Dakota’s Williston basin accounted for 1.13 MMbpd. During 2014 alone, 10 states—the three states previously mentioned, plus Oklahoma, Colorado, Wyoming, Utah, Ohio, West Virginia and Pennsylvania—set monthly production records dating to 1995, and accounted for more than 64% of total U.S. output during August. |
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| DOE authorizes Freeport LNG to export to non-FTA countries |
The U.S. Energy Department has issued two final authorizations for Freeport LNG Expansion, L.P., and FLNG Liquefaction, LLC, to export domestically produced LNG to countries that do not have a Free Trade Agreement (FTA) with the U.S. The Freeport LNG Terminal at Quintana Island, Texas, is authorized to export, up to a total of 1.8 Bcfgd, for a period of 20 years. Federal law generally requires approval of natural gas exports to countries that have an FTA with the U.S. For countries that do not have an FTA with the U.S., the Natural Gas Act directs the Department of Energy to grant export authorizations unless the Department finds that the proposed exports “will not be consistent with the public interest.” |
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| BSEE investigating fatal explosion in Gulf of Mexico |
The U.S. Bureau of Safety and Environmental Enforcement (BSEE) is investigating an explosion that took place on Nov. 20, aboard a production platform at West Delta 105, operated by Fieldwood Energy. The explosion resulted in one fatality and three injured. As reported to BSEE by the operator, the incident happened during routine maintenance operations on its Echo platform. Contractors with Turnkey Cleaning Services were cleaning a piece of equipment—a heater treater—at the time of the incident. Damage to the facility is reported to be limited to the heater treater. The platform had been shut in for more than a week and was not producing at the time of this incident. There has been no reported fire or release of oil, or pollution, as a result of this incident. |
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DISCOVERIES |
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| Ecopetrol, Talisman in discovery at Colombia’s Block CPO-9 |
Ecopetrol and an affiliate of Talisman Energy have proven the presence of hydrocarbons in the Nueva Esperanza-1 exploratory well, in Colombia’s Block CPO-9. During an initial, eight-day flow test, 309 ft of perforations in the T2 formation stabilized at a daily flowrate of 910 bbl of 8°API crude oil, with less than 2% water cut during the last day of flow. Talisman and Ecopetrol are jointly analyzing the results and will file an application with the Colombian authorities to place the well on a long-term test. Approval has been granted to drill two down-dip appraisal wells, the first of which, Nueva Esperanza-2, started drilling on Nov. 16. Nueva Esperanza-1 is the second oil discovery struck by Ecopetrol and Talisman in Block CPO-9. |
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| CNOOC hits oil in South China Sea |
China’s CNOOC Ltd. has made a mid-sized oil discovery in the eastern South China Sea. The Lufeng 14-4 structure is in Lufeng Sag in the Pearl River Mouth basin of the South China Sea, with an average water depth of 145 m. The discovery well, Lufeng 14-4-1, was drilled and completed at a depth of 4,098 m, and encountered oil pay zones with a total thickness of approximately 150 m. The well tested around 1,320 bopd. |
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| ConocoPhillips wildcat comes up dry offshore Angola |
ConocoPhillips’ Kamoxi-1 exploration well in Block 36, offshore Angola in the Kwanza basin, has been drilled to a total depth of 22,660 ft. The well was plugged and abandoned as a dry hole. “Although the Kamoxi well results were disappointing, we continue to see potential for this subsalt Angola play,” said Larry Archibald, senior V.P., Exploration. “After plugging Kamoxi, we will spud a well on adjacent Block 37, which will be the second wildcat in our planned four-well exploration program in the Kwanza basin. We are also actively pursuing a wide range of other global exploration opportunities, including a follow-up to the promising and recently announced FAN-1 well located offshore Senegal,” added Archibald. “A second wildcat in Senegal has commenced, and additional drilling activity in Senegal is being contemplated for late 2015 or 2016.” |
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BUSINESS |
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| Halliburton to buy Baker Hughes in $34.6-billion deal | Halliburton and Baker Hughes have announced a definitive agreement, under which Halliburton will acquire all the outstanding shares of Baker Hughes in a stock and cash transaction. The transaction is valued at $78.62 per Baker Hughes share, representing an equity value of $34.6 billion and an enterprise value of $38.0 billion, based on Halliburton’s closing price on Nov. 12, the day prior to public confirmation by Baker Hughes that it was in talks with Halliburton. Upon the completion of the transaction, Baker Hughes stockholders will own approximately 36% of the combined company. The agreement has been approved unanimously by both companies’ boards of directors. On a pro-forma basis, the combined company had 2013 revenues of $51.8 billion, more than 136,000 employees and operations in more than 80 countries around the world. | ||
| Statoil cancels rig, takes hit after Angola disappoints | Statoil has canceled its Stena Carron rig contract after fulfilling its work commitments in the Statoil-operated Blocks 38 and 39 in the Kwanza basin, offshore Angola. The first two Statoil-operated wells in this pre-salt play, Dilolo and Jacaré, have been drilled safely and efficiently. These two wells fulfill Statoil’s drilling commitments on the two blocks. Statoil is participating in eight commitment wells across five blocks in the Kwanza basin. So far, four wells have been completed, and one well, operated by Total, is ongoing in Block 40. The costs of terminating the operations and associated services, including the Stena Carron rig contract, will be booked in the fourth quarter and amount to about $350 million. | ||
| Chevron, Paradigm sign new long-term contract | Paradigm has signed a new long-term contract with Chevron Energy Technology Company, a division of Chevron U.S.A., that provides access to an expanded Paradigm product portfolio. In addition to the company’s interpretation and modeling solutions, which Chevron has deployed globally over the past seven years, the expanded agreement adds Paradigm solutions for formation evaluation and access to licenses for seismic processing and imaging, and drilling engineering. The broad level of expansion is based on a mutual priority to develop solutions that directly address the needs of Chevron asset teams. The companies will work in collaboration to develop new workflows and functionality within the Paradigm solutions suite, to support the company’s worldwide operations and competitiveness in the global oil and gas market. | ||
PRODUCTION |
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| ConocoPhillips’ Ryan Lance urges U.S. crude exports | ConocoPhillips Chairman and CEO Ryan Lance says exports of the nation’s impending surplus of light oil could benefit the U.S. by encouraging further job creation and economic development, while reducing gasoline prices and improving global energy security. Enabling such exports requires lifting the federal government’s 1970s-era export ban, implemented at a time when U.S. oil production was falling. In contrast, U.S. production increased from about 7 MMbopd in 2008 to about 10 MMbopd last year, due primarily to rapid growth in unconventional production of light oil and condensate from shale rock and tight sands. “The economic transformation resulting from the renaissance in light sweet oil production has been great for our industry and our country. It has proven to be a job-creation machine, an engine for the country, as well as a source of economic development,” Lance told the IPAA’s annual meeting. | ||
| Deepwater GOM production to reach 1.9 MMboed in 2016 | Production in the deepwater Gulf of Mexico is expected to reach a new peak of 1.9 MMboed in 2016, Wood Mackenzie says. Driven by new developments and the expansion of older oil fields, this marks the first time that production will surpass the previous peak set in 2009. “We expect production from 2014 to 2016 to grow 18% annually,” said Imran Khan, GOM analyst at Wood Mackenzie. In 2015, analysts forecast production to increase 21% from the 2014 level, and the impact will intensify in 2016, when Heidelberg field comes online and the Jack/St. Malo project ramps up. Redevelopment and extension of older fields will also augment growth. After hitting the new peak in 2016, Wood Mackenzie anticipates production to plateau for the remainder of the decade. | ||
| Production underway at Kebabangan gas development, ConocoPhillips says | ConocoPhillips has announced first gas from the Kebabangan gas field, 60 mi offshore Malaysia. Production will ramp-up as pipeline capacity becomes available. “This is the third major project startup planned in Malaysia this year, with Siakap North-Petai brought onstream in the first quarter and the Gumusut-Kakap floating production facility starting up in October,” said Matt Fox, executive V.P., Exploration and Production. Project startups in Malaysia are expected to add approximately 60,000 boed to the company’s production volumes by 2017. | ||
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| Mubadala draws first oil from Manora field | Mubadala Petroleum has started production at its operated Manora oil field, within the G1/48 concession, approximately 80 km offshore, in 44 m of water, in the northern Gulf of Thailand. Production is expected to reach a peak rate of approximately 15,000 bopd, as production wells are completed. Up to 10 production wells and five injection wells in the main reservoir sequence are planned. Proved and probable oil reserves contained in Manora’s primary reservoir, and recoverable by natural depletion, are estimated to be in the order of 20 MMbbl, gross. | ||
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ACQUISITIONS |
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| Apache to sell Louisiana, Anadarko basin assets |
Apache is to sell over 200,000 net acres in southern Louisiana and the Anadarko basin in two separate transactions, the company said. According to G. Steven Farris—Apache’s chairman, president and CEO—proceeds from the $1.4-billion sale of the non-core assets will, primarily, be used to fund leasehold acquisitions that the company made this year. In southern Louisiana, Apache agreed to sell its working interest in approximately 90,000 net acres. These mature fields produced approximately 21,000 boed, net, to Apache during third-quarter 2014. In the Anadarko basin, Apache has agreed to sell approximately 115,000 net acres in a portion of its Stiles Ranch field in Wheeler County, Texas, and in its Mocane-Laverne and Verden fields in western Oklahoma. Net production from these properties averaged 26,000 boed during third-quarter 2014. |
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| Shell sells assets in Nigeria for $600 million |
Shell Petroleum Development Company of Nigeria (SPDC), a subsidiary of Royal Dutch Shell, has completed the assignment of its 30% interest in Oil Mining Lease 24 (OML24) and related facilities in the Eastern Niger Delta to Newcross Exploration and Production. Total cash proceeds for Shell amount to some $600 million. OML24 covers an area of some 430 sq km and includes Awoba, Awoba Northwest and Ekulama fields and related facilities. The divested infrastructure includes three oil flow-stations and three gas processing plants, in addition to various oil and gas pipelines. The divested fields produced on average around 13,000 boed during the first half of 2014. Total E&P Nigeria Limited (10%) and Nigerian Agip Oil Company Limited (5%) also have assigned their interests in the lease, ultimately giving Newcross a 45% interest. |
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