EXPLORATION

Norway eyes Barents Sea in new licensing round

Norway’s Ministry of Petroleum and Energy has announced the nation’s 23rd licensing round. The round consists of 57 blocks, or parts of blocks. These are distributed with 34 blocks in the southeastern Barents Sea (the formerly disputed area toward Russia), 20 blocks in other parts of the Barents Sea and three blocks in the Norwegian Sea. The government aims to award new production licenses in the first half of 2016. “By initiating petroleum activity in the southeastern Barents Sea, we reach yet another milestone for Norwegian petroleum activities. For the first time since 1994, we will explore an entirely new area on the Norwegian Shelf. This will generate unique possibilities for value creation, growth and employment opportunities, particularly for Northern Norway,” said Norwegian Minister of Petroleum and Energy Tord Lien. The deadline for applications is Dec. 2, 2015. 

API: Exploratory oil drilling increased 75% in the fourth quarter 

Estimated U.S. exploratory oil well completions increased 75% in the fourth quarter of 2014, compared to year-ago levels, according to API’s 2014 Quarterly Well Completion Report, Fourth Quarter. Compared to the exploratory numbers, there was more modest growth of total development well completions in the fourth quarter, as compared to the fourth quarter of 2013, rising 4%. Total estimated well completions for 2014, so far, are 44,849, which represents no significant change from 2013 levels. There was a 5% increase in total footage drilled, as compared to 2013. “America’s oil and natural gas industry increased exploratory drilling in the fourth quarter, thanks in large part to access on private and state lands,” said Hazem Arafa, director of API’s Statistics Department. “Additional access to our own vast energy resources and streamlined federal permitting would allow for more opportunities to produce U.S. energy, while creating more American jobs and generating more revenue for our government.”

BP to relinquish ‘risky’ exploration blocks offshore Indonesia

BP has decided to hand back two exploration licenses in the Arafura Sea, offshore Indonesia, after deeming them high-risk. “Following the result of the 3D seismic evaluation, we have made the decision to relinquish both West Aru I and West Aru II Blocks,” BP Indonesia Head of Country Dharmawan Samsu said. “The evaluation suggests that these blocks are both technically highly risky and commercially very challenging,” Samsu added. BP was awarded PSCs for the two blocks in 2011. West Aru I covers an area of approximately 8,100 km², and West Aru II covers an area of approximately 8,300 km². The blocks have water depths ranging from 200 m to 2,500 m.

Croatia awards exploration licenses off Adriatic coast 

The Croatian government has granted 10 licenses for the exploration and exploitation of hydrocarbons in the Adriatic Sea. Bids were received from six companies for 15 exploration areas. An expert committee positively evaluated bids for 10 exploration areas and finally awarded 10 licenses. In accordance with the decisions, Marathon Oil, OMV, Eni, Medoilgas and INA gained the right to explore and exploit hydrocarbons in the country’s first offshore licensing round. Marathon Oil and OMV were granted licenses for seven blocks. Eni and Medoilgas were granted a license for one block, and INA was granted licenses for two blocks.

REGULATORY 

Obama lease sale strategy includes offshore Mid- and South Atlantic 

U.S. Secretary of the Interior Sally Jewell and BOEM Director Abigail Ross Hopper have announced the next step in the development of the U.S.’s Outer Continental Shelf Oil and Gas Leasing Program for 2017-2022. The Draft Proposed Program includes 14 potential lease sales in eight planning areas—10 sales in the Gulf of Mexico, three off the coast of Alaska, and one in a portion of the Mid- and South Atlantic. The release of the draft is an early step in a multi-year process to develop a final offshore leasing program
for 2017-2022.

Obama moves to block drilling in Alaska’s ANWR  

On Jan. 25, the Obama administration announced plans to designate nearly all of the 19.8-million-acre Arctic National Wildlife Refuge (ANWR) as wilderness, a move that would render the area off-limits for drilling. Currently, over 7 million acres of the refuge are managed as wilderness, consistent with the Alaska National Interest Lands Conservation Act of 1980. However, in a move denounced by state representatives, the Obama administration called for an additional 12.28 million acres—including the Coastal Plain—to be designated as wilderness. According to the administration, such designation would serve to protect and preserve the refuge. However, U.S. Sen Lisa Murkowski (Rep.-Alaska) said, “It’s clear this administration does not care about us, and sees us as nothing but a territory.” And Sen. Dan Sullivan (Rep.-Alaska) said, “We will defeat their lawless attempt to designate ANWR as a wilderness, as well as their ultimate goal of making Alaska one big national park.”

Norway announces awards from APA 2014 

The Norwegian government has offered ownership interests in 54 new production licenses, in connection with the Awards in Pre-defined Areas 2014. The production licenses are distributed over the North Sea (34), the Norwegian Sea (16) and the Barents Sea (4). A record number of applications were submitted by a total of 47 companies in APA 2014. Forty-three different companies were awarded ownership interests in one or more licenses; 23 of these companies will be offered operatorship. Statoil Petroleum was designated as the operator for eight blocks; Lundin Norway came a close second and was designated as the operator for six blocks, while Total E&P Norge and Tullow Oil Norge were each awarded operatorships for five blocks. “Today’s award of new exploration acreage provides new tangible exploration opportunities for the companies,” said Minister of Petroleum and Energy Tord Lien.

DISCOVERIES

Eni hits new discovery in Egypt’s Western Desert

Eni has announced a discovery in the West Melehia deep exploration prospect, in the Melehia license of Egypt’s Western Desert. The exploration well was drilled to a depth of 4,175 m, meeting a 20-m, net mineralized accumulation of light oil in the Lower Cretaceous age of the Alam El Bueib formation. The well also encountered a significant mineralized accumulation of gas and condensates in the Upper Jurassic age in the Safa formation. The well began production with an initial flow of 2,100 bopd. The discovery will be followed by the drilling of other delineation and development wells, which should result in estimated production of about 8,000 bopd by the end of 2015. Eni, through its subsidiary, International Egyptian Oil Company (IEOC), holds a 76% stake in the Melehia license. Lukoil is the other partner with a 24% stake. The operator is Agiba, which is held equally by IEOC and the Egyptian General Petroleum Corporation. Image: Eni.

CNOOC in deepwater South China Sea gas find

China’s CNOOC has made a mid-to-large-sized natural gas discovery in the South China Sea. The Lingshui 25-1 structure is in northeastern Ledong Sag, in the Qiongdongnan basin of the South China Sea, with an average water depth of about 980 m. The discovery well, Lingshui 25-1-1, was drilled and completed at a depth of about 4,000 m, and encountered an oil and gas pay zone with a total thickness of about 73 m. The well was tested to produce about 35.6 MMcfgd and 395 bopd.

Noble Energy strikes out with Gulf of Mexico wildcat

Noble Energy announced on Jan. 20 that its Madison exploration well in the Gulf of Mexico reached the targeted Upper and Middle Miocene objectives and did not encounter commercial hydrocarbons. Drilled to a TD of 16,859 ft, on Mississippi Canyon Block 479, the well was plugged and abandoned, and the drilling rig released. Noble Energy operated the well with a 60% working interest; Stone Energy Offshore held the remaining 40%.

BUSINESS 

M-I SWACO unveils proposal for new barite mine

Proposals to develop the barite resource at Duntanlich, Scotland, have been announced by M-I SWACO. The proposed mine is a replacement for the company’s mine at Foss. The Duntanlich ore body is unique in the UK. It is the only known significant barite deposit that is economic to work and will enable the UK to become self-sufficient in a mineral vitally important to the North Sea oil and gas industry. Barite is used largely as a weighting agent for drilling fluids; there is no substitute with all the essential properties of this mineral. The Foss barite deposit has a complex geological structure, making it difficult to mine. With increasing depth, this mineral is getting harder and more expensive to obtain. In comparison, a mine at Duntanlich, boasting a resource in excess of 7.5 million tonnes of barite, will supply the whole of the UK’s requirements for more than 50 years at planned production rates. M-I SWACO is intending to submit a planning application for the mine in Spring, following consultation with local communities. If the proposals are approved by the local council, production could begin toward the end of 2017.

Total awarded 10% stake in 40-year onshore concession

Total has signed a new 40-year onshore concession agreement that covers the 15 principal onshore oil fields of Abu Dhabi. The agreement was signed with the Supreme Petroleum Council of the Emirate of Abu Dhabi and ADNOC, granting Total a 10% participating interest, effective Jan. 1, 2015. The new concession will be operated by ADCO, a new operating company in which Total will be a 10% shareholder. Total also has been appointed asset leader for the Bu Hasa and southeast fields, which represent about two-thirds of ADCO’s production. In 2015, ADCO’s expected production is around 1.6 MMbopd, with an objective to increase output to 1.8 MMbopd from 2017.

Vallourec to expand Newfoundland facility

Vallourec Canada is expanding the capacity of its Newfoundland facility. The plant provides premium VAM threaded connections, OCTG repairs, and downhole accessories to the offshore oil and gas companies in the region. This project will almost double the size of the plant. The first stage will be completed in first-quarter 2015, and all upgrades will be finalized in third-quarter 2015. The improved lines will increase efficiencies and better serve the requirements of offshore operators. Image: Vallourec.

PRODUCTION 

Total brings West Franklin Phase 2 onstream

Total has started gas and condensate production from the West Franklin Phase 2 project in the Central Graben area of the UK North Sea. The project will supply 40,000 boed to the Elgin/Franklin hub. Michael Borrell, Total’s senior V.P. E&P, Europe and Central Asia, said, “With the start-up of the West Franklin Phase 2 project, Total consolidates the production capacity of its operated Elgin/Franklin hub. The hub holds significant reserves, as well as promising exploration opportunities.” West Franklin Phase 2 will develop reserves of 85 MMboe. The project includes the drilling of three new production wells and the installation of two new platforms, the West Franklin wellhead platform and the Elgin B platform, which will be also used to drill new wells on Elgin. Located approximately 240 km east of Aberdeen, West Franklin was discovered by Total in 2003, and Phase 1 production started in 2007 with two wells drilled from the Franklin platform. Total operates Elgin/Franklin, including West Franklin, with a 46.2% interest. 

Exxon Mobil starts output at Russia’s Arkutun-Dagi field

Exxon Mobil has started production at the Sakhalin-1 project’s Arkutun-Dagi field, the last of three fields to be developed. Peak daily oil production from the field is expected to reach 90,000 bbl. The field, offshore the northeast coast of Sakhalin Island in the Russian Far East, will bring total daily production at Sakhalin-1 to more than 200,000 bbl. The other two fields, Chayvo and Odoptu, began production in 2005 and 2010, respectively. Production from Sakhalin-1’s Arkutun-Dagi field will be routed through the existing Chayvo onshore processing facility on Sakhalin Island and delivered through pipelines to the De-Kastri oil export terminal located in Khabarovsk Krai, Russia. Exxon Neftegas is the Sakhalin-1 consortium operator with 30% interest.

ConocoPhillips announces first oil from Eldfisk II project

ConocoPhillips has announced first oil from the Eldfisk II project in the Norwegian North Sea. Eldfisk II, along with Ekofisk South and other projects offshore Norway, will add approximately 60,000 boed to the company’s production volumes by 2017. The Eldfisk II project includes plans to drill 40 new production and water injection wells. One of four pre-drilled wells was online, with the remaining three due to come onstream throughout January, the company said in a statement on Jan. 5.  Production from the field will ramp up over the next three years, as additional wells are brought online. The Greater Ekofisk Area, approximately 300 km offshore Stavanger, is comprised of four producing fields: Ekofisk, Eldfisk, Embla and Tor. ConocoPhillips (35.1%) operates the Greater Ekofisk Area.

Anadarko starts production at Lucius field in deepwater Gulf of Mexico

Anadarko has started production at Lucius field in the deep waters of the Gulf of Mexico, 240 mi south of the Louisiana coast. Lucius, which is in approximately 7,000 ft of water, has production secured through six subsea wells tied back to a moored production handling spar, connected to the shore via dedicated oil and gas pipelines. The spar has a design capacity of 80,000 bopd and 450 MMcfgd. Lucius field was discovered in November 2009, and the subsequent development project was sanctioned in late 2011.

ACQUISITIONS 

WPX Energy, Southwestern complete Marcellus deal

WPX Energy has completed the sale of its operations in northeastern Pennsylvania, including the release of certain firm transportation capacity, to Southwestern Energy Company. WPX has received nearly $600 million in cash this year by completing two sales—this one involving Marcellus shale operations, and the exit of its international interests in Argentina and Colombia. Image: WPX Energy

Chevron acquires deepwater exploration interests offshore Mauritania

Chevron’s wholly owned subsidiary, Chevron Mauritania Exploration Ltd., has reached an agreement to acquire a 30% non-operated working interest in Blocks C8, C12 and C13, offshore Mauritania, from Kosmos Energy. Blocks C8, C12 and C13 cover a contiguous area of approximately 6.6 million gross acres, in water depths ranging between 5,249 ft and 9,842 ft. Under the agreement, Kosmos Energy retains a 60% interest and remains the operator. SMHPM, Mauritania’s national oil company, will continue to have a 10% interest. Following any commercial discovery after the exploration phase, Chevron will become the operator, maintaining a 30% working interest. The transaction is subject to the approval of Mauritania’s government.