PRODUCTION

First oil for Scolty/Crathes development for EnQuest, MOL

EnQuest has reported first oil from the Scolty/Crathes development in the UK’s Central North Sea. The fields, which were developed by a single horizontal well, each, lie about 160 km northeast of Aberdeen, Scotland, and are tied back to the Kittiwake platform. “Unit operating costs are expected to be under $15/bbl in the initial peak volume years, and production is anticipated to continue until 2025,” said EnQuest CEO Amjad Bseisu. EnQuest and MOL hold 50% interests in the fields. 

Chevron reports first gas at UK’s Alder field

Chevron North Sea has started production at Alder, a HPHT gas condensate field in the Central North Sea. Alder is a single subsea well tied back, via a 28-km pipeline, to the ConocoPhillips-operated Britannia platform, in which Chevron holds a 32.38%, non-operated working interest. The project has a planned design capacity of 110 MMcfgd and 14,000 bcpd. Production from the field is expected to ramp up over the coming months. Discovered in 1975, the development has been enabled through the application of innovative subsea technologies. Key technologies have included a number of firsts for Chevron in the North Sea, including a vertical mono-bore subsea tree system; a subsea high-integrity pressure protection system; and a specially designed corrosion monitoring system to measure the real-time condition of the production pipeline. 

Aker BP starts production from Norwegian project

Aker BP has started production from the Viper-Kobra development in the Norwegian sector of the North Sea, which is tied back to the Alvheim FPSO. Viper-Kobra consists of two separate discoveries (Kobra, 1997, and Viper, 2009), and constitutes part of Alvheim field. Thus, the development is included in the PDO for Alvheim, as are other structures in the area. The development comprises a new subsea installation, with a pipeline tied into the Volund manifold. The two reservoirs contain approximately 4 MMbbl of recoverable oil, each. Including some gas, total recoverable reserves are estimated at 9 MMboe. Estimated output from the two wells is initially planned to average 15,000 boed. The distribution of ownership interests corresponds to that of the Alvheim license: Aker BP, operator, 65%; ConocoPhillips, 20%; and Lundin Norway, 15%.

BUSINESS/MERGERS/ACQUISITIONS

Ophir, Golar and Schlumberger to develop $2-billion FLNG project

Ophir Energy and OneLNGSM, a JV between subsidiaries of Golar LNG and Schlumberger, have signed a binding agreement to establish a joint operating company (JOC) to develop the Fortuna project, in Block R, offshore Equatorial Guinea. OneLNG and Ophir will have 66.2% and 33.8% ownership of the JOC, respectively. The JOC will facilitate the financing, construction, development and operation of the integrated Fortuna project and, from final investment decision (FID), will own Ophir’s share of the Block R license and the Gandria FLNG vessel. This structure is designed to align investment across the value chain and provide a framework to promptly deliver a fully financed project. The FID is now expected to take place in first-half 2017, with first gas anticipated in first-half 2020. Initial offtake is expected to be 2.2-2.5 mtpa, for a duration of 15 to 20 years.

BP farms into Eni’s supergiant Zohr gas field

BP has agreed to pay Eni $375 million for a 10% interest in Egypt’s Shorouk concession, which contains the supergiant Zohr gas field. On closing, BP also will reimburse Eni for BP’s share of past expenditures. As part of the agreement, BP also has an option, before the end of 2017, to buy a further 5% interest in the concession under the same terms. BP Group Chief Executive Bob Dudley said, “BP has now been in Egypt for over 50 years, and we continue to see opportunities to further develop our extensive activities here. Beyond Zohr, the first phase of our major West Nile Delta project is on schedule to begin production next year, and the fast-tracked development of Atoll gas field is expected to come onstream in 2018.” Eni discovered Zohr field in August 2015; six wells have been drilled successfully, so far, on the field. Zohr lies in the Mediterranean Sea, approximately 190 km north of Port Said, in waters approximately 1,500 m deep. Thought to be the largest gas discovery made in the Mediterranean, Eni has estimated Zohr’s total gas resources-in-place to be approximately 30 Tcf. The first development phase at Zohr is being fast-tracked, with first gas expected in late 2017. Eni has had a 100% interest in the Shorouk concession; BP’s purchase is expected to close in second-quarter 2017.

Total, SOCAR sign agreement to develop field offshore Azerbaijan

Total and SOCAR have agreed to the contractual and commercial terms for the first phase of production from Absheron gas and condensate field. The field, which lies in the Caspian Sea, was discovered by Total in 2011. Production from this high-pressure field will be around 35,000 boed, including a significant portion of condensate. This first production phase also will enable a dynamic appraisal of the field for future phases. Total (40%) operates Absheron alongside SOCAR (40%) and ENGIE (20%).

Saudi Aramco, Rowan form offshore drilling JV

Rowan Companies and Saudi Aramco are to create a 50/50 JV to own, operate and manage offshore rigs in Saudi Arabia. The new company, which is expected to begin operations in second-quarter 2017, will use Rowan’s established business in Saudi Arabia as its base, with a scope of operations covering Saudi Arabia’s existing and future offshore fields. As operations begin, Rowan and Saudi Aramco will contribute three and two jackups, respectively. Rowan will contribute an additional two jackups, as the rigs complete their current contracts with Saudi Aramco in late 2018. The new company also will manage the operations of five Rowan jackups currently in Saudi Arabia, until their associated drilling contracts expire, which then may be released, leased by, or contributed to, the new company. Rowan and Saudi Aramco have committed the new company to purchase future newbuild rigs that will be constructed in Saudi Arabia.

REGULATORY/INDUSTRY TRENDS

Maersk, NOV to challenge maintenance status quo

Maersk Drilling and NOV have entered into a five-year partnership to improve maintenance predictability for drilling equipment. The partnership aims to implement a new maintenance mind-set, which will increase value for customers by minimizing operational downtime, while lowering maintenance cost levels. Until now, a major overhaul of drilling equipment has been carried out at five-year intervals as part of the Special Periodic Surveys at the quay side. Through this partnership, Maersk Drilling will switch to a condition-based maintenance strategy, where overhaul and repairs will, to the extent possible, be carried out as rolling maintenance while the unit is operating. As part of the agreement, NOV will establish a dedicated team that can assist Maersk Drilling’s rigs when needed. The team can be deployed instantly, if an urgent task arises or if a window of opportunity opens in which the crew needs assistance with a major overhaul job. When needed, and where circumstances allow, equipment will be replaced and sent onshore for a complete overhaul. Following the overhaul, the equipment will return to service on one of the sister rigs. The agreement covers Maersk Drilling’s three deepwater D-class semisubmersibles, as well as the four ultra-deepwater V-class drillships.

Canadian drilling seen edging higher in 2017

The Petroleum Services Association of Canada (PSAC) has released its 2017 Canadian Drilling Activity Forecast. The association is calling for 4,175 wells to be drilled in Canada next year, up slightly from the 3,950 expected this year. Although the association expected next year’s activity to be better than 2016, the projected total of 4,175 wells is still 63% lower than the number of wells drilled in 2014. Meanwhile, in a separate forecast, the Canadian Association of Oilwell Drilling Contractors is projecting that 4,665 wells will be spudded in Canada during 2017. 

Obama administration rules out Arctic leases in 2017–2022 OCS plan

The U.S. Department of the Interior has released its final plan governing lease sales for the Outer Continental Shelf between 2017-2022. The Proposed Final Program, details of which were released on Nov. 18, includes 11 potential lease sales in four planning areas. The program includes ten sales in the Gulf of Mexico and one off the coast of Alaska in the Cook Inlet Program Area. However, proposed lease sales in the Arctic waters of the Beaufort Sea and the Chukchi Sea were not included in the final program. Commenting on the program, U.S. Secretary of the Interior Sally Jewell said, “Given the unique and challenging Arctic environment, and industry’s declining interest in the area, forgoing lease sales in the Arctic is the right path forward.” However, the withdrawal of the Arctic leases drew criticism from industry bodies. API President and CEO Jack Gerard warned that removing the sales would weaken America’s energy security and put the nation at a competitive disadvantage.

REGULATORY/INDUSTRY TRENDS

BP acquires stakes in two North Sea prospects

BP has acquired interests in two exploration prospects, Jock Scott and Craster, in the UK North Sea. BP acquired a 25% interest in the Statoil-operated licenses to the east of Shetland, P2275 and P2097, which includes the Jock Scott prospect, and a 40% interest in the nearby P2163 and P2147 licenses. Statoil will remain the operator for all of these licenses. Statoil and BP are planning to drill an exploration well on Jock Scott in mid-2017. To the west of Shetland, BP acquired a 40% interest in the north and a 30% interest in the south of the Nexen-operated license P2062, which includes the Craster prospect. Nexen will remain the operator of the license. BP and Nexen are also planning to drill an exploration well on Craster in mid-2017.

Lundin strikes Barents Sea discovery

Lundin Petroleum has completed the Neiden exploration well as an oil and gas discovery. The well is in Block PL609, approximately 60 km northeast of the Alta discovery on the Loppa High, in the southern Barents Sea. The well encountered a 31-m hydrocarbon column (gross), with 21 m of oil and 10 m of natural gas. The total gross resource estimate for the Neiden discovery is between 25 MMboe and 60 MMboe. Extensive data acquisition and sampling was carried out. Testing revealed a high-quality karst carbonate reservoir. The discovery reduces the risk of the Børselv prospect, which is situated 15 km north and up dip from the Neiden discovery. The Børselv prospect is a candidate for drilling in 2017. Upon completion of the Neiden well, the Leiv Eiriksson semisubmersible was to move to the Filicudi prospect in PL533. The Filicudi prospect is estimated to contain gross prospective resources of 258 MMboe. Lundin Norway operates both PL609 and PL533, and holds a 40% and 35% working interest in these respective licenses.