Production

Chevron reports first gas from Chuandongbei project in China

Chevron’s wholly owned subsidiary, Unocal East China Sea, Ltd., has reported the start of natural gas production from the first stage of the Chuandongbei project in southwestern China. Chuandongbei is one of the largest onshore gas projects developed by an international oil company and a national oil company in China. “First gas for the Chuandongbei project represents a significant milestone and highlights Chevron’s leadership in the development of sour gas resources,” said Jay Johnson, executive V.P., Upstream, Chevron. The Chuandongbei project covers over 800 km² in Sichuan province and the Chongqing Municipality. Unocal East China Sea, Ltd. holds a 49% participating interest as the operator, and CNPC holds the remaining 51%. The start-up of the first train commences stage one of the project. Production is planned to ramp up over the coming months, as all three trains come online. 

Anadarko reports first oil from Heidelberg development

Anadarko has reported first oil from its Heidelberg development in the Gulf of Mexico. According to Anadarko, Heidelberg, the company’s second major truss spar development in the Gulf of Mexico in the last two years, achieved first oil on Jan. 14. Lucius, the spar’s sister development, started production in January 2015.

Shell reports first gas from Corrib field, exits development of Bab sour gas reservoirs

Natural gas has started to flow from Ireland’s Corrib gas field, Shell reported. Located 83 km off Ireland’s northwest coast, in water depths of almost 350 m, Corrib gas field lies about 3,000 m below the seabed. At peak annual production, Corrib field is expected to produce around 260 MMscfgd. Six wells have been drilled at Corrib field, with gas transported to the Bellanaboy Bridge Gas Terminal in northwest Mayo through a 20-in. pipeline. The gas is processed at Bellanaboy before it is transferred into the Gas Networks Ireland network, which delivers it to Irish consumers. “We are pleased to have completed the development of this unique project and to bring the Corrib field on stream,” Shell E&P Ireland Ltd. Managing Director Ronan Deasy said. The Corrib project is a JV between Shell E&P Ireland Ltd. (operator, 45%), Statoil Exploration Ireland Ltd. (36.5%) and Vermilion Energy Ireland Ltd. (18.5%). Meanwhile, in a separate announcement, Shell reported its decision to exit the joint development of the Bab sour gas reservoirs with ADNOC, in the emirate of Abu Dhabi, and to stop further joint work on the project. Following an evaluation of technical challenges and costs, Shell concluded that the project does not fit with the company’s strategy.

Eni starts production at field offshore Angola

Eni has started production from Mpungi field, in the West Hub Development Project, within Block 15/06 of the Angolan Deep Offshore, about 350 km northwest of Luanda, Angola. The start-up of Mpungi field, which follows the West Hub’s first oil from Sangos field in November 2014, and Cinguvu field in early April 2015, will bring production up to approximately 100,000 boed in first-quarter 2016. The West Hub Development Project encompasses the development of Sangos, Cinguvu, Mpungi, Mpungi North, Ochigufu and Vandumbu fields. The wells are arranged in clusters and connected to the N’Goma FPSO.

Cheniere delays first Sabine Pass LNG export

Cheniere Energy Partners expects to export the first LNG commissioning cargo from its Sabine Pass liquefaction project in Cameron Parish, La., in late February or March. The first commissioning cargo was initially expected to occur by late January. However, instrumentation issues were discovered during the final phases of plant commissioning and cool down that required some additional work, said the company in a statement dated Jan. 14. “We are now expecting the first cargo in late February or March,” said Neal Shear, the company’s interim president and CEO. 

Regulatory/Government

Operators face difficult year, as hedging protections roll off: IHS

As oil prices continue to decline, North American E&P companies have hedged just 15% of their total production volumes for 2016, including 14% of oil and 18% of natural gas, leaving them largely exposed to current depressed market prices, according to IHS. Production hedging for the group of 51 companies studied will fall even more significantly in 2017, when just 4% of total production will be hedged, including only 2% of oil and 7% of gas, IHS said. “For most companies in the sector, 2016 is going to be another very tough year, as plunging revenues lead to balance sheet deterioration, and financial pressures mount,” said Paul O’Donnell, principal analyst at IHS Energy.

Interior moves to curb methane emissions on public, tribal lands

U.S. Secretary of the Interior Sally Jewell announced new regulations on Jan. 22 to reduce the release of natural gas from oil and gas operations on public and American Indian lands. According to the Department of the Interior, the proposed rule on venting, flaring and leaking will help curb waste of America’s natural gas supplies, reduce harmful methane emissions and provide a fair return on public resources for federal taxpayers, tribes and states. Developed by Interior’s Bureau of Land Management (BLM), the proposed rule would require oil and gas producers to adopt available technologies, processes and equipment that would limit the rate of flaring at oil wells on public and tribal lands, and would require operators to periodically inspect their operations for leaks, and to replace outdated equipment that vents large quantities of gas into the air. Operators would also be required to limit venting from storage tanks and use best practices to limit gas losses when removing liquids from wells. The new measures would also clarify when operators owe royalties on flared gas, and ensure that BLM’s regulations provide congressionally authorized flexibility to set royalty rates at or above 12.5% of the value of production. However, the proposed regulations drew prompt criticism from IPAA, which said operators already have a vested interest in curbing emissions. “This is the latest in the string of bad policies released by this administration showing a lack of knowledge of how the oil and gas industry truly works,” said IPAA Senior V.P. of Government Relations and Political Affairs Dan Naatz. “Imposing these new regulations will make it more expensive and harder for independent producers to operate, reducing America’s total energy production and preventing additional receipts from going back to the U.S. Treasury.”

MERGERS/ACQUISITIONS/BUSINESS

McClendon, YPF in $500-million Vaca Muerta venture

Aubrey McClendon, CEO of American Energy Partners, LP (AELP), and Miguel Galuccio, president and CEO of YPF, have signed initial agreements for the exploration and development of the Vaca Muerta formation in Argentina’s Neuquén basin. The CEOs jointly visited Juan José Aranguren, Argentina’s Minister of Energy, to present details of the shale oil and gas projects that both companies plan to execute, which entail investments of more than $500 million over the next three years, and to introduce AELP. One project consists of launching a shale oil and gas development pilot in the Bajada de Añelo Block, covering approximately 200 km². After this first stage is completed by mid-2018, the project would enter into the full-field development phase in “U.S.-style shale manufacturing” mode. In addition, YPF and an affiliate of AELP, in partnership with Pluspetrol and Gas y Petróleo de Neuquén, will launch a second project to delineate shale gas resources in the southern portion of the Cerro Arena Block, covering approximately 375 km².

FMC wins $180-million subsea contract from Woodside

FMC Technologies has signed an agreement with Woodside for the design, manufacture and supply of subsea production systems for the Greater Western Flank Phase 2 (GWF-2) Project as part of the North West Shelf (NWS) Project in Western Australia. The contract is valued at approximately $180 million for FMC Technologies and includes: subsea production trees; wellheads; manifolds; subsea and topside controls; and flowline connection systems. Deliveries are expected to begin in 2016 and continue through 2018. The GWF-2 Project is the fourth major gas development for the NWS Project in the last seven years, and is expected to develop 1.6 Tcf of raw gas from its combined six fields, using subsea infrastructure and 21.7 mi of 16-in. pipeline connecting to the existing Goodwyn A platform.

Aker to deliver FPSO concept study for Johan Castberg

Aker Solutions has secured an order from Statoil to provide a concept study for an FPSO facility for the Johan Castberg field development in the Barents Sea. The order is a call-off by Statoil on an engineering contract for Johan Castberg won by Aker Solutions in 2013. The Statoil-operated Johan Castberg field lies about 240 km northwest of Hammerfest, Norway.

Shareholders approve Shell’s BG takeover

Shareholders of Royal Dutch Shell and BG Group have approved Shell’s takeover proposal for the Reading, England-based company. According to Reuters, 99.53% of BG shareholders voted in favor of the merger on Jan. 28, a day after 83% of Shell’s shareholders approved the deal. The two companies are set to merge on Feb 15. Commenting on the BG shareholder vote, Ben van Beurden, CEO of Shell, said, “BG adds attractive deepwater and integrated gas positions, and will act as a catalyst for accelerating the re-shaping of our business.”

EXPLORATION/DISCOVERIES

Woodside discovers gas offshore Myanmar

Woodside’s Shwe Yee Htun-1 exploration well, in Block A-6 in the Rakhine basin, in the western offshore area of Myanmar, has intersected a gross gas column of approximately 129 m. Approximately 15 m of net gas pay is interpreted within the primary target interval. Shwe Yee Htun-1 targeted one of many identified channel complexes that run over a large anticlinal feature, the Saung Anticline. “Further analysis will be undertaken to understand the full potential of the play, but this de-risks a number of leads, which will now be matured,” Peter Coleman, CEO of Woodside, said. “This discovery is an encouraging outcome for future exploration and appraisal activity in the area.”

TGS reaches midway point on Gigante seismic program

TGS has acquired 93,000 km of the 186,000 km 2D seismic project, Gigante, the company said Jan. 28. Gigante covers the entire offshore sector of Mexico and ties into TGS’ regional 2D seismic grid covering the entire U.S. Gulf of Mexico. Interpretation of preliminary data has identified a number of prospective play fairways within a variety of structural provinces. Delivery of fast-track products is ongoing, with over 57,000 km presently available, including areas covering the proposed bid rounds in the Campeche, Perdido and Mexican Ridges regions. Acquisition of the Gigante multibeam data is 12% complete, with preliminary results available. The resulting detailed seafloor bathymetry provides information on the structural overprint of underlying geology and can identify seafloor hydrocarbon seeps. This is used to direct TGS’ seafloor coring operations, which commenced in January. The piston core samples will be analyzed to validate active petroleum systems and will be combined with TGS’ other geoscience data as part of a comprehensive framework interpretation of the region.