PRODUCTION

BP extends scope of Khazzan gas development

BP and Oman Oil have signed a heads of agreement with the government of Oman, committing to amend the Oman Block 61 exploration and production sharing agreement (EPSA), extending the license area of the block, and enabling further development of the major Khazzan tight gas field. BP operates Block 61 with a 60% interest, and Oman Oil holds the other 40%. Under the amended EPSA, the extension will add a further 1,000-plus km² to the south and west of the original 2,700 km² Block 61. The extension will allow a second development phase, accessing additional resources in the area that have been identified by drilling activity within the original block. Development of this additional resource is subject to final approval by the Omani government, and by BP; both expected in 2017. The Khazzan reservoirs in Block 61 represent one of the Middle East’s largest unconventional tight gas accumulations. Combined, plateau production from Phases 1 and 2 is expected to total approximately 1.5 Bcfgd. The Phase 1 project, sanctioned in December 2013, remains on schedule to deliver first gas in late 2017. Subject to completion of the agreements and final sanctioning, the new Khazzan Phase 2 project will go onstream from 2020.

Total starts output at world’s southernmost gas field

Total has started production from Vega Pleyade gas and condensate field, in the Tierra del Fuego region, offshore Argentina. Operated by Total, the project will have a production capacity of 10 MMcmgd (70,000 boed). “The project consists of the development of one of the largest offshore gas fields in Argentina, and is the world’s southernmost gas development. It will allow us to maintain the level of our operated production in Tierra del Fuego at around 18 MMcmgd (130,000 boed) and to contribute to the long-term delivery of gas to Argentina,” said Arnaud Breuillac, president of Total’s E&P division. The Vega Pleyade development consists of a wellhead platform in 50-m waters. The platform is tied back, via a 77-km offshore pipeline, to the Total-operated Rio Cullen and Cañadon Alfa onshore treatment facilities, and was completed in just two-and-a-half years. Vega Pleyade is in the Cuenca Marina Austral 1 concession. Total also has started production from Laggan and Tormore gas/condensate fields, in 600 m of water in the West of Shetland area. The fields will produce 90,000 boed. The Laggan-Tormore development consists of a 140-km tie-back of four subsea wells to the new, onshore, Shetland Gas Plant, which has a capacity of 500 MMscfd. 

In Salah Gas brings four-field project onstream

In Salah Gas—a JV between Sonatrach, BP and Statoil—has announced the start-up of its Southern Fields project. The project is the latest stage in the development of seven gas fields in central Algeria. The In Salah Gas JV commenced production in 2004 from three fields in the north of the area: Krechba, Teguentour and Reg. The Southern Fields project involves the development of four dry gas fields: Gour Mahmoud, In Salah, Garet el Befinat and Hassi Moumene. Developing the Southern Fields will maintain planned production at 9 Bcm/annum. The drilling of 26 new wells in the Southern Fields began in 2014 and is planned to continue until 2018. The project’s scope includes a new 500-MMcfd gas dehydration, central processing facility, close to Hassi Moumene; brownfield modifications to existing processing facilities at Reg, Teg and Krechba; 150 km of carbon steel export pipelines; 160 km of 13% chrome corrosion-resistant alloy infield flowlines; and the drilling and tie-in of the 26 new wells.

EXPLORATION/DISCOVERIES

Woodside hits second gas discovery offshore Myanmar

Woodside’s Thalin-1A exploration well in Block AD-7, in the Rakhine basin, intersected a gross gas column of approximately 64 m. Approximately 62 m of net gas pay were interpreted within the primary target interval. Block AD-7 is in the Bay of Bengal, approximately 100 km off the west coast of Myanmar. Water depth at the Thalin-1A well location is 836 m. The well reached a TD of 3,034 m, referenced from the rig’s rotary table. Following drilling, wireline logging was conducted, and it confirmed the presence of a gas column through pressure measurements and gas sampling. The gas discovery at Thalin-1A follows Woodside’s earlier gas discovery at the Shwe Yee Htun-1 well in Block A-6. Woodside CEO Peter Coleman said the two discoveries, at opposite ends of the Rakhine basin, were a great result for the company, saying that Thalin-1A had successfully proved a working petroleum system, and a new play type, different to that encountered at Shwe Yee Htun-1.

Statoil buys into OMV license in New Zealand

Statoil has agreed to acquire, from OMV, a 30% working interest in New Zealand’s Petroleum Exploration Permit (PEP) 57073. The permit covers an area of 9,800 km² in the East Coast basin, and it sits in water depths of 1,000–2,000 m. OMV will remain the operator, with a 70% working interest. “This is an underexplored area, with the potential for multiple plays, offering a considerable exploration upside,” said Nicholas Alan Maden, Statoil’s senior V.P. for exploration. The tract is adjacent to permits 57083, 57085 and 57087, which were awarded to Chevron and Statoil in 2014. OMV and Statoil will work together on the exploration program in PEP 57073. This includes geological and geophysical studies, as well as seismic acquisition over the coming years. The work will provide information necessary to decide, in 2021, if a well commitment should be made in the permit.

CGG to conduct multi-client survey offshore Mexico

CGG will begin a multi-client airborne gravity and magnetic survey offshore Mexico. Mexico’s Comisión Nacional de Hidrocarburos (CNH) has authorized the program, which will include the acquisition of approximately 200,000 line km, over six areas, across the Mexican Gulf of Mexico. Data acquisition will commence in March 2016 and is anticipated to take 12 months. The project has received significant pre-funding from the oil industry. The survey will provide coverage over the most prospective areas, from the prolific Perdido fold belt to the more mature, near-shore, heavy oil belt. The data will help explorers map crystalline basement, and magnetic and density anomalies within the sedimentary section. The airborne survey also will collect continuous data through the “transition zone,” from the marine environment to onshore. Image: CGG.

GOVERNMENT/REGULATORY

BOEM offers acreage in two March lease sales

The U.S. Bureau of Ocean Energy Management (BOEM) will offer about 45 million acres for oil and gas exploration, and development, in the Gulf of Mexico in two March lease sales. Central Planning Area Lease Sale 241 and Eastern Planning Area Lease Sale 226 will be held consecutively in New Orleans, La., on March 23. Sale 241 encompasses about 8,349 unleased blocks, covering 44.3 million acres, from 3 to 230 nautical miles offshore Louisiana, Mississippi and Alabama, in water depths ranging from 9 ft to more than 11,115 ft. Sale 226 encompasses 162 whole or partial unleased blocks, covering about 595,475 acres in the Eastern Planning Area. The blocks are at least 125 statute miles offshore, in water depths ranging from 2,657 ft to 10,213 ft. The area is south of eastern Alabama and western Florida; the nearest point of land is 125 miles northwest, in Louisiana. Most of the Eastern Gulf of Mexico Planning Area cannot be offered for lease until 2022, as part of the Gulf of Mexico Energy Security Act of 2006.

IHS sees further expansion of unconventional gas resource base

North America’s natural gas resource base is more abundant and lower-cost than ever, according to a new assessment by IHS. The findings show considerable growth of the low-cost segment of the resource base since 2010. The study concludes that approximately 1,400 Tcf of natural gas in the U.S. Lower 48 and Canada are recoverable at a current, break-even, Henry Hub price of $4/MMBtu or less (in real terms). This is a 66% increase over 2010 estimates. More than half of that (800 Tcf) can be produced at a current break-even price of $3/MMBtu or less, the study finds.

Aubrey McClendon dies in crash after indictment

Shale pioneer Aubrey K. McClendon, former CEO of Chesapeake Energy Corp., died in a car crash on March 2 at the age of 56. McClendon’s death came the day after he was indicted over lease bid rigging by the U.S. Department of Justice. The indictment alleged that McClendon orchestrated a conspiracy between two large oil and gas companies to not bid against each other for the purchase of certain oil and natural gas leases in northwest Oklahoma. During this alleged conspiracy, which, the DOJ said, ran from December 2007 to March 2012, the conspirators would decide ahead of time who would win the leases. The winning bidder would then allocate an interest in the leases to the other company. Following the March 1 indictment, McClendon issued a statement denying any wrongdoing. “The charge that has been filed against me today is wrong and unprecedented,” he said.  

BUSINESS/MERGERS & ACQUISITIONS

QP buys stake in Chevron’s deepwater leases offshore Morocco

Qatar Petroleum (QP) has reached an agreement with Chevron Morocco Exploration Ltd., a subsidiary of Chevron Corp., to acquire a 30% participating interest from Chevron’s 75% share in three deepwater leases offshore Morocco. Under the agreement, which was approved by the Moroccan government, QP will acquire the 30% interest in the deepwater leases, while Chevron will retain a 45% interest and remain the operator. Morocco’s Office National Des Hydrocarbures Et Des Mines will continue to hold a 25% interest. The three offshore areas are Cap Rhir Deep, Cap Cantin Deep and Cap Walidia Deep. The leases are 100–200 km west and northwest of the city of Agadir, Morocco. They encompass approximately 29,200 km², with average water depths ranging from 100 m to 4,500 m.

BP awards Subsea 7 contract for work offshore Egypt

Subsea 7 has won a major contract from BP, and partner DEA, for the development of Giza, Fayoum and Raven fields, offshore Alexandria, Egypt. This is the second phase of the West Nile Delta project, where the field development will take place at water depths as great as 800 m. The contract scope includes engineering, procurement, installation and pre-commissioning of the subsea infrastructure from 12 wells, with 80 km of umbilicals and 220 km of pipelines. It also includes the installation of export lines from the subsea location to the Idku terminal. Engineering and project management work will be undertaken at Subsea 7’s Global Projects Centre in London. Offshore installation is scheduled to begin in two stages. The first stage, launching in 2017, will comprise the landfall and shallow-water pipe lay, and the second stage, commencing in 2018, will involve the installation of deepwater pipelines and execution of the SURF scope. Image: Subsea 7.