What's new in production

July 2002 Vol. 223 No. 7  What's New in Production

Perry A. Fischer,  Editor

Access to low-cost O&G data. Data resources from state agencies are growing rapidly. Free software and data in GIS format are expanding mapping options. PTTC’s regional websites contain or provide links to a wealth of O&G data. Dr. Sandra Mark, PTTC’s Rocky Mountain Director, and associate Ira Pasternack, have developed a comprehensive list of Internet data and software resources for basic O&G data. The list can be found at: http://www.mines.edu/research/PTTC/cases/internet/index.html. To improve service and allow users to find data without surfing the different regional sites, PTTC is now providing links to regional data sources from the national website at: http://www.pttc.org/dataregional.htm.

China to quintuple gas production. Perhaps in part due to a recent giant discovery (see "What’s new in exploration," page 25), CNOOC, China’s state oil company, believes it will produce 1 Bcfd (10.3 Bcu m/yr) of natural gas by 2005. That’s almost three times last year’s output of 400 MMcfd (4.1 Bcu m/yr). The company estimates that its gas output will further rise to 1.9 Bcfd in 2010 and 2.9 Bcfgd in 2015, according to CNOOC’s manager of business strategy and development. CNOOC plans to build several pipelines to ship offshore natural gas to nearby provinces and connect them to a trunk pipeline along the coast in 10 to 15 years.

Sakhalin-I forges ahead. ExxonMobil plans to invest $750 million this year to develop the Sakhalin-I oil and gas field located north of Japan. Work on the first stage of the project will show the international community that a large investment project can go ahead in Russia, a company spokesman said. The money would be used to install drilling equipment on Chaivo oil field, and to upgrade the offshore platform Orlan.

The three offshore fields in the Sakhalin-I project, Chayvo, Odoptu and Arkutun-Dagi, are estimated to contain more than 2.3 Bbbl of oil and 17 Tcfg. The fields will be operated by an international consortium comprising ExxonMobil and Sakhalin Oil and Gas Development (SODECO), each with a 30% stake, with the remaining 40% divided between ONGC Videsh and two subsidiaries of Rosneft. The consortium has already invested $450 million in a five-year drilling program, and the overall project investment is expected to be around $12 billion over 30 to 40 years.

New LNG plants in Nigeria. ChevronTexaco, Phillips Petroleum, Statoil and Agip have stepped up plans to build LNG plants in Nigeria. The Ministry of Petroleum Resources said ChevronTexaco, Phillips Petroleum and Statoil have submitted construction proposals for the new LNG plants in the Niger Delta area. ChevronTexaco is handling a project named West Niger Delta LNG, while Phillips Petroleum, in partnership with Agip, is working on Brass LNG project. A Ministry source said that it would soon sign a memorandum of understanding with Statoil.

It is estimated that the Phillips LNG project could cost as much as $1.5 billion for the production of 5 million t of LNG per year, and the joint venture plans to bring the plant onstream within the next 18 months. ChevronTexaco’s West Niger Delta LNG project is expected onstream in 2008, with an annual production of 9 million t of LNG.

Nigeria, Africa’s largest crude oil producer, currently flares more than 60% of its associated gas. The Federal government has set 2008 as the target date to end gas flaring in the country. These LNG projects were a key strategy adopted by Agip, ChevronTexaco and Phillips to end gas flaring from their oil fields.

Special Assistant to the President on Petroleum Matters, Engineer Funso Kupolokun, confirmed on-going discussions on the three new LNG projects. He said Nigeria was poised to begin to make "as much money from gas as we are making from oil. First we want to flare down. It is no longer a question of flaring down or out, but of commercializing gas and making money from gas." Nigeria became a major gas exporter in 1999 when the NLNG plant began exports from the $3.8 billion Bonny LNG plant. Last year, NLNG earned $1.2 billion in revenue from the export of LNG to European markets.

Egypt-Jordan pipeline. A report by Business Monthly (American Chamber of Commerce in Egypt) cites the planned construction of an Egyptian-Jordanian natural-gas pipeline estimated to cost about $260 million. The pipeline – to be implemented on a Build, Own, Operate, Transfer (BOOT) basis – seems close to reality after the latest round of energy talks between the two countries.

The talks were held in mid-March and produced a financing commitment from the Kuwait Fund for Arab Economic Development. A tender was announced for construction of a gas pipeline linking Jordan’s port city of Aqaba to the country’s main refineries. Discussions emphasized Egyptian gas exports to Jordan as the first phase of a project that would eventually export gas to Lebanon, Syria and Turkey, and then on to Cyprus.

The first stage of the pipeline project involves extending a 250-km land pipeline from Al Arish to Taba, and then a 13-km maritime pipeline to Aqaba. This section, according to the March 15 issue of Middle East Economic Digest, is being built by Egyptian government-controlled Engineering Petroleum & Process Industries and Petrojet.

Completion of the project is scheduled for the end of first quarter 2003. The pipeline’s estimated capacity is 1 Bcfgd (10 Bcu m/yr) and depends somewhat on undrilled, but assumed, offshore reserves. Under an agreement signed in June 2001, Egypt’s Al-Sharq Gas Co. will provide Jordan with 100 MMcfgd (1 Bcu m of gas/yr) for 15 years starting in 2003.

About 57% of project funding has already been pledged. The Kuwait Fund for Arab Economic Development said it would provide Egypt with $100 million to construct the pipeline from Al Arish to Aqaba, with a three-year grace period, before a 20-year repayment schedule commences. The Arab Fund for Economic & Social Development has also agreed to provide $50 million for the project. Four international consortia placed bids on April 4 for construction of the pipeline.

Comments? Write: fischerp@gulfpub.com