World of Oil

ConocoPhillips well on fire in British Columbia

A ConocoPhillips Canada gas well is burning in a remote area of northeast-ern British Columbia. The company said in a news release that it does not know how long it will take to get control of the fire, which broke out early Nov. 12. A rig crew has been removed from the site, but no injuries have been reported. The company said it has set up roadblocks and air monitoring stations in the area. A company spokesman said the fire was sparked by an influx of gas that damaged the rig. In a bid to contain the leak, the company is likely to drill a relief well, a process that could take up to a couple of weeks.

Petronas, Sasol partner for offshore Mozambique

Sasol, the GTL specialist, and Petronas of Malaysia have entered into a strategic partnership covering an offshore hydrocarbon exploration program in Mozambique, where drilling commenced in early October. Sasol will continue as operator of the joint venture consortium. According to the terms of the partnership agreement, Blocks 16 and 19 offshore Mozambique will be split among Sasol, with 50% interest; Petronas, 35%; and the Government of Mozambique and its national oil company with 15%.

Russia decreases oil export duties

The Russian government has decreased oil export duties in response to top producers’ concerns of losses on overseas shipments. Beginning in November, the duty was set at $40 per bbl, down from $51 per bbl.

Khurais Field onstream in mid-2009

Saudi Arabia announced that it will bring onstream its 1.2 million-bpd Khurais Field development in mid-2009. “Come June 2009 and you will see Khurais onstream,” Saudi Arabian Oil Minister Ali Naimi said. Naimi added that the 500,000-bpd Khursaniyah Field, originally due to start pumping crude in late 2007, is now onstream.

Ecuador amends oil deals with Petrobras and Repsol

Ecuador reached an agreement with both Petrobras and Repsol regarding the companies’ oil and gas contracts within the country. Ecuador signed an agreement with Brazil’s state-owned Petrobras in early November to change a valid participation contract into one of service providing. The amended contract will sharply increase Ecuador’s oil royalties from fields that produce 32,000 bpd or more - to 67%. The agreement establishes that the share for Ecuador in Block 18, currently exploited by Petrobras and producing about 11,000 bpd, will go up to 40% from 25.8%. Ecuador and Repsol have agreed on a year of transition to service contracts similar to the ones previously signed by Petrobras.

Burma removes rig from disputed waters

Burma removed a rig from a stretch of the Bay of Bengal after Bangladesh sent warships to protest against exploration in the disputed waters. Bangladesh deployed four ships and put its navy and armed forces on high alert after a South Korean company escorted by Burmese ships began work in the area. Bangladeshi Foreign Minister Iftekhar Ahmed Chowdhury told reporters that Burma was removing the exploration equipment. “What I have heard from the ground is that Daewoo is slowly removing its rig. As I talk to you, it is leaving Bangladeshi territory,” Chowdhury said. “We hope that they will not conduct any further exploration in this area until we can demarcate our maritime boundary through talks,” he added. Bangladesh’s armed forces issued a statement saying Burma had been forced to withdraw from the disputed waters. Bangladesh faces an acute energy shortage and has invited bids from foreign companies to explore gas reserves in its part of the Bay of Bengal. Officials of the two countries held talks in the new Burmese capital Naypyidaw and later in Bangladesh’s capital Dakha, but apparently failed to resolve the dispute. Burma, which has discovered huge reserves of natural gas in the bay, insists its exploration work is legal.

BASF, Gazprom begin production at Achimgaz project

In early November, BASF and Gazprom officially launched natural gas production at the joint venture ZAO Achimgaz in Siberia. The German-Russian joint venture produces natural gas and condensate from the Achimov Formation in the Urengoy deposit, which lies about 2,174 mi northeast of Moscow. The joint venture plans to recover up to 7.1 Tcf of natural gas and 3.6 billion bbl of condensate from the Achimov Formation over a period of more than 40 years. The annual natural gas production target during the plateau phase is up to 265 Bcf. The Achimov reserves lie at a depth of about 12,000 ft and have a much more complex structure than the overlying rock formations that have been producing so far. A gas treatment facility as well as three gas and condensate wells are currently in operation at section 1A of the Achimov Formation, providing 53 MMcf of gas daily.

Russia, China sign oil pipeline deal

Russian oil pipeline company Transneft and China National Petroleum Corporation signed a deal in late October for the construction of a pipeline spur between the two countries. The pipeline would run some 43 mi from the East Siberia-Pacific Ocean trunk pipeline in Skovorodino, Siberia - which is still under construction - to the Chinese border and will eventually supply the oil hub of Daqing in northern China. Pipeline capacity is expected to be over 118.5 million bbl of oil per year, and the line will be put into operation no earlier than 2009.

Indonesia awards 31 oil and gas exploration licenses

Indonesia has been offering new exploration rights and financial incentives for exploration in an attempt to slow its production decline. In late October, the country awarded 31 oil and gas exploration licenses. The government awarded the Arafura Sea Block to ConocoPhillips, the offshore West Papua I and III Blocks to Chevron and the offshore North Sumbawa II Block to Husky Energy. Hess received Block Semai V, an offshore block west of Papua province.

Total, Nigeria sign deep offshore licenses

In early November, Total signed an agreement with OMEL Energy Nigeria Limited (OENL) and OMEL Exploration and Production Nigeria Limited (OEPNL) for interests of 14.5% in deep offshore license OPL 279 and 25.67% in deep offshore license OPL 285. OENL will remain the operator for block OPL 285, and OEPNL the operator for block OPL 279. The Nigerian company EMO Exploration and Production Limited is also partner on both blocks. OPL 279 is located some 62 mi offshore, near Ehra and Bosi Fields, in water depths ranging from 2,600 to 5,900 ft. The license covers an area of about 434 sq mi. OPL 285 is located about 50 mi offshore, covering an area of about 452 sq mi near Bonga Field, in water depths ranging from 1,300 to 3,000 ft. For each block, the first exploration period, which ends in 2012, covers commitments for acquisition and processing of 193 sq mi of 3D seismic and the drilling of one exploration well. In the second 5-year exploration period, which is optional, the work commitments will cover the acquisition of a further 193 sq mi of 3D seismic and the drilling of two exploration and/or appraisal wells.

Colombia auctions 22 oil and gas areas

In early November, the Colombian oil licensing agency (ANH) auctioned oil and gas exploration and production in 22 areas across the country. The ANH picked ten companies to operate 22 out of the 43 areas auctioned. Canada-based Pacific Rubiales Energy Corp. won the rights to explore six areas, while Columbia’s state-controlled Ecopetrol SA won the rights to seek oil and gas in four blocks. France’s Etablissements Maurel et Prom SA, Argentina’s Pluspetrol SA and South Korea’s SK Energy Co. Ltd. won the rights to explore two blocks each. Privately owned Tecpetrol SA won the rights over three blocks, while India’s ONGC Videsh Ltd. and Lewis Energy won a block each. The government will check that the companies selected fulfill all the requirements, and contracts will be signed in the coming weeks. The companies offered to pay a contribution of between 2% and 47% on top of taxes, royalties and a new tax on high prices created recently.

CNOOC, NIOC finalizing North Pars Field development plan

National Iranian Oil Co. (NIOC) is finalizing a development plan for Iran’s North Pars gas field with China National Offshore Oil Corp. (CNOOC) and is negotiating the price of the gas. Mohammad Ali Emadi, NIOC’s director of research and development, said the price of the gas and other outstanding terms may be agreed upon “in less than one month.” NIOC and CNOOC had agreed on a development plan that encompasses both the production of gas at the wellhead and investment in a plant to turn it into liquefied natural gas, without specifying exact volumes. The agreement between the two companies would last for at least 25 years. “We finalized a discussion about the plan for the liquefaction and LNG [in October], and some of the package which is very important, such as the price of the gas, is coming closer, maybe less than one month,” Emadi said. North Pars gas field, located 53 mi north of South Pars gas field, contains about 80 Tcf of gas reserves, and each of the four development phases may produce as much as 1.2 Bcf a day of gas.

Gazprom, Petrovietnam sign offshore deal

In late October, Gazprom signed a deal with Petrovietnam to explore for oil and gas off the Vietnamese coast. The 30-year agreement with the Vietnamese state oil company covers the exploration of four blocks on Vietnam’s continental shelf. Gazprom will finance initial exploration work on Blocks 129, 130, 131 and 132. The companies’ existing joint venture, Vietgazprom, will carry out the work. The two companies also created a new joint venture, Gazpromviet, for work in Russia and third countries.

BP resumes Baku-Supsa pipeline exports

In early November, the Baku-Supsa pipeline, which pumps oil from Azeri fields, reopened after being shut for almost three months. “The Baku-Supsa pipeline has started working again and we will gradually raise the amount of oil pumped through it to the optimal level,” BP spokesman Tamam Bayatly said. The Azeri state oil company has said the pipeline will pump 90,000 bpd after reopening, and is likely to remain at this level until the end of the year; capacity is 145,000 bpd.

Iran launches South Pars phase 6

Phase 6 of the giant South Pars gas field was launched in late October. Phase 7 is due to go online by the end of the year and phase 8 in May. The three phases will produce 3.7 Bcf of sour gas, 158,000 bbl of condensates and 4,450 metric tons of liquefied petroleum gas a day. The project is a joint one between Iranian and foreign companies, including StatoilHydro. South Pars Field has reserves of about 494 Tcf and has been divided into 28 phases. Most of the gas is slated for injection into oil fields of the southern province of Khuzestan to compensate for low pressure, which cuts the oil recovery rate.

China, Iraq sign oil deal

In early November, China and Iraq signed an oil deal that would allow China National Petroleum Corporation (CNPC) to help develop al-Ahdab Field in eastern Iraq’s Wasit province. Iraqi Oil Minister Hussein al-Shahristani signed the $2.9 billion deal with CNPC President Jiang Jiemin. “This is an important participation from the Chinese side to develop the Iraqi oil fields, and we are looking forward for more participation in rebuilding Iraq,” Shahristani said. He added that the deal “would produce a total of more than 110,000 bpd, which would mainly be allocated to the Zubaidiyah power plant in the province and the surplus would go for export.”

Explosion damages Kirkuk-Ceyhan pipeline

An explosion cut oil flows on the Turkish section of the Kirkuk-Ceyhan pipeline in the southeastern province of Sanliurfa in early November. Following the explosion and an immediate loss in pressure, Turkey’s state-owned pipeline company Botas closed the valves on the pipeline. The pipeline was flowing at 480,000 bpd last month from northern Iraq to the Turkish port of Ceyhan on the Mediterranean Sea.

Russia buys Oman’s Caspian pipeline share

In early November, Russia bought Oman’s 7% stake in the Chevron-led Caspian oil pipeline, raising its share in the key export route for Kazakhstan’s crude to 31%, Russian pipeline monopoly Transneft announced. Transneft, the biggest state shareholder in the Caspian Pipeline Consortium (CPC), is involved in protracted discussions with other shareholders of the group on terms by which the route’s capacity could be expanded. Oman decided this year to sell its stake in the pipeline, which pumps Kazakh crude to Russia’s main Black Sea port of Novorossiisk. The pipeline has been shipping oil since 2001. It pumps up to 750,000 bpd to Russia for re-export to the Mediterranean.

Statfjord Nord shut in until late 2009

StatoilHydro announced in early November that it is in the process of shutting down its Statfjord Nord Field for technical repairs, which will halt the field’s 14,000-bpd output until third-quarter 2009. “We’ve had some trouble with water injection on the Statfjord satellite,” StatoilHydro spokesman Geir Gjervan said. “We started to phase down production in mid-October and we expect it to be at zero within the year.” StatoilHydro is the field operator, with a 21.88% stake, while Royal Dutch Shell holds 10%, ConocoPhillips has 12.08%, ExxonMobil 25%, Petoro 30% and Enterprise Oil Norges 1.04%.

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