World of Oil and Gas

Vol. 234 No. 3

WORLD OF OIL AND GAS

NELL LUKOSAVICH, SENIOR EDITOR

EXPLORATION

TGS to sell Fugro’s 2D multi-client library

TGS-NOPEC announced a commercial agreement to sell Fugro’s 2D multi-client library. Per this agreement, Fugro will provide TGS with an exclusive right to license and market the majority of Fugro’s multi-client 2D library and receive commission fees on the sales of these data. The agreement covers more than 1 million km of seismic data in areas of great strategic interest for TGS. While the brokerage agreement provides TGS with more data coverage in existing focus areas, such as Northwest Europe, it also provides access to a broad range of new client contacts and exposure to seven new countries/areas where TGS is not active today.

Lukoil reaches deal with Total for joint bid on Lebanon tenders

Lukoil, Russia’s second-largest oil producer, has reached a deal with France’s Total for a joint bid on tenders for offshore hydrocarbon projects in Lebanon. Lukoil has, in recent years, been looking abroad to offset production declines at its core fields in western Siberia.

San Leon, Halliburton sign deal to prove Polish potential

San Leon Energy has signed an agreement with Halliburton’s German affiliate to develop a strategic relationship to jointly explore and develop the carboniferous unconventional gas potential in San Leon’s Wschowa, Gora and Rawicz concessions in Poland. San Leon will continue to serve as operator and manage operations on the concessions. Under the agreement, Halliburton will perform and fund a diagnostic fracture injection test (DFIT) for the Siciny-2 well in second-quarter 2013. Upon completion of the DFIT, Halliburton will have the option to perform and fund a minimum 2-stage vertical hydraulic fracture in the Siciny-2 well, with San Leon paying 50% of the wholesale proppant (fracturing fluid) cost to Halliburton. This procedure is also planned for second-quarter 2013. Based upon initial results of Siciny-2, drilled by San Leon in 2012, the company estimates the net prospect resource potential of the carboniferous play on its Polish concession to be over 60 Tcf of recoverable gas.

UNCONVENTIONALS

CNPC, Eni develop unconventional resources in Sichuan basin

China National Petroleum Corp., the country’s largest energy producer by volume, said that it has signed a joint study agreement with Italian oil giant Eni to develop unconventional resources in the Sichuan basin. The block, north of Rongchang County, has an area of 2,000 sq km. If results show that development of the block is commercially and technically feasible, the two companies will enter into negotiations to sign a more formal production-sharing contract, so that further development can take place. CNPC signed the agreement as part of an overall deal with Eni to acquire a 28.6% stake in Eni East Africa, which owns the Area 4 natural gas field in Mozambique. The transaction gives CNPC a 20% stake in the Area 4 field, while Eni retains a 50% stake.

ABB to provide process analyzers for Cheniere Energy’s Sabine Pass LNG project

ABB has been chosen to supply process analyzers, system integration and related services for Cheniere Energy’s Sabine Pass, LNG export facility in Cameron Parish, La. Located 4 mi from the Gulf Coast in southwestern Louisiana, the new export facility is being built by EPC contractor Bechtel as an expansion of Cheniere’s existing Sabine Pass natural gas storage and import terminal. When completed, it will accommodate up to four LNG trains capable of processing approximately 2 Bcfd of gas liquefaction for transport and potential export. The initial project under construction includes two trains with a liquefaction capacity of 1 Bcfd. The project is scheduled to be commissioned in 2015.

ConocoPhillips to reduce AP-LNG, oil sands stakes

ConocoPhillips plans to sell some parts of its stakes in expensive developments, such as the Australia Pacific LNG project and the Canadian oil sands, so it can steer more cash to its U.S. shale plays, CEO Ryan Lance told analysts. The company has already announced plans to shed billions of dollars in assets, as it seeks to focus on fast-growing shale plays in the U.S. and bring in much-needed money. The potential sales will generate more cash and free up money for higher-margin projects. Lance said the company is targeting a $16-billion annual capital budget for the next five years, which includes about $2.5 billion set aside for exploration in unconventional formations, from Colorado to Colombia.

PRODUCTION

Statoil starts production from Skuld field in Norwegian Sea

Statoil said that, along with partners Eni and Petoro, it has started production from Skuld field at Norne in the Norwegian Sea. Skuld consists of two discoveries, Fossekall and Dompap, with recoverable reserves estimated at 90 MMboe. About 90% of this is oil, and the rest is gas. Skuld is the largest of the fields being developed in the fast-track portfolio. The average increase in daily production from Skuld over the next two years will be half of what is currently produced to Norne. The field amounts to 45% of the added production from fast-track projects in 2013. Total investments have been estimated at about $1.73 billion.

North Dakota doubles 2011 production numbers

According to EIA data, North Dakota—home to the Bakken shale—has hit an all-time high in crude oil output. The state’s production has been rising since the beginning of 2004, but that pace began to accelerate even more rapidly in the middle of 2011. Since then, production has more than doubled, going from just under 350,000 bopd in January of 2011, to a high of 770,000 bopd in December 2012. This boom in production was made possible by advances in hydraulic fracturing, which is required for 95% of wells drilled in the state. Graphs show a slight fall at the beginning of 2013, but this is due mostly to the fact that 75% of oil produced in North Dakota is transported by truck, before reaching rails, which carry it out of the state. Trucking, unlike pipeline or rail transportation, is especially vulnerable to inclement weather. The state is expanding its pipeline network to cope with these challenges.

Dockwise delivers mega-sized ETLP hull

Dockwise has safely transported the Chevron-operated Extended Tension Leg Platform (ETLP) hull from Silli-do Island, South Korea, around the Cape of Good Hope, and delivered it to Corpus Christi, Texas. The mega-sized hull will be used for Big Foot field, considered to be one of the largest and deepest oil discoveries in the Gulf of Mexico. The Bigfoot hull weighs 35,000 t and will be the world’s deepest TLP installation.

BUSINESS

Apache may earn $3 billion on deepwater U.S. Gulf sale

Apache Corp. could realize up to $3 billion in a rumored sale of its deepwater Gulf of Mexico oil and natural gas assets, analysts said. Apache was said to be considering an exit from the Gulf to concentrate on its onshore North American drilling assets. Apache declined to comment on the rumors, only noting that it announced in its fourth-quarter earnings release, that it planned to sell $2 billion in assets. A sale would undo Apache’s relatively recent investment in the Gulf of Mexico, when it acquired Mariner Energy in 2010 for about $2.4 billion in debt and cash

Petrobras approves $236.7 billion investment plan

Brazilian energy giant Petrobras plans to invest $236.7 billion over the next five years, maintaining spending and production targets at the same levels as in last year’s plan. The 2013–2017 investment plan remains one of the world’s largest corporate spending schedules, but it is up only marginally from the $236.5 billion that Petrobras earmarked for investments in the 2012–2016 period. The company failed, once again, to meet its production target in 2012, as maintenance shutdowns at aging offshore platforms and declining output in the mature Campos Basin undermined crude oil production. Petrobras ended 2012 with average domestic crude oil output of 1.98 MMbopd, short of the 2.02-MMbopd target, and expects production to remain stable in 2013.

Exxon to invest $190 billion over next five years on new resource opportunities		ExxonMobil plans to invest about $190 billion over the next five years on new exploration and development opportunities, as energy demand continues to grow. “An unprecedented level of investment is needed to develop new energy technologies, to expand the supply of traditional fuels and advance new energy sources,” Chairman and CEO Rex W. Tillerson said. The world’s largest publicly traded oil company said it plans to more than double its exploration acreage in a range of proven and emerging locations, such as Russia, that will feed its inventory in the coming years. Production of crude oil and other liquids is expected to increase an average 4%/year between 2013 and 2017, as Exxon starts production at 28 major oil and gas projects, 24 of which are liquids or liquids-linked projects.

REGULATORY AFFAIRS

U.S. seeks details from Shell on Arctic drilling

The U.S. government says key components of Shell’s Arctic program weren’t finalized going into last season, which put pressure on the company’s operations and schedule. In the future, the government will require a more comprehensive plan, describing every phase of the operation. It will also require Shell’s management systems to be audited by a third party. Shell will need to provide more detailed plans before it can make another attempt to drill off Alaska.

U.S. grants Pangea project permission to export LNG

The U.S. Department of Energy has granted the Pangea project long-term, multi-contract authorization to export LNG to free trade agreement nations from its South Texas LNG Project, in development on Corpus Christi Bay. Pangea LNG will be authorized to export up to 8 Mtpa of LNG produced from domestic gas fields for a 25-year term, commencing on the date of its first export. That amount is equal to 1.09 Bcfgd.

Abu Dhabi invites field bids

Abu Dhabi National Oil Co., or Adnoc, has invited several international oil firms, in addition to existing partners, to bid for the renewal of a shared license to operate some of the emirate’s largest onshore oil fields. Chevron Corp., Occidental Petroleum Corp., China National Petroleum Corp., Japan’s Inpex Corp., Korea National Oil Corp., Statoil and Rosneft were among the new companies invited. The 75-year-old concession, which expires at the end of the year, produces more than half the UAE’s crude production of 2.6 MMbopd.

Brazil suspends royalties regime

Brazil’s Supreme Court has suspended the redistribution of oil royalties that would cost three states billions of dollars in lost revenue. Supreme Court Justice Carmen Lucia granted the injunction after Rio de Janeiro, Espirito Santo and Sao Paulo states filed lawsuits to block the new royalties regime.

DISCOVERIES

Anadarko’s Shenandoah well hits 1,000 net ft of oil pay

Anadarko Petroleum said that its Shenandoah-2 well in the deepwater Gulf of Mexico encountered more than 1,000 net ft of oil pay in multiple high-quality Lower Tertiary-aged reservoirs. The discovery is in Walker Ridge Block 51 and marks one of Anadarko’s largest oil finds in the Gulf of Mexico. The well was drilled to a TD of 31,405 ft in 5,800 ft of water, more than 1 mi southwest and 1,700 ft structurally down-dip from the Shenandoah-1 discovery. Similar to the initial Shenandoah discovery well, log and pressure data from the Shenandoah-2 well indicate excellent-quality reservoir and fluid properties. The well was drilled to test the down-dip extent of the accumulation, and the targeted sands were full to base with no oil-water contact. Anadarko is the operator of the Shenandoah-2 well with a 30% working interest. Other co-owners are ConocoPhillips, Cobalt International Energy, Venari and Marathon Oil Company.

Noble upgrades Leviathan resource estimate to 18 Tcf

Noble Energy has announced results from its second Leviathan appraisal well in the Rachel license, offshore Israel. The Leviathan #4 appraisal well was drilled to a TD of 16,992 ft and encountered 454 net ft of natural gas pay in multiple intervals, the thickest net pay of any well drilled, to date, at Leviathan. Reservoir quality and the field-wide gas/water contact were confirmed at the well location, and 240 ft of core were recovered. These results have enhanced the company’s understanding of the reservoir, which has led to an increase in the field’s estimated recoverable gross mean resources to 18 Tcf, with a range of 15 to 21 Tcf. Following operations at Leviathan #4, and pending partner approval, the Ensco 5006 rig will be relocated to the Karish prospect offshore Israel.

Qatar Petroleum, Wintershall find gas in Block 4 north

Qatar Petroleum and Wintershall struck a gas discovery in exploration Block 4 North, offshore Qatar, and have estimated the find to hold 2.5 Tcf of natural gas. Qatar Petroleum and Wintershall entered into an E&P sharing agreement for Block 4 north in November 2008. Mitsui Gas Development Qatar joined in 2010 by acquiring 20% of the contractor’s interest, with Wintershall retaining 80% interest and operatorship. Block 4 North is in direct proximity to North field at a water depth of around 70 m.

Dorset discovery totals 2.2 Bcf

Royale Energy announced that its new Dorset well onshore California has been completed with a flowrate of 1.375 MMcfgd. The most recent evaluation confirms that 2.2 Bcf of natural gas will be produced from this discovery.

GeoPark hits first Chile find

GeoPark Holdings discovered the new Palos Quemados gas field on the Tranquilo Block in Chile. The company drilled and completed the Palos Quemados 1 well to a TD of 5,249 ft. A test conducted in the El Salto formation, at approximately 2,641 ft, resulted in a production rate of 4 MMcfgd, through a 10-mm choke, and with a wellhead pressure of 1,050 psi. Further production history will be required to determine stabilized flowrates and the extent of the reservoir. The Palos Quemados 1 well is 3.7 mi from a regional gas pipeline. Studies are underway to connect the gas to market. Palos Quemados field is the first gas discovery in the Tranquilo Block by GeoPark, and the first hydrocarbon discovery in the Magallanes Fold and Thrust Belt in more than 40 years.

Petrobras strikes oil in Iara area

Petrobras has confirmed the presence of good-quality oil in well 3-RJS-706 (3-BRSA-1132-RJS), in the Iara area, Block BMS-11 of the Santos Basin pre-salt. The well is 140 mi off the coast of Rio de Janeiro, 3.7 mi from the discovery well (1-RJS-656, Iara), in a water depth of 7,208 ft. This well, the fourth in the Iara area, is still undergoing drilling and will continue with the aim of defining the base of the oil reservoirs. Results have confirmed 28°API oil in good-quality carbonate reservoirs, obtained by cable samples, starting at a depth of 17,257 ft.

Eni strikes more oil off Angola

Eni has made its ninth oil discovery in Block 15/06, in deep waters offshore Angola, increasing the resource base of the West Hub project. The discovery was made through the Vandumbu 1 well, 93 mi from the coast. The well was drilled in a water depth of 3,202 ft and reached a TD of 13,474 ft.

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