World of Oil and Gas

Vol. 234 No. 5

CenterPoint, XTO sign Bakken shale crude-gathering pact

ExxonMobil’s XTO unit has agreed to gather Bakken shale oil production into a new crude oil gathering system being built by a subsidiary of CenterPoint Energy. The agreement is the first secured for the proposed pipeline, which will have a capacity of 19,500 bopd. It underscores the rapid build-up of infrastructure taking place in the shale plays, which underpin a big boost in U.S. oil output. The Bakken shale has turned North Dakota into the second-largest U.S. producer of crude, after Texas. Limited infrastructure in the region has led many producers there to ship their oil via rail, and the bottleneck has produced a discount in the price of crude extracted in the region.The state is expanding its pipeline network to cope with these challenges.

Noreco: Huntington field production starts

Noreco has been advised by its operating partner, E.ON Exploration and Production, that production from Huntington field on the UK Continental Shelf has commenced. The Huntington development includes the Voyageur Spirit FPSO, modified specifically to meet the field requirements, along with a six-well subsea drilling template and a 12-km gas export pipeline connected to the BP CATS transportation system. Huntington is expected to have a production capacity of approximately 30,000 bopd. Noreco has a 20% interest in Huntington field, and E.ON Exploration and Production holds 25%. Other partners are Premier (40%) and Iona Energy (15%).

OPEC: China to overtake U.S. as largest oil importer

China could overtake the U.S. as the world’s largest oil importer by 2014, according to an OPEC report. This is the latest evidence that the North American shale boom is reshaping global energy markets and reducing U.S. oil import needs. OPEC, whose members supply more than one in three barrels of crude consumed worldwide, said rising Chinese imports were backed by increased throughput at the country’s refineries. The group quoted analysis that said China’s oil imports could top 6 MMbpd this year, while the EIA foresees net U.S. oil imports could fall below that level in 2014. After initially downplaying the impact of the U.S. shale boom, OPEC may be gradually accepting its transformational role in markets.

Feds assess civil penalty on Oxy

Oxy USA, Inc. has been hit with a $947,000 civil penalty by the federal Office of Natural Resource Revenue (ONRR), based in Lakewood, Colo. As part of the U.S. Department of the Interior, the ONRR office collects royalties from oil and gas produced on federally owned lands, including American Indian lands and tracts offshore, on the Outer Continental Shelf. Announced on April 23, the penalty was assessed for “knowing or willful failure” to permit an audit of Oxy’s oil and gas leases on federal lands in New Mexico. “The goal of these audits is to ensure that we are collecting every dollar due to the American taxpayer,” Greg Gould, director of the ONRR office, told the Denver Business Journal. The federal office claims that New Mexico state officials contacted Oxy a number of times for documents considered necessary for such an audit, but that the company failed to comply. The state had originally requested documents from Oxy pertaining to the volumes, values and royalties for four federal leases and two agreements in New Mexico from March 2008 to December 2009.

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.

The Denver-based U.S. subsidiary of Canadian firm Encana has made a business decision to begin drilling in New Mexico’s San Juan basin, considered to be a potentially new oil play. The company noted that the San Juan oil play has similarities to Colorado’s Niobrara shale, in that horizontal drilling and hydraulic fracturing are helping to produce oil from an area, where gas production has dominated historically. In late April, Encana declared its San Juan acreage commercial, and also revealed that it has partnered with local companies that have worked in the area for a number of years. These partnerships have drilled several horizontal wells into the Mancos shale. Indeed, Jeff Wojahn, executive V.P. and president of Encana’s U.S. unit, told investors in a conference call that production rates on these wells range from 150 to 700 boed. He predicted that they will produce between 200,000 and 700,000 bbl of oil over their lifetimes.

At press time, Brazilian oil regulator ANP had qualified 38 companies for the exploration licensing round on May 14 and 15. The regulator said that the companies represent just over half of the original 71 firms that had expressed interest in participating. The eight companies most recently qualified are Petróleos de Portugal, Maersk Oil do Brasil, Barra Energia do Brasil Petróleo e Gás, ExxonMobil Química, Statoil Brasil Oleo e Gas, Imetame Energia, Karoon Petróleo e Gás, and PTT Exploration and Production Public Company. ANP plans to offer 289 blocks at auction, covering 155,800 sq km across 11 sedimentary basins. Of the total, 166 blocks are offshore, including 94 in deep water and 72 in shallow water. The remaining 123 blocks are onshore.

Chevron struck the Coronado deepwater oil discovery in the U.S. Gulf of Mexico, about 190 mi off the coast of Louisiana. The oil major said the well, in 6,127 ft of water, revealed more than 400 ft of net pay. Results from the well, which was drilled to a depth of 31,866 ft, are still being examined, and more work remains to determine the discovery’s full extent. The well was drilled by the Pacific Santa Ana drillship. It was Chevron’s second attempt at Coronado after a 2011 well was abandoned, due to adverse conditions in the shallow section of the wellbore. Chevron is working to complete a number of expensive, large-scale projects meant to raise its worldwide production, including a massive natural gas project in Australia and new oil wells in the ultra-deep waters of the U.S. Gulf. The company aims to boost its daily oil and gas production to 3.3 million boed in 2017, from the nearly 2.7 million boed that it averaged in fourth-quarter 2012.

Anadarko Petroleum has discovered a new natural gas field offshore Mozambique, and it has also completed drilling a well offshore Kenya. The producer said that the Orca-1 discovery well encountered about 190 net ft of natural gas pay within Offshore Area 1 of the Rovuma basin, offshore Mozambique in a Paleocene fan system. Anadarko operates Offshore Area 1 with a 36.5% working interest. Co-owners include Mitsui E&P Mozambique Area 1 Ltd. (20%), BPRL Ventures Mozambique B.V. (10%), Videocon Mozambique Rovuma 1 Ltd. (10%) and PTT Exploration & Production PLC (8.5%). Empresa Nacional de Hidrocarbonetos’ 15% interest is carried through the exploration phase. The Orca-1 exploration well was drilled to a TD of about 16,391 ft, in a water depth of 3,481 ft. Anadarko also completed drilling of its Kubwa well in the L-07 Block offshore Kenya, which encountered non-commercial oil shows in reservoir-quality sands.

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