May 2014
News & Resources

World of oil and gas

World of oil and gas
Melanie Cruthirds / World Oil



Lukoil launches production at West Qurna-2 in Iraq

Lukoil started commercial production at West Qurna-2 oil field in Iraq, and reached the target production level of 120,000 bpd on March 28. According to the service contract between Lukoil and the Iraqi government, the company must maintain that level of production for 90 days afterward, to begin receiving a return on its investments. West Qurna-2—one of the largest oil fields in the world—is in southern Iraq, 65 km from the town of Basra. The field has 35 billion bbl of estimated geological oil reserves in two main formations: Mishrif and Yamama. The project is being implemented in three phases: Mishrif Early Oil (with a target production level of 400,000 bpd), Mishrif Full Field Development (550,000 bpd) and Yamama Formation Development (1.2 MMbpd). The production plateau will then be maintained at 1.2 MMbpd for 19.5 years. The development and production service contract for West Qurna-2 was signed on January 31, 2010.

Repsol starts gas production at Kinteroni field in southeastern Peru

Repsol has started gas production in Kinteroni field in Peru, one of 10 key projects included in the company’s 2012–2016 strategic plan. The field, in Cuzco, east of Lima, will initially produce 20,000 bpd, which is expected to double by 2016. Repsol operates the project with a 53.84% stake, with Brazil’s Petrobras holding the remaining 46.16%. Kinteroni is in Block 57, east of Peru’ s Andes mountain range, and is one of the most promising gas-prone exploratory plays in the country. Preliminary estimates indicate the field may hold resources of between 2 Tcf and 3 Tcf of gas. With the start-up of Kinteroni, one of the five biggest discoveries made worldwide in 2008, Repsol has begun production at seven of its 10 key growth projects. The remaining six in production include: Sapinhoa (Brazil), Mid-Continent (U.S.), AROG (Russia), Margarita-Huacaya (Peru), Lubina and Montanazo (Spain), and Carabobo (Venezuela).

Shell lifts first crude oil from Majnoon field in Iraq

Shell announced April 7 that the Majnoon oil field it operates, in partnership with South Oil Company (SOC), Petronas and Missan Oil, in Southern Iraq, had successfully exported its first shipment of crude oil to Shell trading, a significant milestone for the field. The achievement came as production at Majnoon reached a current average of 210,000 bopd, well in excess of the 175,000-bopd first commercial production target, which initiates the commencement of cost recovery. Shell and its partners recommenced production successfully from Majnoon in September 2013, following the completion of major overhaul works, including 28 sq km of mine clearance, extensive refurbishment of brownfield facilities to meet safety standards, and the construction of a new greenfield central processing facility—the largest to be built in Iraq in the last decade—to allow for increased production capacity. To date, 18 new wells have been drilled at the field.

Exxon Mobil starts production ahead of schedule at PNG LNG project

Exxon Mobil reported that the $19-billion PNG LNG project has started producing LNG in Papua New Guinea ahead of schedule. Production from the first LNG train was expected to increase over the following weeks, and the first cargo is expected to be shipped to Asian markets before mid-year. Work on the second train is progressing, and LNG production from this unit was expected to start in May or June. The project, which is operated by Exxon Mobil affiliate Exxon Mobil PNG, is expected to produce more than 9 Tcf of gas over an estimated 30 years of operations. PNG LNG is an integrated development that includes gas production and processing facilities in the Southern Highlands, Hela, Western, Gulf and Central provinces of Papua New Guinea.

Statoil, partners brings North Sea’s Gudrun field onstream

Statoil and its partners, GDF Suez and OMV, have started production at Gudrun oil and gas field in the North Sea. According to Arne Sigve Nylund, Statoil’s executive V.P. for the Development and Production Norway business area, Gundrun is “the first new Statoil-operated platform to come onstream on the Norwegian Continental Shelf since 2005.” Statoil expects to recover 184 MMboe from the field. Gudrun was discovered in 1975. It is a high-temperature, high-pressure field, and the need for new drilling technology was one of the reasons why the reserves were left in the bank for such a long time, the company said.


Encana subsidiaries sell U.S. gas assets

Encana reported that its wholly-owned subsidiary, Encana Oil & Gas USA, has reached an agreement with an affiliate of TPG Capital (TPG) to sell certain natural gas properties in Jonah field in Sublette County, Wyo., for a purchase price of approximately $1.8 billion. Jonah field comprises a total productive area of about 24,000 acres and over 1,500 active wells. Estimated year-end 2013 proved reserves for the field totaled approximately 1,493 Bcfe. The transaction also includes over 100,000 undeveloped acres adjacent to Jonah, known as the Normally Pressured Lance (NPL) area. Elsewhere, Encana Natural Gas Inc. (ENGI) signed a definitive agreement to sell substantially all of its U.S.-based assets to Stabilis Energy. Stabilis will fulfill ENGI’s entire existing customer obligations, including its existing contracts, subject to customer consent.

Devon Energy completes sale of Canadian conventional assets

Devon Energy Corporation has completed the sale of its Canadian conventional assets to Canadian Natural Resources Limited for $2.9 billion. The company’s retained Canadian business will consist of its thermal heavy oil, Lloydminster and Horn River assets. The divestiture process for the company’s remaining non-core properties in the U.S. is ongoing. Devon expects to open data rooms for these U.S. assets in second-quarter 2014, and complete these divestitures by year-end. Canadian Natural planned to immediately integrate the acquired properties into its ongoing operations. The acquired production, infrastructure and land add to Canadian Natural’s existing core areas, enabling more efficient operations.

Crude Energy acquires interest in Permian basin

Crude Energy, LLC, has acquired a 50% working interest in 3,680 acres in Sterling County, Texas, in the heart of the Permian basin. The acreage is in northwestern Sterling County in an area with multiple pay zones. Wells drilled on or adjacent to this block have produced from the Lower Wolfcamp Lime, the Canyon Sand, the Mississippian Chert and Lime, the Fusselman Lime, the Montoya Lime, and the Ellenburger Dolomite. Using improved exploration and exploitation methods, the company said this position offers it the opportunity to develop significant oil and gas reserves with low-to-moderate risk.

Statoil, partners make gas and oil discovery in Valemon area 

Operator Statoil has, together with the Valemon Unit partners, made a gas and oil discovery in the Valemon Nord prospect in the North Sea. Discovery wells 34/10-54 S and 34/10-54 A, drilled by the Transocean Leader rig, are approximately 10 km north of the planned Valemon installation. The main wellbore, 34/10-54 S, proved a gross 164-m gas/condensate and oil column in the Middle Jurassic Brent Group. The sidetrack, 34/10-54 A, proved a gross 100-m gas/condensate column in the Brent Group and in sand of unspecified Jurassic age, and an additional gross 140-m gas/condensate column in the Statfjord Group.

CNOOC finds gas in South China Sea, Bohai Bay

CNOOC made a new mid-sized gas discovery in the deep waters of the South China Sea’s Qiongdongnan basin. Lingshui 17-2 is in the east Lingshui Sag, in the deepwater area of Qiongdongnan basin, with an average water depth of about 1,450 m. Discovery well Lingshui 17-2-1 was drilled and completed at a depth of 3,510 m, and encountered a gas reservoir with a total thickness of about 55 m. The operator also made a mid-sized gas discovery at Bozhong 22-1, in Bohai. Bozhong 22-1 is in south-central Bohai.

Ecopetrol hits oil with Colombian exploratory well

Ecopetrol reported that exploratory well Tibirita-1A, in the municipality of San Martin, Meta province, Colombia, has shown the presence of hydrocarbons. Initial well testing indicated a hydrocarbon column of 50 ft. Testing also indicated an average daily production of 580 bbl of crude oil of 11.3° API and 1% water cut, by means of a progressive cavity pump artificial lift system. Drilling of the well began during the first week of February, and ended Feb. 14, reaching a depth of 8,608 ft through Eocene rock.

Total in deepwater oil discovery off Ivory Coast

The Total-operated Saphir-1XB exploration well on Block CI-514 has proved the presence of liquid hydrocarbons in the deep waters offshore the Ivory Coast. Lying in 2,300 m of water, Saphir-1XB is the first well in Block CI-514. It was drilled to a TD of 4,655 m, encountering around 40 m of net pay containing light 34° API oil. The data acquired during drilling are being analyzed.



U.S. Steel president and CEO, steel industry leaders press Congress to halt unfair trade practices In late March, United States Steel Corporation President and CEO Mario Longhi joined fellow steel industry executives and Leo Gerard, international president of the United Steelworkers, in pressing Congress to maintain America’s economic and national security by halting unfair trade practices and enforcing the country’s trade laws. While testifying before the Congressional Steel Caucus, Longhi emphasized that the issue of fair trade is “a matter of utmost importance to our employees, our company, our industry and our country.”

BOEM proposes Western Gulf of Mexico lease sale Bureau of Ocean Energy Management (BOEM) Director Tommy P. Beaudreau reported that the bureau will offer more than 21 million acres offshore Texas for oil and gas exploration and development in a lease sale that will include all available unleased areas in the Western Gulf of Mexico Planning Area. Proposed Western Gulf of Mexico Lease Sale 238, scheduled to take place in New Orleans, La., in August 2014, will be the sixth offshore sale under the Administration’s Outer Continental Shelf Oil and Gas Leasing Program for 2012–2017 (Five Year Program). This sale will build on the first five sales in the current Five Year Program, which have offered more than 60 million acres and netted nearly $2.3 billion for American taxpayers. Sale 238 will include approximately 3,992 blocks, covering roughly 21.4 million acres, from 9 mi to 250 mi offshore, in water depths ranging from 16 ft to more than 10,975 ft. 

Croatia opens first offshore licensing round with 29 blocks In early April, Croatia’s Minister of Economy, Ivan Vrdoljak, officially opened the country’s first offshore licensing round. This round comprises a total area of 36,823 sq km, divided into 29 blocks. The fiscal terms are based on a production-sharing agreement model with a five-year exploration phase and a 25-year production phase. Bids are due on Nov. 3. The Croatian Hydrocarbon Agency is responsible, on behalf of the relevant governmental ministries and institutions, for the exploration and exploitation of onshore and offshore hydrocarbons, and storage of natural gas.


ConocoPhillips spuds fifth well in Browse basin Poseidon North-1, the fifth well in second phase of the Browse basin exploration drilling campaign, was spudded on March 19. The exploration well, 6.5 km northeast of Poseidon-1, in permit WA-315-P, is targeting the Plover and Montara formations. It has the potential to add significantly to the already discovered Greater Poseidon area resource. The second phase of the Browse campaign will continue through calendar year 2014, using the Transocean Legend semisubmersible. Four of the six planned wells have been completed, so far. 

Statoil encounters gas near Visund field in North Sea Statoil, operator of production license 120, has concluded drilling wildcat well 34/8-17 S, on the northeastern flank of Visund field, in the northern North Sea. The well’s primary exploration target was to prove petroleum on the east flank of Visund in Lower Jurassic reservoir rocks. The secondary exploration target was to prove petroleum in Lower Jurassic and Upper Triassic reservoir rocks. 

Tethys Petroleum reports two successful gas wells Tethys Petroleum reported success at the AKK18, the second shallow gas exploration well of its 2014 program in Kazakhstan. Analysis of data from the well indicates it, like the recently drilled AKK17 well, is similar to the AKK15 well, which tested gas at a stable rate of approximately 7 MMcfd. AKK18 is anticipated to test at a comparable rate, and was drilled to a depth of 750 m, roughly 6 km southwest of AKK15. The company also reported the success of the AKK19 well, the third in its 2014 program. Analysis of data from the well indicates it has a pay zone twice as thick as the AKK15 well; AKK19 is anticipated to test at significantly more than that rate. The AKK19 well was drilled to a depth of 800 m and encountered an 8-m interval of gas-bearing Tasaran sand.


Apache to sell Western Canada assets for $374 million

Apache Corporation and its subsidiaries have agreed to sell producing oil and gas assets in the Deep basin area of western Alberta and British Columbia, Canada, for $374 million. The company is selling primarily dry gas-producing properties comprising 622,600 gross acres (328,400 net acres) in the Ojay, Noel and Wapiti areas in Alberta and British Columbia. In the Wapiti area, Apache will retain 100% of its working interest in horizons below the Cretaceous, retaining rights to the liquids-rich Montney and other deeper horizons. The company will also retain other Canadian assets, including Provost field (pictured). During 2013, production from the fields to be sold averaged 101 MMcfgd and 1,500 bpd of liquid hydrocarbons. Since Apache announced that it would be rebalancing in 2013, the company also divested operations on the Gulf of Mexico Shelf and in Argentina, and sold a one-third interest in its Egypt operations.


Chevron, YPF continue development of Vaca Muerta shale 

Chevron Corporation has confirmed that subsidiaries of the company have signed agreements with Argentina’s YPF to continue development of shale oil and gas resources from the Vaca Muerta formation, in the Neuquén province in Argentina. The agreements call for continued investment toward large-scale drilling and production in the 96,000-acre Loma Campana concession. The agreements also call for exploration of shale oil and gas resources in the 49,400-acre Narambuena area, about 70 mi north of Loma Campana in the Chihuido de la Sierra Negra concession, one of the main producing areas in the Neuquén basin of west-central Argentina.


Total launches Kaombo ultra-deep project offshore Angola

Total and its JV partners have made the final investment decision to develop the ultra-deep offshore Kaombo project in Angola. With a production capacity of 230,000 bpd, Kaombo will develop estimated reserves of 650 MMbbl. Following an intensive optimization exercise, the project’s capital expenditure to reach full capacity was reduced by $4 billion to $16 billion, with an expected start-up in 2017. Approximately 260 km offshore Luanda, in water depths ranging from 1,400 m to 1,900 m, the Kaombo project will develop six of the 12 discoveries already made on Block 32.


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Melanie Cruthirds
World Oil
Melanie Cruthirds
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