World of oil and gas

EXPLORATION

Petrobras proves potential of Moita Bonita area in Sergipe-Alagoas basin

The third well drilled by Petrobras in the Moita Bonita area, offshore Brazil, in the BM-SEAL-10 Block of the Sergipe-Alagoas basin, has proved the extension of the gas and light oil discovery made in that area. This well, informally known as Moita Bonita 3 (3-BRSA-1244-SES / 3-SES-182), is the second extension well drilled in the area, and is 82 km off the coast of Sergipe, approximately 5 km from discovery well Moita Bonita 1-BRSA-1088-SES (1-SES-168), and at a water depth of 2,790 m. Drilling confirmed the existence of 40-m thick reservoirs with good permeability and porosity conditions, consistent with the project’s expectations. After drilling was concluded, a formation test was conducted, which proved the presence of 41° API oil with good reservoir productivity. The Moita Bonita accumulation is part of the Sergipe-Alagoas basin ultra-deepwater development program. Petrobras is the operator with a 100% interest.

BG: DST supports potential development off Tanzania

The results from a second DST on the Mzia discovery in Block 1, offshore southern Tanzania, provided further support for a hub development to supply a potential onshore LNG project, BG Group said on Aug. 27. The DST on the Mzia-3 appraisal well, drilled in approximately 1,800 m of water, around 6 km north of the original Mzia-1 discovery, included sustained gas production at a maximum flowrate of 101 MMcfd, equivalent to approximately 17,000 boed. In May 2013, BG announced a test on the Mzia-2 well, the first on a Cretaceous discovery in deepwater offshore Tanzania, had flowed at an equipment-constrained rate of 57 MMcfd, or around 9,500 boed. Mzia, discovered in 2012, is a multi-layered field of Upper Cretaceous age, with a gross gas column in excess of 300 m.

BP is highest bidder at Western Gulf lease sale 238

BP was the apparent high bidder on 27 of 32 bids that it submitted at Western Gulf of Mexico lease sale 238 in New Orleans, La., for a success rate of 84%. The total amount of winning BP bids was $22,837,729. Shell bid on one block and was the apparent high bidder on Alaminos Canyon Block 902 with a bid of $1.75 million. Competition for Block 902 included Stone Energy with a bid of $1.06 million. The acquisition of this block strengthens Shell’s existing position in Perdido, where, to date, the operator has drilled 11 exploration and appraisal wells, and has current production coming from 14 wells in the Tobago, Silvertip and Great White ultra-deepwater fields.

Egdon Resources reported preliminary results from drilling of the Wressle-1 conventional exploration well, located east of Scunthorpe, on Sept. 2. Spudded on July 18, the well reached a TD of 2,240 m MD on Aug. 23. Elevated mud gas readings were observed over large parts of the interval from the top of the Penistone Flags reservoir target (1,831.5 m, MD) to TD. Preliminary petrophysical evaluation of the log data has indicated the presence of potential hydrocarbon pay in three main intervals: Penistone Flags, up to 19.8 m measured thickness (15.9 m vertical thickness); Wingfield Flags, up to 5.64 m measured thickness (5.1 m vertical thickness); and Ashover Grit, up to 6.1 m, measured thickness (5.8 m vertical thickness). The well is being completed with a 4½- in. liner to enable selective and sequential testing of these intervals as part of an extended well test. These test operations are expected to commence during October 2014.

GOVERNMENT/REGULATORY  

Energy reforms could increase Mexico’s long-term oil production by 75%, the EIA said. On Aug. 11, Mexico’s president signed legislation that will open the country’s oil and natural gas markets to foreign direct investment, effectively ending Pemex’s monopoly. These laws, which follow previously adopted changes in Mexico’s constitution to eliminate provisions that prohibited direct foreign investment in the nation’s oil and natural gas sector, are likely to have major implications for the future of Mexico’s oil production profile. Analysis in EIA’s upcoming International Energy Outlook 2014 will include the potential effects on upstream oil E&P and the potential for foreign participation. The changes in EIA’s assessment of Mexico’s liquids production profile are profound. Last year’s Outlook projected that Mexico’ s production would continue to decline from 3.0 MMbopd in 2010 to 1.8 MMbopd in 2025 and then struggle to remain in the range of 2.0 to 2.1 MMbopd through 2040. However, the forthcoming Outlook, which assumes some success in implementing the new reforms, projects that Mexico’s production could stabilize at 2.9 MMbopd through 2020 and then rise to 3.7 MMbopd by 2040.

Supporters and opponents of drilling in Colorado have dropped rival measures to restrict hydraulic fracturing and punish towns that curb it. Activists dropped proposals to limit fracing by requiring that it take place 2,000 ft from any occupied building, while pro-energy state lawmakers ended a separate bid to deny tax revenue to cities that impose moratoriums or bans. Drilling in the Denver-Julesburg basin has helped make Colorado the U.S.’s sixth-largest natural-gas producer and ninth-biggest oil producer. However, industry executives warned that the 2,000-ft setback initiative would effectively ban drilling in the basin. The deal came after Gov. John Hickenlooper negotiated a compromise that created a task force to study the industry’s impact on communities. Tisha Schuller, president of the Colorado Oil & Gas Association, welcomed the move.

Halliburton has reached an agreement to settle a substantial majority of the plaintiffs’ class claims asserted against the company as a result of the 2010 Macondo well incident in the U.S. Gulf of Mexico.  The approximately $1.1-billion settlement, which includes legal fees, is subject to approval by the U.S. District Court for the Eastern District of Louisiana. It will be paid into a trust, until all appeals have been resolved in three installments over the next two years. The company’s previously accrued loss contingency provision relating to the multi-district litigation proceedings is currently $1.3 billion. The agreement includes the following: claims against Halliburton that BP assigned to the settlement class in BP’s April 2012 settlement; punitive damage claims against Halliburton by a class of plaintiffs, who allege damages to property, or associated with the commercial fishing industry arising from the Deepwater Horizon Incident; and affirmation that Halliburton has no liability for compensatory damages to the members of the settlement class in the BP April 2012 settlement.

Noble Energy has announced final results at the Katmai exploration well and Dantzler appraisal in deepwater Gulf of Mexico. At Katmai, wireline logging data indicate 154 net ft of oil pay in multiple reservoirs, including 117 net ft in Middle Miocene and 37 net ft in Lower Miocene. The discovery well in Green Canyon Block 40 was drilled to a TD of 27,900 ft in 2,100 ft of water. Total gross resources at Katmai are estimated at between 40 MMboe and 100 MMboe. Noble holds 50% of Katmai, and Ridgewood Energy Corporation holds the remaining half. The Dantzler-2 appraisal in Mississippi Canyon Block 782, encountered 122 net ft of oil pay in two high-quality Miocene reservoirs. The well was drilled to a TD of 18,210 ft in 6,600 ft of water. Gross resources at Dantzler have increased to between 65 MMboe and 100 MMboe.

Shell has announced production results from two discovery wells in the Utica formation of Tioga County, Pa. Neal and Gee were drilled to a TMD of approximately 14,500 ft and 15,500 ft, respectively, with lateral lengths of 3,100 ft at Gee and 4,200 ft at Neal. The Gee well had an initial flowback rate of 11.2 MMcfgd and the Neal well in February, with an observed peak flowback rate of 26.5 MMcfd. Shell is awaiting results from four more Utica wells in Tioga County. Image courtesy of Shell.

Apache has discovered oil at the Phoenix South-1 well in Australia’s Canning basin, offshore. Tools have confirmed at least four columns, within a sand-rich section between 13,648 ft and 14,763 ft. Six light oil samples have been recovered, with preliminary estimates that there might be as much as 300 MMboe in place. Evaluation of the formation is underway. The well is in permit WA-435-P, offshore western Australia, 110 mi north of Port Hedland in 435 ft of water. Apache has a 40% interest. Co-venturers are Carnarvon Petroleum (20%), Finder Exploration (20%) and JX Nippon (20%).

Shell has discovered gas at its Marjoram-1 well offshore Malaysia. The well is located 111 mi off the Malaysia coast in Block SK318, in 2,625 ft of water. Earlier this year, Shell announced the Rosmari-1 gas discovery, also in this block. Block SK318 is operated by Shell with an 85% interest, with the remaining 15% held by PETRONAS Carigali Sdn Bhd.

BUSINESS

PRODUCTION

Chestnut Exploration & Production has acquired the Willamar West Unit in Willacy County, Texas, for $13.1 million. The field produces from the Gulf Coast basin, and includes 37 wellbores. Seventeen of those wells are producers, 14 are shut-ins, and six are injection wells. In 2013, the field produced 34,621 bbl of oil and 45,728 Mcf of natural gas. Daily production, as of February, was estimated at 196 bpd of oil and 310 Mcf of gas. The wells acquired in the 1,720-acre unit are producing from the Frio and Miocene sands, with multiple production zones at depths between 5,000 to 8,000 ft. The acquisition nearly doubles the Dallas-based company’s oil production.

Woodside has acquired a 40% participating interest in Block F15 of the Gabon Coastal basin in offshore West Africa. Block F15 is 87 mi off the southwestern coast of Gabon and covers more than 667,000 acres. Water depths range from 7,545 ft to 9,850 ft. Noble Energy has the remaining 60% interest and will be the operator. Plans include a seismic commitment and an option for future drilling.

INPEX Corporation has agreed to sell a 25% stake in offshore East Malaysia deepwater Block S to Santos. INPEX acquired the block in January 2012. The block lies in the same area where the Kikeh and Gumusut-Kakap fields were discovered. The block covers 574 km2 with a water depth ranging between 200 m and 1,500 m. INPEX remains the operator with 50% interest, and Petronas holds the remaining 25%. INPEX and Santos have teamed up prior to this joint-venture, with exploration and production activities in the Bayu-Undan Project between Australia and Timor-Leste as well as exploration permits in northwestern Australia.