GOVERNMENT/REGULATORY 

API issues updated standards for shale development

New editions of API’s hydraulic fracturing standards provide the latest technical direction for operators working to continuously improve well integrity, groundwater protection and environmental safety. Last updated in 2011, API’s standards for shale development have worked alongside robust state regulations to ensure safe, responsible energy development with hydraulic fracturing for over 65 years. “Strong standards are key to America’s success as an energy leader, and that’s why we bring together regulators and operators to promote proven practices for environmental protection,” said API Director of Standards David Miller. “This update provides the latest guidance on equipment, monitoring, storage, and installation.” Dubbed ANSI/API RP 100-1 and 100-2, the two new standards provide detailed specifications for pressure containment and well integrity, as well as environmental safeguards, including groundwater protection, waste management, emissions reduction, site planning and worker training.

NPD commissions study on unmanned wellhead platforms

The Norwegian Petroleum Directorate (NPD) has commissioned a study to look into the benefits and disadvantages of unmanned wellhead platforms. The regulator wants such platforms to be considered more often, as an alternative to subsea tie-backs, in connection with development decisions. “The main argument in favor of unmanned wellhead platforms as a concept, is that this could be an efficient development solution in terms of both cost and production,” Niels Erik Hald, principal engineer in the Norwegian Petroleum Directorate, said. “In fact, it is just as functional and robust as a subsea development, and it is also more accessible for inspection and maintenance.” NPD commissioned the study with the objective of gaining further knowledge about the different types of unmanned wellhead platforms. Plans call for the study, which will be performed by Rambøll Oil & Gas, to be submitted to authorities toward the end of December. 

U.S. cancels remaining Arctic offshore lease sales

The U.S. Department of the Interior has canceled the two potential Arctic offshore lease sales scheduled under the Obama administration’s five-year offshore oil and gas leasing program for 2012-2017. The decision followed Shell’s announcement of its exploration results at the Burger prospect in the Chukchi Sea, and that the company will cease further exploration activity offshore Alaska for the foreseeable future. “In light of Shell’s announcement, the amount of acreage already under lease and current market conditions, it does not make sense to prepare for lease sales in the Arctic in the next year-and-a-half,” said Secretary of the Interior Sally Jewell. Chukchi Sea Lease Sale 237 was scheduled potentially for 2016. Beaufort Sea Lease Sale 242 had been scheduled potentially for the first half of 2017. 

DISCOVERIES 

Genie Energy confirms significant find on Golan Heights

Genie Energy says preliminary evidence from the exploratory wells drilled by its Afek subsidiary in northern Israel confirm the existence of significant quantities of oil and gas within its exploratory license area. The company does not yet have sufficient evidence to determine whether this, or any part of the resource, can be technically or economically produced, according to a company statement. The resource, which is present at multiple strata and in some of the explored portion of the license area, is up to 350 m thick—a finding consistent with the company’s geological model. “We remain optimistic, given the results to date,” said Howard Jonas, chairman and CEO of Genie Energy. “In term of quantity, our log results indicate that this could be a significant find, if analogous conditions are present over a significant portion of the license area. We are now working diligently to determine the production costs and total quantity of the resource.”

Apache strikes North Sea discoveries totaling 50-70 MMboe

Apache Corp. has announced significant discoveries on two exploration wells in the Beryl area of the UK North Sea. The company also drilled two significant development wells in the Beryl area, from which no reserves have been booked previously. Additionally, Apache announced a large find at its Seagull prospect, which lies approximately 50 mi south of the company’s Forties field, the largest oil field in the UK North Sea. The K and Corona wells are the first exploratory prospects drilled by Apache in the Beryl area. Each discovery proves a separate geologic concept that helps to de-risk additional drilling locations. Apache estimates that the K and Corona discoveries, combined with the success at Seagull, represent likely, net recoverable reserves of 50 MMboe to more than 70 MMboe. Future appraisal drilling will enable the company to further define the upside potential beyond 70 MMboe. Apache’s proved reserves in the North Sea at year-end 2014 were approximately 140 MMboe. “The success of our first two exploration wells at Beryl, combined with the Seagull discovery, could increase our total North Sea proved reserve base by more than 50%,” said Thomas E. Voytovich, Apache’s executive V.P., international and offshore, and E&P technology. 

Lukoil in deepwater gas discovery offshore Romania

Lukoil’s Lira-1X wildcat has discovered a gas field in the Lira offshore structure, which is in the Trident Block (EX-30), in the deepwater area offshore Romania. The water depth within the block, which has an area of 1,006 km², ranges from 300 m to 1,200 m. The Lira-1X well is about 90 mi from the coast, where the sea depth is about 700 m. The well was drilled to a depth of 2,700 m, and it was temporarily abandoned for further evaluation of the gas discovery. According to preliminary results from analysis of drilling data and geophysical exploration, the Lira-1X well delivered a productive interval with an effective gas-saturated thickness of 46 m. According to seismic data, the gas field’s area could reach up to 39 km², and reserves could exceed 30 Bcm, which is to be confirmed during evaluation drilling.

Caofeidian 6-4 confirmed as mid-sized oil field, says CNOOC

CNOOC’s Caofeidian 6-4 oil structure in Bohai, discovered in 2014, has been appraised and confirmed as a mid-sized oil field, according to a company statement dated Oct. 22. The Caofeidian 6-4 structure is in the western part of the Shijutuo Uplift, in the west of Bohai, an area with an average water depth of about 20 m. The Caofeidian 6-4-1 discovery well was drilled and completed at a depth of about 3,100 m. It encountered oil pay zones with a total thickness of about 180 m, CNOOC said. The well produces light crude oil, and output was tested at around 5,750 bpd.

PRODUCTION

Noble Energy starts production at Big Bend deepwater field

Noble Energy’s Big Bend oil development, in the deepwater Gulf of Mexico, has begun production. The single-well field, which went onstream on Oct. 26, is ramping as expected. It is anticipated to reach a maximum gross production rate of approximately 20,000 boed by the middle of November. Approximately 90% of the volumes being produced are oil. In addition, Noble has continued to accelerate the Dantzler development, and, according to a statement dated Oct. 28, the company was expecting first production from the field by early November. Big Bend and Dantzler, in Mississippi Canyon 698 and 782, respectively, are subsea tie-backs to the third-party Thunder Hawk production facility.

Santos ships first cargo from GLNG

The first LNG shipment from Santos’ $18.5-billion GLNG project left Curtis Island in October. The shipment was bound for South Korea. The first cargo was dispatched by the Malaysian-owned LNG ship Seri Bakti and will be delivered in the coming weeks, Santos said on Oct. 16. “The first cargo from GLNG strengthens our position as a major and competitive LNG supplier to Asia,” said Santos Managing Director and CEO David Knox. “GLNG is a robust project and will generate strong cash flows for the business, for decades to come.” Project construction began in 2011 and has taken more than 95 million work hours, to date. Production from the first train commenced in September, and work on the second train is continuing to progress well, with Train 2 expected to be ready for start-up by the end of the year, with first LNG in second-quarter 2016. When fully operational, the facility will have the capacity to produce 7.8 MMt/annum of LNG. 

BP signs $10-billion LNG deal with China Huadian Corp.

BP and China Huadian Corp. have signed a sale-and-purchase agreement for BP to sell the Chinese company up to 1 MMt/annum of LNG. The agreement is worth up to $10 billion over the next 20 years. Huadian is one of the five largest state-owned power generation companies in China, as well as the country’s largest, gas-fired power generator. The agreement was signed during a state visit to the UK by the president of the People’s Republic of China. “We expect China’s energy production to rise 47% and its consumption to grow 60% by 2035, making it the world’s largest energy importer,” said Edward Yang, president of BP China.

EXPLORATION 

Chevron reports successful appraisal of deepwater Anchor find

Chevron Corp. has successfully appraised the Anchor discovery in the Gulf of Mexico’s Lower Tertiary Wilcox Trend. “The positive results of our appraisal work at Anchor indicate a significant discovery of potentially hub class scale,” said Jay Johnson, executive V.P., Upstream, Chevron Corp. The original Anchor discovery well, in Green Canyon Block 807, was drilled in late 2014 to a depth of 33,750 ft, and it encountered 690 ft of net oil pay. Appraisal drilling began in June 2015 and recently found 694 ft of net oil pay. To date, Chevron has confirmed a hydrocarbon column of at least 1,800 ft in the Lower Tertiary Wilcox reservoirs at Anchor. Complete appraisal of the field will require further delineation wells and technical studies. 

Statoil to explore offshore South Africa with farm-in

Statoil has completed a farm-in transaction with Exxon Mobil Exploration and Production South Africa Ltd., acquiring a 35% interest in the ER 12/3/154 Tugela South Exploration Right. The remaining interests are held by the operator, Exxon Mobil (40%), and co-venturer, Impact Africa Limited (25%).  The Tugela South Exploration Right covers about 9,054 km² and has water depths as great as 1,800 m. The farm-in represents a country entry for Statoil into South Africa. Statoil enters in an early exploration phase with a step-wise program. Work commitments between 2015 and 2017 include the acquisition of 1,000 km² of 3D seismic data, and G&G studies. There are no commitment wells during this exploration period. The information obtained from the initial studies and seismic survey will form the decision basis for the co-venturers’ next steps in the Exploration Right.

BUSINESS

Encana sells DJ basin assets for $900 million

Encana has reached an agreement to sell its Denver Julesburg (DJ) basin assets in Colorado to a new entity that is 95%-owned by the Canada Pension Plan Investment Board and 5% by The Broe Group. The total consideration to Encana under the transaction is about $900 million. The transaction includes all of Encana’s DJ basin acreage, comprising 51,000 net acres. During first-half 2015, Encana’s DJ basin assets produced an average 52 MMcfgd and 14,800 bpd of crude oil and NGLs. Based on Encana’s development plan at year-end 2014, estimated proved reserves were 96.8 MMboe (over 40% natural gas). The sale of Encana’s DJ basin assets is expected to close in fourth-quarter 2015, with an effective date of April 1, 2015.

Shell to halt Carmon Creek in situ project

Royal Dutch Shell will not continue construction of its 80,000-bopd, Carmon Creek, thermal in situ project in Alberta, Canada. Shell sanctioned the project in October 2013 and announced in March 2015 that it would be re-phased to take advantage of the market downturn, to optimize design and retender certain contracts. However, after a review of the potential design options, updated costs, and the company’s capital priorities, Shell took the view that the project does not rank in its portfolio at this time. According to Shell, the decision reflects current uncertainties, including the lack of infrastructure to move Canadian crude oil to global commodity markets. “We are making changes to Shell’s portfolio mix by reviewing our longer-term upstream options worldwide, and managing affordability and exposure in the current world of lower oil prices. This is forcing tough choices at Shell,” said Shell CEO Ben van Beurden. The company will retain the Carmon Creek leases and preserve some equipment while continuing to study the options for this asset. 

Wood Group wins global subsea contract from BP

Wood Group has secured a new multi-million-dollar contract to provide engineering services to BP’s existing subsea infrastructure in the Gulf of Mexico, on the UK and Norwegian continental shelves, and offshore Azerbaijan. Wood Group Kenny (WGK) will deliver program, project and integrity management and operational support for subsea projects under the five-year contract. The contract will be delivered from WGK’s offices in Aberdeen, London, Norway, Houston and Baku. It adds to WGK’s work with BP globally. WGK continues to perform work, under a contract held since March 2007, to provide engineering and project management services to BP’s portfolio of future subsea projects.

Petrofac secures Shell training contract in Iraq

Petrofac has been awarded a multi-million-dollar technical training contract with Shell Iraq. Effective from October, Petrofac Training Services (PTS) has joined Shell in the management and operation of the firm’s Majnoon Training Centre in the Majnoon oil field development in southern Iraq for two years, with an optional one-year extension. The center was opened in 2013, and has focused on providing quality technical and non-technical training to the Majnoon workforce. Through its focus on competency development, the training center is making a strong contribution to the growth of Iraqi capabilities. PTS also will provide human resources, including project managers, HSE, technical, and English language trainers, as well as administrators, with a focus on supporting the competency development of the national workforce.

MERGERS AND ACQUISITIONS

INEOS Upstream buys North Sea gas fields from DEA

INEOS Upstream has agreed to acquire a strong portfolio of natural gas assets in the North Sea from a UK subsidiary of DEA Deutsche Erdoel AG, which is part of the LetterOne Group. INEOS Upstream will acquire gas fields, including Breagh and Clipper South fields in the southern North Sea, which are well-positioned close to INEOS’ sites in northeastern England and Scotland. The annual production from these fields accounts for 8% of the UK’s annual gas production. 

Total sells further interest in Gina Krog field

Total said it will sell a 15% interest in Gina Krog field, offshore Norway, to Tellus Petroleum, a subsidiary of Sequa Petroleum NV. The completion payment will be about $173 million (1.4 billion NOK). Sanctioned in 2013, the Gina Krog project is under development in the Norwegian North Sea and is expected to start up in 2017. Upon completion of the sale, Total will retain a 15% interest in Gina Krog, alongside Statoil (58.7%, operator), Tellus Petroleum (15%), PGNiG Upstream International (8%) and Det norske oljeselskap ASA (3.3%).