PRODUCTION

Exxon Mobil starts production at Erha North Phase 2 project

Esso Exploration and Production Nigeria Limited, an Exxon Mobil subsidiary, has started oil production at the Erha North Phase 2 project offshore Nigeria. The Erha North Phase 2 project is a deepwater subsea development, 60 mi offshore Nigeria, in 3,300 ft of water, 4 mi north of Erha field, which has been producing since 2006. The Erha North Phase 2 project includes seven wells from three drill centers tied back to the existing Erha North FPSO vessel, reducing additional infrastructure requirements. The project is expected to develop an additional 165 MMbbl from the producing Erha North field. Peak production from the expansion is estimated at 65,000 bopd and will increase total Erha North field production to approximately 90,000 bopd. Erha North field was discovered in 2004; initial production commenced in 2006. 

VAALCO starts production from Dentale formation offshore Gabon

VAALCO Energy’s North Tchibala 1-H well, the first development well drilled by VAALCO in North Tchibala field, has been brought online at a rate slightly in excess of 3,000 bopd, the Houston-based company said. The well was drilled to a measured depth of approximately 11,160 ft, targeting the undeveloped Dentale reservoir. The Dentale formation is productive in fields onshore Gabon, but this well represents the first Dentale production for the industry from that horizon offshore of Gabon. The North Tchibala 1-H well was initially brought on production utilizing an ESP, but it was subsequently allowed to produce naturally. The well is not producing any formation water or hydrogen sulfide, and has a strong flowing tubing pressure in excess of 1,000 psi. VAALCO plans to continue to produce the well without artificial lift while monitoring surface and downhole pressures. This is the second well drilled and placed on production at VAALCO’s new Southeast Etame/North Tchibala (SEENT) platform.

Gladstone LNG starts production on schedule

The Gladstone LNG (GLNG) project has started producing its first liquefied natural gas on Curtis Island, Queensland, Australia-based Santos announced Sept. 24. LNG is being produced from Train 1 ahead of the first cargo, which, according to the company statement, was expected to be shipped to Asian markets in the coming weeks. Work on the second train is continuing to progress as well, with Train 2 expected to be ready for start-up by the end of the year. GLNG produces natural gas from Queensland’s coal seams and converts it into LNG. It involves gas field development in the Surat and Bowen basins, a 420-km gas transmission pipeline and a two-train LNG plant on Curtis Island, near Gladstone, which will have the capacity to produce 7.8 MMt/annum of LNG when it is fully operational. Santos is the operator and has a 30% interest in the project. Other co-venturers include Petronas (27.5%), Total (27.5%) and KOGAS (15%).

Husky produces from second well at South White Rose extension drill center

Husky Energy has started production from a second oil well at the South White Rose extension drill center offshore Newfoundland and Labrador. The two wells are expected to ramp up to a combined, net peak production of 15,000 bopd. South White Rose is Husky’s second major subsea tieback following the North Amethyst subsea project in 2010. “This satellite extension aligns with our long-term strategy to extend the life of the main White Rose field through staged step-outs,” said CEO Asim Ghosh. Production from the South White Rose extension drill center is tied back to the SeaRose FPSO vessel. Husky is the operator of White Rose field and its satellite extensions, holding a 72.5% working interest in the main White Rose field and a 68.875% interest in the satellite fields, which include North Amethyst, South White Rose and West White Rose. 

INPEX delays start, raises capacity of Ichthys LNG project

INPEX has updated the expected production start-up schedule and raised the anticipated production capacity of the Ichthys LNG project, which it is developing as operator alongside its project partners. Production, which was initially expected to start toward the end of December 2016, is now expected to start in the third quarter of 2017. INPEX updated the production start schedule, based on the findings of a detailed review of the project’s development schedule. Meanwhile, INPEX will raise the annual LNG production capacity by approximately 6% to 8.9 MMt/annum from the initially planned 8.4 MMt/annum. This increase in production capacity is based on the company’s recent technical evaluation of the latest technological information pertaining to the entire LNG production system.

GOVERNMENT/REGULATORY 

IPAA, API praise Senate committee vote in favor of U.S. oil exports

IPAA and API have welcomed the passage of legislation designed to lift restrictions on exporting U.S. crude oil. The legislation was approved by the Senate Committee
on Banking, Housing, and Urban Affairs on Oct. 1. “Today, the 40-year-old ban acts only to prevent American companies from competing on an equal playing field, in the very global market that sets the prices driving their business,” said IPAA Senior V.P. of Government Relations and Political Affairs Dan Naatz. “We should not allow U.S. producers to remain at a competitive disadvantage by limiting trade access to global markets.” The vote also was welcomed by API Executive V.P. Louis Finkel. “Bipartisan consensus continues to grow, as lawmakers recognize that crude exports will unlock savings for U.S. consumers and create jobs,” said Finkel. “With Iranian exports on the horizon, America would be the only major oil producer without access to global markets.”

BOEM proposes 40-million-acre lease sale in Gulf of Mexico

The U.S. Bureau of Ocean Energy Management (BOEM) will offer 40 million acres offshore Louisiana, Mississippi and Alabama for oil and gas exploration and development in sales that will include all available unleased areas in the Central and Eastern Gulf of Mexico Planning Areas. Proposed Gulf of Mexico Central Planning Area (CPA) Lease Sale 241 and Eastern Planning Area (EPA) Lease Sale 226, which are scheduled to take place in New Orleans, La., in March 2016, will be the ninth and tenth offshore sales under the Obama administration’s Outer Continental Shelf Oil and Gas Leasing Program for 2012-2017. Proposed CPA Sale 241 will include approximately 7,919 blocks, covering 42.1 million acres, located from 3 to 230 nautical miles offshore, in water depths ranging from 9 ft to more than 11,000 ft. BOEM estimates that the proposed lease sale could result in the production of 460 MMbbl to 894 MMbbl of oil and 1.9 Tcf to 3.9 Tcf of natural gas. Proposed EPA Sale 226 will offer approximately 175 blocks, covering 595,475 acres. The blocks are at least 125 statute miles offshore, in water depths ranging from 2,657 ft to 10,213 ft. BOEM estimates the proposed lease sale could result in the production of 71 MMbbl of oil and 162 Bcf of natural gas.

EXPLORATION

Shell halts Arctic exploration after wildcat disappoints

Shell has called a halt to further exploration work offshore Alaska after the company’s Burger J well, in the Chukchi Sea, failed to find meaningful quantities of oil or gas. The Burger J well is approximately 150 mi from Barrow, Alaska, in about 150 ft of water. Shell drilled the well to a total depth of 6,800 ft this summer, in a basin that demonstrates many of the key attributes of a major petroleum basin. For an area equivalent to half the size of the Gulf of Mexico, this basin remains substantially under-explored. Shell has found indications of oil and gas in the Burger J well, but these are not sufficient to warrant further exploration of the Burger prospect. “Shell continues to see important exploration potential in the basin, and the area is likely to ultimately be of strategic importance to Alaska and the U.S. However, this is a clearly disappointing exploration outcome for this part of the basin,” said Marvin Odum, director, Shell Upstream Americas. Shell will now cease further exploration activity in offshore Alaska for the foreseeable future. This decision reflects both the Burger J well result, the high costs associated with the project, and the challenging and unpredictable federal regulatory environment in offshore Alaska. 

Wireless Seismic lands contract with SINOPEC Geophysical

Wireless Seismic has announced the sale and delivery of its RT System 2 seismic data acquisition system to the Chinese seismic contractor, SINOPEC Geophysical Corporation (SGC), following extensive system trials in China. SGC combines a number of its former provincial geophysical companies and operates domestically in China and internationally in Asia, South America, the Middle East and Africa. “We are very impressed by the system’s ability to record data in real time without the use of cables, and as a result, we are pleased to purchase our first RT System 2,” Sui Rongliang, V.P. of SGC, said.

BG Group to explore offshore Newfoundland

BG Group has acquired three non-operated positions offshore Newfoundland from Repsol. These acquisitions provide the company with access to early-stage exploration in a proven prospective basin ahead of the first well being drilled later this year. The three blocks—EL1123 (25%), EL1125 (10%) and EL1126 (10%)—are in the Atlantic Ocean, approximately 200 km from St. John’s, Newfoundland. The blocks are all operated by Statoil. Chevron also holds a stake in EL1125 and EL1126.

DISCOVERIES 

Tethys Oil reports successful well onshore Lithuania

Tethys Oil’s Tidikas-1 exploration well, on the Raseiniai license onshore Lithuania, encountered a combined oil column of almost 50 m, in two different limestone formations, and flowed oil to surface during drill stem tests. Tethys will put the well on a long-term production test. Tidikas-1 was drilled vertically to the Cambrian sandstone, at a measured depth of 1,413 m, and cores were taken from Silurian and Ordovician limestones, marl and dolomites. Tidikas-1 was the second well drilled in 2015 on the license. The Bedugnis-1, which was completed in August, was drilled vertically to a TMD of 1,067 m and recorded oil shows while drilling, but no oil flowed to surface. Both wells were targeting Silurian reefs and carbonate features mapped by an 80-km², 3D seismic study completed in 2014.

Oil discovery in northern part of the North Sea

Statoil, operator of production license 104, has concluded the drilling of wildcat well 30/9-27 S. The well was drilled around 7 km west of Oseberg Sør field in the northern part of the North Sea. The well’s purpose was to prove petroleum in Middle Jurassic reservoir rocks (the Tarbert formation). The well encountered a 34-m oil column in sandstone with moderate to good reservoir quality. The oil/water contact was encountered 3,242 m below sea level. Preliminary estimates of the size of the discovery range between one and two million standard cubic meters of recoverable oil equivalents. The discovery will be developed together with the Oseberg Delta 2 project, which is under development, and the licensees are assessing a production well in the structure encountered by wildcat well 30/9-27 S. Data acquisition has been carried out. License 104 was awarded in the ninth licensing round. The well was drilled to measured and vertical depths of 3,989 m and 3,353 m, respectively, below the sea surface and was terminated in Middle Jurassic rocks (the Ness formation). The water depth at the site is 103 m.

BUSINESS 

FMC bags contract for Shell’s deepwater Appomattox development

FMC Technologies has received a contract award from Shell Offshore for its Appomattox deepwater development in the Gulf of Mexico. FMC will provide enhanced vertical deepwater trees, subsea manifolds, topside controls, a control system and a distribution system for the field, which lies in the Mississippi Canyon area of the eastern Gulf of Mexico in 7,200 ft of water, 140 nautical mi southeast of New Orleans.

Wood Group supports MWCC’s well containment training

Wood Group has been awarded a contract with Marine Well Containment Company (MWCC) to provide an operator training simulator, supporting training for containment in the event of a deepwater well control incident in the Gulf of Mexico. Under the contract, the simulator will be developed by Wood Group Kenny, using its proprietary software, and will be located at the MWCC shore base near Corpus Christi, Texas. It will be used to train operators, who will be involved in the deployment of MWCC’s well containment equipment, if capture operations are required for an incident response.

Maersk Training brings advanced simulator to U.S.

Maersk Training, together with Oiltec Solutions and eDrilling, has announced that training on the advanced drilling and engineering simulator—wellSim hiDRILL—will be available in Maersk Training’s new training facility in Houston, when the center opens in November. “Saving cost, improving safety and increasing efficiency and performance of drilling operations have always been our targets, and these factors are only going to grow in importance,” Jacob Petz, managing director of Maersk Training in Houston, said. “Drilling the well, testing new technology, and verifying procedures, in simulators, are assisting operators to do exactly that.”

MERGERS/ACQUISITIONS 

Halliburton, Baker Hughes name further units to be sold prior to merger

Halliburton and Baker Hughes announced Sept. 28 that the companies will market for sale additional businesses in connection with Halliburton’s pending acquisition of Baker Hughes. Pursuant to the merger agreement, and in order to permit completion of Halliburton’s acquisition of Baker Hughes, the following additional businesses are intended to be divested: Halliburton’s expandable liner hangers business, which is part of the company’s Completion & Production Division; Baker Hughes’ core completions business, which includes: packers, flow control tools, subsurface safety systems, intelligent well systems, permanent monitoring, sand control tools and sand control screens; the Baker Hughes sand control business in the Gulf of Mexico, including two pressure pumping vessels; and Baker Hughes’ offshore cementing businesses in Australia, Brazil, the Gulf of Mexico, Norway, and the UK. The divestitures process for the previously announced divestitures of Halliburton’s Fixed Cutter and Roller Cone Drill Bits, Directional Drilling and Logging-While-Drilling (LWD)/Measurement-While-Drilling (MWD) businesses is continuing. The closing of the divestitures would be conditioned on, the closing of the pending Baker Hughes acquisition. There is no agreement to date with any competition enforcement authority as to the adequacy of the proposed divestitures. The companies will continue to work constructively with all competition enforcement authorities that have expressed an interest in the proposed transaction, Halliburton said. The pending acquisition has received unconditional regulatory clearances in Canada, Kazakhstan, South Africa, and Turkey. 

Schlumberger refuses to extend $1.7-billion Eurasia Drilling deal

Schlumberger has refused to extend its agreement to acquire a minority equity interest in Russia’s Eurasia Drilling. The world’s largest service company will “focus on other M&A opportunities” instead, Schlumberger said in a statement dated Sept. 24. Schlumberger announced its intention to buy a 45.65% stake in Eurasia Drilling in January, in a deal valued at $1.7 billion. However, a lack of regulatory approvals led the deal to be postponed four times, with the latest extension expiring on Sept. 30.