PRODUCTION       

OPEC extends oil production cuts through year-end 2018

During a ministerial meeting in Vienna on Nov. 30, OPEC and participating nations agreed to extend cuts in oil production through the end of next year. According to delegates, the market has not yet been rebalanced, and further efforts are needed. Libya and Nigeria—previously exempt from the production cuts—reportedly agreed to join the effort, until further notice. It already has been suggested that adjustments to the agreement be considered at the next OPEC meeting in June. “We must continue to work in unison and stay the course,” said Saudi Arabian Energy Minister Khalid Al-Falih, prior to the meeting. The promise to extend production cuts coincided with a marginal rise in U.S. drilling rigs, raising concerns that a new wave of shale output could offset the production cuts next year. As a result, oil dropped below $57/bbl in early December.

Production begins at Brazil’s giant Libra field

Nearly 112 mi off the coast of Rio de Janeiro, Brazil’s giant Libra field is onstream. The field, which is situated in the Brazilian pre-salt of the Santos basin, is one of the region’s largest oil discoveries, to date. The ultra-deepwater field covers an area of 1,550 km². First oil was produced via the Pioneiro de Libra FPSO, which reportedly is the first FPSO reserved for extended well tests. Additionally, it features a gas reinjection capability. The FPSO can process up to 50,000 bopd and 4 MMcmgd. As operator, Petrobras holds a 40% stake in the block. Partners include Total (20%), Shell (20%), CNOOC (10%) and CNPC (10%). Petrobras subsequently announced that the Libra Consortium has submitted the declaration of commerciality to the National Petroleum, Natural Gas and Biofuels Agency. The declaration, relating to the oil accumulation in the block’s northwestern area, indicated that the field contains an estimated 3.3 Bbbl of recoverable resources. Additionally, it stated that the field is to be named Mero. The Consortium reportedly plans to continue development of the field with four new production systems to be deployed in Mero field. In the remaining area of Libra, the Consortium also plans to resume the exploratory phase with a 27-month extension. 

ExxonMobil begins output at Hebron field, offshore East Canada

ExxonMobil said on Nov. 27 that it has started oil production at its Hebron field project, about 200 mi offshore Newfoundland and Labrador. The field, which is estimated to contain more than 700 MMbbl of recoverable resources, is expected to produce up to 150,000 bopd at its peak. The Hebron platform contains a stand-alone, gravity-based structure, which supports an integrated topsides deck. The deck includes drilling and production facilities, as well as living quarters. According to ExxonMobil, the platform’s storage capacity is 1.2 MMbbl of oil. The project, which was brought onstream ahead of schedule, is operated by ExxonMobil Canada Properties (35.5%). Partners include Chevron Canada (29.6%), Suncor Energy (21%), Statoil Canada (9%) and Nalcor Energy (4.9%). 

BUSINESS               

BP sells group of North Sea assets to Serica Energy

Serica Energy has agreed to purchase BP’s interests in the North Sea’s Bruce assets. These assets include Bruce, Keith and Rhum fields, as well as three bridge-linked platforms and supplementary subsea infrastructure. Bruce field was brought onstream in 1993. In 2000, Keith field was tied back to Bruce. Rhum, an HPHT satellite field, is situated nearly 25 mi north of Bruce. It was brought onstream in 2005. “We remain committed to the North Sea and continue to invest. We expect our production there to double to around 200,000 boed by 2020 through new projects like Quad 204 and Clair Ridge,” said Bernard Looney, chief executive of BP’s upstream division, in a release. “While the Bruce assets are no longer core to BP, we are confident that Serica is the right owner and operator to maximize their continuing value for both companies and for the UK.” 

Saudi Aramco agrees to megaprojects worth nearly $4.5 billion

Saudi Aramco recently signed agreements with a number of service contractors for several major projects. Eight contracts, worth a total of $4.5 billion, reportedly were signed. Three of the contracts were with Técnicas Reunidas, under the southern region’s Gas Compression Program. The program is expected to improve gas production from Haradh and Hawiyah fields over the next 20 years. An additional 1 Bscfd is anticipated. Other signed agreements included a free-flow pipeline contract with China Petroleum Pipelines Co., and an engineering and project management services contract with Jacobs Engineering Inc., for the Zuluf Field Development Program. Additionally, the company agreed on a pipeline and trunk line project with the National Petroleum Construction Co. and a slipover platforms and electrical distribution platform project with McDermott Middle East—both of which are for Safaniyah field, the largest offshore oil reservoir ever discovered.

Total becomes second-largest global LNG player with acquisition of Engie’s upstream business

Total has acquired Engie’s portfolio of upstream LNG assets for $1.49 billion. According to the company, this consists of participating interests in liquefaction plants, including interest in the U.S. Cameron LNG project, long-term LNG sales and purchase agreements, an LNG tanker fleet, and access to regasification capacities in Europe. With the acquisition, Total reportedly will gain approximately 180 employees. Patrick Pouyanné, Total’s chairman and CEO, said that the acquisition “will allow the group to manage an overall volume of around 40 million tonnes of LNG per year by 2020, making Total the second-largest global player among the majors, with a worldwide market share of 10%.”

DISCOVERIES/DEVELOPMENTS       

Rosneft achieves world record for longest well drilled

As part of the Sakhalin-1 Consortium, Rosneft has achieved a world record for the longest drilled well. The length of the well with horizontal completion is nearly 49,213 ft. It was drilled from Chaivo field’s Orlan platform, in the Sea of Okhotsk. According to Rosneft, the Sakhalin-1 Consortium has drilled nine out of 10 of the world’s longest wells. The Sakhalin-1 project, specifically, is said to have set five world records for measured depth of wells since drilling began in 2013. The well reportedly is a supercomplex well with a directional drilling index of 8.0, and a nearly 46,355-ft step-out. 

Keystone XL pipeline project gets approval in Nebraska

The Nebraska Public Service Commission (PSC) has approved an alternative route for the proposed Keystone XL pipeline, determining that the project is in the state’s public interest. Following the hearing, the company reported that it will carefully review the PSC’s ruling, while also assessing the decision’s potential impact on the $8-billion project. TransCanada President and CEO Russ Girling said, “As a result of [this] decision, we will conduct a careful review of the Public Service Commission’s ruling while assessing how the decision would impact the cost and schedule of the project.”  

Statoil moves forward with $6-billion Johan Castberg project

Statoil, alongside partners Eni and Petoro, has submitted the plan for development and operation (PDO) for the Johan Castberg project, approximately 62 mi north of Snøhvit field, in the Barents Sea. The development project is made up of three oil discoveries in PL 532—Skrugard, Havis and Drivis. With estimated recoverable resources of 450-650 MMboe, it is the largest offshore development to get the green light this year. “Johan Castberg will be the sixth project to come on stream in northern Norway. The field will be a backbone of the further development of the oil and gas industry in the North. Infrastructure will also be built in a new area on the [NCS]. We know from experience that this will create new development opportunities,” Arne Sigve Nylund, Statoil’s executive V.P. for development and production in Norway, said in a release. The field, which is expected to produce for more than 30 years, is anticipated to begin production in 2022.

Tyra redevelopment becomes largest investment ever made in Danish North Sea

Maersk Oil and the Danish Underground Consortium (DUC) have approved an investment of about DKK 21 billion for the redevelopment of Tyra gas field, in the Danish sector of the North Sea. As Denmark’s largest gas field, Tyra’s redevelopment reportedly will ensure that it continues producing for at least 25 years. It is responsible for processing approximately 90% of Denmark’s overall gas production. At its peak, it is expected to produce about 60,000 boed. Maersk Oil CEO Gretchen Watkins explained, “Tyra has been a key asset in the history of Maersk Oil, and an important source of energy security for Denmark. The redevelopment of Tyra is the largest investment carried out in the Danish North Sea, and when completed in 2022, production from Tyra field, itself, has the potential to cover Danish gas consumption for a decade.”

Lundin Petroleum reports non-commercial gas discovery in the Barents Sea

Lundin Norway AS, a subsidiary of Lundin Petroleum AB, reported that exploration well 7219/12-2 yielded a non-commercial gas discovery in the main well. The sidetrack, however, reportedly was dry. The exploration well is on PL533 of the Hufsa prospect, in the southern Barents Sea. According to the company, the well’s main objective was to prove oil in Jurassic and Triassic sandstone reservoirs. It encountered a gross 72-ft gas column. Subsequently, the company carried out coring, logging and sampling of gas from the wireline tools. The semisubmersible drilling rig Leiv Eiriksson will move to the Hurri prospect, which also is in PL533. Lundin Norway is operator of the license, with a 35% working interest. The company’s partners include Aker BP and DEA Norge, with a 35% and 30% working interest, respectively.