DISCOVERIES & DEVELOPMENTS

Shell starts production at Appomattox, in deepwater GOM

Several months ahead of schedule, Shell Offshore Inc., a Royal Dutch Shell subsidiary—alongside partner CNOOC Petroleum Offshore SA, Inc., a subsidiary of CNOOC Limited—has begun producing at its Appomattox floating production system. Situated approximately 80 mi off the Louisiana coast, in about 7,400 ft of water, Appomattox is Shell’s largest floating platform in the Gulf of Mexico. With an anticipated production rate of 175,000 boed, the field is opening a new frontier in the region. It is the first commercial discovery brought into production in the deep water GOM’s Norphlet formation. According to Shell—through optimized development planning, better designs and fabrication, as well as expert drilling execution—Appomattox has realized cost reductions of more than 40% since taking FID in 2015. Andy Brown, upstream director at Shell, said, “Appomattox creates a core long-term hub for Shell in the Norphlet, through which we can tie back several already discovered fields, as well as future discoveries.” Photo: Shell.

Eni reports light oil discovery offshore Angola

In Block 15/06, in Angola’s deep offshore, Eni has reported a new light oil discovery. The new discovery, on the Ndungu exploration prospect, is estimated to contain up to 250 MMbbl of light oil-in-place, with further upside. The Ndungu-1 NFW well was drilled just a few miles from Eni’s West Hub facilities. Because it is located just 1.24 mi from Mpungi field, it is likely that the discovery can be fast-tracked to production, due to its close proximity to the subsea production system. According to Eni, production will be routed to the N’goma FPSO, extending the West Hub’s production plateau. Drilled by the Poseidon drillship in a water depth of about 3,530 ft, the discovery well reached a TD of approximately 13,287 ft. It proved a single oil column of about 213 ft, with roughly 147 ft of net pay. Eni reported that data collected indicate a production capacity in excess of 10,000 bopd. Ndungu reportedly is the fourth commercial find since the Block 15/06 JV—which is made up of Eni (operator, 36.8421%), Sonangol P&P (36.8421%) and SSI Fifteen Limited (26.3158%)—relaunched its exploration campaign in mid-2018. It follows the discoveries of Kalimba, Afoxé and Agogo.

BP approves Phase 2 of Thunder Horse South Expansion

BP has sanctioned development of the Thunder Horse South Expansion Phase 2 project, in the deepwater Gulf of Mexico. According to BP, the project will further boost output at one of the largest oil fields in the GOM. Phase 2 is expected to add an estimated 50,000 boed (gross) of peak production to the existing Thunder Horse platform. It will see the addition of two new subsea production units, approximately 2 mi south of the existing platform, with two new production wells in the near term. Eventually, however, eight wells are planned as part of the overall development. The project follows several other major expansion projects at Thunder Horse in recent years. An earlier South Expansion project was started in 2017 and raised output at the facility by an additional 50,000 boed. Likewise, last October, the Thunder Horse Northwest Expansion project came online, which is anticipated to add another 30,000 boed. Earlier this year, BP also reported that it had identified an additional 1 Bbbl of oil-in-place at the field, highlighting the potential for further development opportunities. First oil at the South Expansion Phase 2 project is anticipated for 2021. Photo: BP.

Mozambique’s Rovuma LNG project gets the green light

The Government of Mozambique has approved the development plan for the Rovuma LNG project. The project will produce, liquefy and market natural gas from three reservoirs in the Mamba complex, situated in the Rovuma basin’s Area 4 block. The Rovuma LNG project is expected to produce up to 17,000 tons of liquefied petroleum gas (LPG) per annum, which reportedly makes up about half of the country’s LPG imports. “This is the third development plan approved in this five-year period, to enable the sustainable development of the huge natural gas reserves discovered in the Rovuma basin, and represents the government’s commitment to ensure the implementation of projects that will drive the development of Mozambique,” Minister of Mineral Resources and Energy Ernesto Elias Max Tonela said in a release. The Mozambique Rovuma Venture is a joint venture made up of Eni, Exxon Mobil and CNPC. The JV operates Area 4 with a 70% interest, while Galp, KOGAS and Empresa Nacional de Hidrocarbonetos EP each hold a 10% interest. With the development plan now approved, the JV reportedly hopes to reach FID later this year.

Eni reports discovery offshore Ghana

Eni has announced a gas and condensate discovery in the CTP-Block 4, offshore Ghana. The Akoma-1X exploration well was drilled to TD of 12,434.4 ft, in a water depth of 350 m, nearly 7.5 mi northwest of the Sankofa hub, where the John Agyekum Kufuor FPSO operates. According to Eni, it is the first well to be drilled on the block. The exploration well reportedly proved an estimated volume between 550 Bcfg and 650 Bcfg, and between 18 MMbbl and 20 MMbbl of condensate. Eni said the find has additional upside for oil and gas, which will require further drilling to be confirmed. Eni’s (operator, 42.469%) CTP-Block 4 JV partners include Vitol Upstream Tano (33.975%), GNPC (10%), Woodfields Upstream (9.556%) and Explorco (4.00%).

CGG begins first multi-client ocean bottom node survey in the Gulf of Mexico

CGG has commenced its first multi-client ocean bottom node (OBN) survey, in the north-central region of the Gulf of Mexico. According to the company, the survey will provide well-sampled, full azimuthal coverage with long offsets to deliver valuable data for imaging the geologically complex structures of the Mississippi Canyon. CGG CEO Sophie Zurquiyah said, “We are pleased to initiate our first multi-client OBN survey in this strongly growing market, as clients take advantage of the enhanced geologic understandings that OBN data and advanced imaging can deliver.” Preliminary products reportedly will be available in third-quarter 2019, and final products are expected in first-quarter 2020.

BUSINESS..................................................................................................

Devon Energy exits Canada with $2.8-billion divestiture

Devon Energy Corp. has entered into a definitive agreement to sell its Canadian business to Canadian Natural Resources Limited for $2.8 billion. The company’s Canadian assets consist of heavy oil properties, primarily in Alberta, with net production averaging 113,000 boe during first-quarter 2019. At year-end 2018, proved reserves associated with these properties reportedly amounted to about 409 MMbbl of oil. The buy reportedly brings Canadian Natural Resources’ total oil sands production capacity to more than 700,000 bpd. “The sale of Canada is an important step in executing Devon’s transformation to a U.S. oil growth business,” Dave Hager, Devon president and CEO, said in a release. “This transaction creates value for our shareholders by achieving a clean and timely exit from Canada, while accelerating efforts to focus exclusively on our high-return U.S. oil portfolio.” To complete this transformation, the company reportedly continues to also advance the divestiture process for its Barnett shale gas assets in North Texas. It expects to exit those assets by year end. 

Ithaca Energy acquires Chevron’s Central North Sea assets for $2 billion

Ithaca Energy, a unit of Delek Group Ltd., has agreed to purchase North Sea oil and gas fields from Chevron for $2 billion. The acquired assets include Alba, Alder and Erskine fields, as well as Britannia, Elgin/Franklin and Jade non-operated projects. Chevron’s stake in the BP-operated Clair venture reportedly is not included in the deal. Ithaca expects the acquisition to boost 2019 production 300%, resulting in a 150% increase in proved and probable reserves.

Spur Energy Partners, KKR partner to acquire assets across the Lower 48

Spur Energy Partners LLC and KKR, a global investment firm, have partnered to acquire large, high-margin oil and gas assets across the Lower 48. The acquisitions include interests in approximately 380 gross producing wells and 22,000 net acres in the core of New Mexico’s Yeso formation. During first-quarter 2019, these assets reportedly produced about 9,200 boed (net). Spur CEO Jay Graham—who is also co-founder and former CEO of WildHorse Resource Development Corp.—said, “We look forward to working [with KKR] as we make our first investment in this high-quality asset, with a strong existing production base and attractive development potential.” In conjunction with the companies’ announcement, they also disclosed the signing of a definitive agreement to acquire the Permian Northwest Shelf assets of Percussion Petroleum. Photo: Percussion Petroleum.

LICENSING ROUNDS

Ukraine holds its third licensing round this year

Ukraine announced a series of licensing rounds earlier this year, creating more opportunity for upstream investors in the region. Terms for the licensing rounds include acreage of nearly 25,000 km². There reportedly are 35 onshore blocks and one offshore block open for transparent competitive bidding. Concession areas to be sold through online auctions cover more than 4,000 km², and PSA blocks up for tenders cover 11,600 km² onshore and 9,500 km² offshore, according to the Association of Gas Producers of Ukraine. All onshore blocks are situated in proven petroleum provinces, with well-developed infrastructure and widely covered by geophysical surveys. All the blocks are said to contain contingent, undiscovered hydrocarbon resources. The first and second rounds, which took place in March and May, resulted in the awarding of concession licenses for nine blocks, from 17 proposed. The third round, scheduled for June 18, is offering nine E&P blocks in three regions, for a period of 20 years. Additionally, the Ukrainian government opened a public tender for nine onshore blocks and one offshore block for a 50-year period.

Sierra Leone re-opens fourth licensing round

The Petroleum Directorate of Sierra Leone, in partnership with GeoPartners and Getech, announced the re-opening of its fourth licensing round, as of late May. This purportedly includes a direct tender for licensing applications where half, or more, of the area is in water depths of more than 2,202.1 ft. Blocks are available from nearshore to ultra-deep waters. Bids reportedly close in September. The licensing round is giving investors an opportunity to take a closer look at what is considered an under-explored region. Eight wells have been drilled offshore Sierra Leone since 1982, with oil shows in 1982 and 1985. No further drilling took place in the region until 2009. Three wells drilled by Anadarko in 2009, 2010 and 2012 produced discoveries, as well as one by Lukoil in 2013.