World of oil and gas

PRODUCTION

Maersk Oil UK gets approval to develop Flyndre, Cawdor

Maersk Oil UK has received approval from UK and Norwegian authorities to develop Flyndre and Cawdor fields. The fields lie approximately 293 km southeast of Aberdeen in Blocks 30/13 and 30/14 of the UK North Sea (Flyndre and Cawdor) and Block 1/5 of the Norwegian North Sea. The fields will be co-developed as a subsea tie-back to the Clyde platform (pictured), operated by Talisman Sinopec Energy UK. Flyndre will be developed with a single production well, while Cawdor will be developed, initially, with a single production well, with potential development of two further wells, based on field performance. Flyndre is expected to peak at around 10,000 bopd, with first oil expected in 2016, and Cawdor should peak at around 5,000 bopd, with production beginning in 2017. Total recoverable resources are expected to be approximately 30 MMboe for the initial development phase, with further upside depending on performance and additional development phases.

IEA: U.S. shale revolution to spread by 2019

In its annual, five-year oil market outlook, released in June, the International Energy Agency (IEA) said it is likely that the unconventional supply revolution seen in North America over the past several years will expand outside those borders by 2019. The group’s report also projected a slowdown in global oil demand growth and “OPEC capacity growth facing headwinds.” The IEA report, Medium-Term Oil Market Report 2014, goes on to point out that a handful of countries are seeking to play catch-up with the U.S. as a producer of shale and light, tight oil (LTO). By 2019, it estimates, tight oil supplies outside of the U.S. could hit 650,000 bpd, including 390,000 bpd from Canada, 100,000 bpd from Russia and 90,000 bpd from Argentina. In the same period, however, the IEA forecasts that the U.S. will double its LTO output to 5 MMbpd. In addition to ongoing technical challenges relating to field development and production in the shale arena, some OPEC producers are also facing surface security concerns, the report stated, with questions surrounding how realistic it is to expect three-fifths of OPEC’s growth to come from Iraq by 2019, with ongoing military upheavals throughout the country.

Total starts production at CLOV, boosts Block 17 output to 700,000 bpd

Total, operator of Block 17 offshore Angola, has started up CLOV, a major deepwater development 140 km offshore Luanda, in line with the initial project schedule. With a production capacity of 160,000 bopd, CLOV will develop proven and probable reserves of over 500 MMbbl. After Girassol, Dalia and Pazflor, CLOV is the fourth FPSO unit on Block 17. Developing four fields (Cravo, Lirio, Orquidea and Violeta), the project comprises 34 wells and eight manifolds connected by 180 km of subsea pipelines to an FPSO unit at water depths of 1,100 m to 1,400 m. Measuring 305 m long and 61 m wide, the FPSO has a storage capacity of 1.8 MMbbl of oil. The gas produced on CLOV will be exported via a subsea line to the onshore Angola LNG liquefaction plant. Along with Total (40%), partners in the block are Statoil (23.33%), Esso Exploration Angola (Block 17) Limited (20%) and BP (16.67%). Sonangol is the concessionaire for Block 17.

Gazprom Neft has begun drilling production wells at Badra field in Iraq. Drilling work began in May 2014, with a well more than 4,800 m long, under a contract with Chinese company ZPEC, which provided for the drilling of six wells in total. Two development wells have now been tested successfully and switched to production status, making it possible to launch commercial oil output at Badra. The development of a third well is still underway. On May 31, Gazprom Neft began production at Badra, and the central gathering station (CGS) is undergoing testing of its crude oil processing system. Testing will be completed in three months, once enough oil has been accumulated for commercial production. The field will then be ready to reach planned production levels of 15,000 bopd.

BUSINESS

Statoil and Thailand’s PTT Exploration and Production (PTTEP) have completed an agreement to divide their respective interests in the Kai Kos Dehseh (KKD) oil sands project in northeastern Alberta, Canada. Following the satisfaction of all conditions precedent and the closing of this transaction, Statoil now owns 100%, and continues as operator of the Leismer and Corner development projects, with PTTEP owning and operating 100% of the Thornbury, Hangingstone and South Leismer areas. Statoil paid $200 million to PTTEP, plus a working capital adjustment amount of approximately $222 million.

Qatar Petroleum (QP) reportedly has plans to invest nearly $11 billion in the re-development of Bul Hanine offshore oil field, approximately 120 km east of the Qatari coastline. The project, which is at the pre-FEED stage, is one of the largest to be managed and executed by QP. It is designed to prolong the field’s life by countering its output decline and doubling its oil production rate. Major reservoir and field-wide studies have been undertaken to re-assess reserves and the long-term production prospects for each field. The planned project scope includes new offshore, central production facilities and a new onshore gas liquids processing facility at Mesaieed. Also included is a drilling campaign of about 150 new wells, scheduled for between now and 2028. New wells will be drilled from the existing/modified wellhead jackets, as well as from 14 new wellhead jackets.

Officials representing PDVSA; its president, Rafael Ramirez; Eni and Repsol have signed strategic agreements concerning the exploitation of Perla field, one of the world’s largest discoveries in the last decade. The first agreement is a memorandum of understanding for the creation of a new company (mixed enterprise), which will develop and produce Perla’s condensate reserves. The new company will be run jointly by CVP (PDVSA’s affiliate, 60%), along with Eni (20%) and Repsol (20%). The second agreement is a term sheet, which establishes the key elements required for an up-to-$1 billion investment structure to finance PDVSA’s (CVP’s) share in the Perla development. Eni and Repsol will contribute up to $500 million, each. Both agreements are subject to the signing of final contracts, and to the approval of local authorities.

Repsol made two new discoveries in Russia’s Karabashsky Blocks, in Ouriyinskoye field, West Siberia. Recoverable resources from the Gabi-1 and Gabi-3 wells are estimated, by the Russian Federation’s Ministry of Natural Resources and Environment, at 240 MMboe. According to Minister of Natural Resources and Environment Sergei Donskoi, the find is the biggest made in Russia in the last two years. Repsol has been exploring the Karabashsky 1 and 2 Blocks since 2010, and, in 2011, it created a JV with Alliance Oil, called AROG, to carry out development work in the country. During 2013, Russian activity contributed 14,600 boed to Repsol’s production. This has risen to 17,640 boed in 2014, with the start-up of new gas wells at Syskonsyninskoye field.

Ophir Energy (20%) said that it and BG Group (60%, operator) have discovered gas at the Taachui-1 well, and subsequent Taachui-1 ST1 well, in Block 1 offshore Tanzania. Ophir and BG Group are partners in  Blocks 1, 3 and 4. Taachui-1 was drilled near the western boundary of Block 1. The well was sidetracked for operational reasons, to complete as the Taachui-1 ST1 well, and was drilled to a TMD of 4,215 m. The well encountered gas in a single gross column of 289 m within the targeted Cretaceous reservoir interval; net pay totaled 155 m. Estimates for the mean recoverable resource from the discovery are approximately 1 Tcf.

GDF SUEZ has reported a new gas discovery in the UK Southern North Sea. The Cepheus 44/12a-6 exploration well encountered a gas column within the Permian Lower Leman sandstone, which was the primary reservoir target. The well was spudded March 9, and drilled to a TMD of 12,125 ft. It was deviated to the northeast, from a top hole location in Block 44/12a, to the target location in Block 44/12b (License P1731). The GSF Monarch rig, which drilled the well, was scheduled to move off location May 29, after plugging and abandonment operations.

GOVERNMENT/REGULATORY 

EXPLORATION

Total has signed an agreement to sell its 10% interest in the Shah Deniz field, offshore Azerbaijan, and the South Caucasus pipeline to TPAO, the Turkish, state-owned E&P company. The transaction is valued at $1.5 billion and is subject to customary approvals. Shah Deniz field is approximately 100 km southeast of Baku, Azerbaijan, in the Caspian Sea, and covers approximately 860 km2, in water depths up to 550m. Phase One of the field started up in 2006 and is producing 200,000 boed. A second phase was sanctioned in 2013.

Bowleven, an Africa-focused oil and gas exploration group, intends to sell part of its interest in the Etinde permit, offshore Cameroon, by entering into a conditional agreement with Lukoil and NewAge. The company will reduce its interest in the permit from 75% to 25%, and will receive aggregate consideration of approximately $250 million. Lukoil will acquire a 37.5% interest, and NewAge will acquire an additional 12.5% interest in the Etinde permit to increase its group holding from 25% to 37.5%.

Chevron Corporation’s subsidiary, Chevron Global Energy Inc., has sold its 25% non-operated interest in an oil-producing concession in southern Chad, and the related export pipeline interests, to the Republic of Chad for approximately $1.3 billion. The transaction includes the sale of the subsidiary’s interests in seven fields in Chad’s Doba basin, which, in 2013, had an average net crude oil production of about 18,000 bpd. The sale also includes pipeline interests.

Eni has concluded an agreement with Sasol to acquire a 40% interest and operatorship in Exploration Right permit 236 (ER236) offshore South Africa. The permit grants the right to explore for hydrocarbons in a wide, unexplored area of 82,000 km² off South Africa’s east coast (Durban and Zululand basins), Kwazulu-Natal province. The permit was granted to Sasol by South African regulator, Petroleum Agency of South Africa (PASA), in late 2013.