July 2014
News & Resources

World of oil and gas

World of oil and gas
Melanie Cruthirds / World Oil



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 launches production drilling at Badra

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.


Statoil, PTTEP complete agreement to divide Canadian oil sands interests

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 to invest nearly $11 billion in Bul Hanine re-development

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.

Eni, Repsol, PDVSA agree to develop Perla field

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 strikes Russia’s largest discovery in two years

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.

BG, Ophir Energy hit gas off Tanzania

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 discovers gas in southern North Sea

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.



Exxon Mobil awarded leases in Gulf boundary area Secretary of the Interior Sally Jewell and Bureau of Ocean Energy Management (BOEM) Acting Director Walter Cruickshank have announced the award of the first three oil and gas leases in the Gulf of Mexico boundary area, subject to the U.S.-Mexico Transboundary Hydrocarbons Agreement. The leases were awarded to Exxon Mobil, which submitted bids for the blocks within (or partially within) three statute miles of the maritime and continental shelf boundary with Mexico at Western Planning Area Sale 233, held in August 2013. BOEM opened the three sealed bids, totaling $21,333,850, during the Eastern and Central Planning Area Sales on March 19. The leases are in the Alaminos Canyon Area, and will be subject to the terms of the U.S.-Mexico agreement, effective July 18.

Draft bill seeks 35% local content in Mexico According to reports out of Mexico, a group of legislators within the country is seeking to raise the proposed local content provision for oil and gas projects to 35%, up from the 25% recommended by Mexican President Enrique Pena Nieto. The draft bill, proposed by the heads of Mexico’s Senate committees on energy and legislative studies, would exempt deepwater projects from the 35% local content requirement. Additional laws relating to the country’s energy industry were scheduled to come under discussion soon after the bill’s proposal.

UK energy minister announces new shale terms UK Energy Minister Michael Fallon has said he will move forward with updated rules for shale development. In June, he introduced a “new flexibility to licenses,” whereby landholders can retain greater areas than before. The new system will involve production plans, which will govern acreage used for production, and retention agreements, which outline work plans agreed upon between the license-holder and the Department of Energy & Climate Change (DECC). Fallon said that the DECC will reduce the confidentiality period on information submitted about hydraulically fractured shale wells from four years to six months.


Statoil drilling Martin prospect in deepwater GOM As part of an ambitious effort to expand its E&P portfolio in North America, Statoil is in the midst of drilling a wildcat well as an operator in the deepwater Gulf of Mexico (GOM). Statoil is using the Maersk Developer, a sixth-generation semisubmersible, to drill the well on the Martin prospect across Blocks 717, 718 and 761 in the Mississippi Canyon area. Installed at a 3,000-ft water depth, the well is expected to reach TD during third-quarter 2014. The operator said it is fairly confident of success at Martin. Fields under production in the area include Mars and Ursa (Shell), and Thunder Horse (BP), which are some of the largest producing fields in the GOM. For Martin, Statoil is the operator (42.5%), with partners Nexen (25%) and LLOG (26%). 

INPEX wins permit to explore Western Australian block  INPEX (40%) said that it and Santos (operator, 60%) were awarded an exploration permit for Release Area WA-504-P, offshore Western Australia. This is the 11th block in which INPEX holds exploration permits or retention leases in the vicinity of Ichthys gas-condensate field, where the company, as operator, is developing the Ichthys LNG project. This latest block is approximately 500 km off the coast of Western Australia. It covers an 83-km2 area, where the water is approximately 400 m deep.

AWE abandons Oi-1 exploration well offshore New Zealand AWE, operator of Petroleum Mining Permit 38158 offshore Taranaki, New Zealand, has advised that due to operational challenges in managing near-surface unconsolidated formations, the Oi-1 exploration well has been abandoned, and a new well, Oi-2, will be drilled from an adjacent location. The Kan Tan IV semisubmersible has been moved 150 m to the new well location, and preparations are being made to commence drilling Oi-2. Oi-1 was drilled to a planned depth of 1,507 m in a 17½-in. hole. Installation of 133/8-in. casing was not completed, due to wellbore instability at a shallow depth. Subsequent attempts to sidetrack the well were unsuccessful and, consequently, the JV decided to abandon Oi-1. AWE said it has revised the drilling program for Oi-2 to further mitigate risks, and to then continue the program as previously planned. 


Total sells interest in Shah Deniz

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.


Lukoil, NewAge farm into block offshore Cameroon

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 sells interests in Chad, Cameroon

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 buys 40% stake in Sasol field off South Africa

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.



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Melanie Cruthirds
World Oil
Melanie Cruthirds melanie.cruthirds@worldoil.com
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