EXPLORATION & PRODUCTION

Shell reports large deepwater discovery in the U.S. Gulf of Mexico

Shell Offshore, Inc., reported a significant deepwater discovery in the U.S. GOM’s Norphlet geologic play. The company’s Dover well encountered more than 800 net ft of pay, qualifying it as the sixth Norphlet discovery. The Jurassic-period Norphlet play is a geologic formation that extends from onshore to the deep waters of the eastern GOM. The latest find is approximately 13 mi from the Appomattox platform (pictured), where it is likely to be tied back. Andy Brown, Shell’s upstream director, explained, “By focusing on near-field exploration opportunities in the Norphlet, we are adding to our resource base in a prolific basin that will be anchored by the Appotmattox development.” According to the company, Appotmattox is expected to start production before the end of 2019. Photo: Shell.

Shell starts production at Phase 1 of Kaikias, in the U.S. Gulf of Mexico

Royal Dutch Shell reported the start of production at the first phase of the Kaikias development, in the U.S. GOM. With recoverable resources that could exceed 100 MMboe and estimated peak production of 40,000 boed, Shell touts the project as “the most competitive subsea development in the Gulf of Mexico.” Situated about 130 mi off the coast of Louisiana, in the prolific Mars-Ursa basin, the Kaikias subsea development is in close proximity to existing infrastructure, allowing more room for cost efficiencies. It will produce oil and gas through a subsea tie-back to the nearby Shell-operated Ursa platform (pictured). According to the company, initial drilling and appraisal of Kaikias were completed ahead of schedule and under budget. Likewise, production at Phase 1 started approximately one year ahead of schedule. Accordingly, Shell has reduced overall costs associated with the development by about 30% since taking FID in early 2017. This has lowered the deepwater project’s forward-looking, break-even price to less than $30/bbl. Photo: Shell.

SDX Energy confirms natural gas discovery in South Disouq, Egypt

SDX Energy announced that, after drilling to a TD of 9,608 ft, its Ibn Yunus 1X well has successfully flowed natural gas at a stabilized rate of 39.3 MMscfd on a 32/64-in. choke. Ibn Yunus 1X, in Egypt’s South Disouq region, had encountered 100.8 ft of net conventional gas pay in the Abu Madi horizon. The pay section reportedly had an average porosity of 28.5%. According to the company, the flowrate achieved during initial well tests exceeded expectations. SDX Energy, which holds a 55% working interest in the discovery, has shut in the well for initial buildup. Immediately following, a series of additional flowing periods will be conducted and fluid samples will be taken. The discovery is anticipated to come into commercial production by year-end, the company said. SDX Energy’s South Disouq concession is situated in the prolific Abu Madi-Baltim trend, covering an area of approximately 1,275 km² in the Nile Delta. It is said to contain an estimated 1.3 Tcf of overall resource potential.

GOVERNMENTAL/REGULATORY/

Trump reinstates Iranian sanctions, threatening foreign investment in the region

After withdrawing from the 2015 nuclear accord with Iran, U.S. President Donald Trump restored sanctions on the Islamic Republic last month. Despite concern from many of Trump’s political opponents, he insisted that the deal was “defective at its core,” and it would not effectively prevent an Iranian nuclear bomb as it was. As Trump announced his decision, WTI crude fell below $70/bbl in New York. However, it quickly rose to a three-year high, once buyers of Iranian crude were warned about the penalties they could face if purchases were not curbed within six months. Trump’s decision also created much uncertainty for operators in Iran, as a resumption of U.S. sanctions is expected to threaten the nation’s ability to attract foreign investment. Additionally, trade between the EU and Iran has nearly tripled in the last few years, resulting in more cause for concern from a European perspective. Consequently, just days after the announcement was made, Total said that it would not commit any further to the South Pars 11 project. The French major said that continued business in the country would be too great a risk, unless granted a waiver by U.S. authorities. Conversely, India’s foreign minister Sushma Swaraj said that “India will comply with UN sanctions and not any country-specific sanctions.” As one of Asia’s biggest oil importers, the world’s third-largest oil consumer, and a frequent buyer of Iranian oil, India’s refusal to comply with U.S. sanctions persists.

UKCS attracts operators in 30th offshore licensing round

In the 30th Offshore Licensing Round, the Oil and Gas Authority (OGA) offered 123 licenses over 229 blocks to 61 companies. A total area of 26,659 km² of the UK Continental Shelf (UKCS) was offered for award. The region contains an estimated 1.5 Bboe of undeveloped, potentially commercial resources, according to Wood Mackenzie. The OGA hopes to unlock approximately 320 MMboe with the recent awards. “The UKCS is back. Big questions facing the basin have been answered in this round. Exploration is very much alive, with lots of prospects generated and new wells to be drilled. The results show a great diversity of active players, from supermajors to new entrants, and the hard work promoting undeveloped discoveries is starting to pay off. I’m looking to industry to rapidly press ahead with these activities and maximize recovery from these great opportunities,” OGA Chief Executive Dr. Andy Samuel said in a release. Of those awarded, 14 licenses reportedly will move straight to field development planning. Highly prospective Blocks 15/18d and 15/19b, in the Central North Sea, were among those awarded during the licensing round. United Oil & Gas secured a 95% interest in the blocks, one of which contains the Palaeocene Crown oil discovery, which reportedly could hold up to 16 MMbbl of recoverable oil. The blocks, covering an area of about 13.6 km², are said to have numerous targets. Additionally, Faroe Petroleum was awarded Block 30/14b, which contains the Edinburgh prospect. Faroe is now operator with a 100% interest in the block.

DEVELOPMENTS

Equinor sees installation of Johan Sverdrup platform

In late May, the topside for the Johan Sverdrup drilling platform, a 22,000-ton steel structure, was delivered to Johan Sverdrup field in the Norwegian North Sea, about 87 mi west of Stavanger. The topside was transferred to the jacket via Allseas’ Pioneering Spirit vessel, the world’s largest heavy-lift vessel. The topside reportedly was put into position in one single lift, saving significantly in cost and man hours. According to Equinor (formerly Statoil), installation of the platform took just three hours after initial preparations. Trond Bokn, Equinor’s senior V.P. for Johan Sverdrup, said, “This is an important milestone in the Johan Sverdrup installation campaign. Two of the four Johan Sverdrup platforms are now in place. The power cables to the field were rolled out last week and, so far, the installation of Norway’s biggest oil pipeline has gone very well, so this is definitely moving in the right direction.” The drilling platform is expected to become operational this fall. The eight wells pre-drilled by the Deepsea Atlantic semisubmersible in 2016 will be tied back to the platform by year-end. First oil is anticipated in late 2019. With estimated resources of between 2.1 and 3.1 Bboe, Johan Sverdrup is considered one of the largest oil fields on the NCS. According to Equinor, it also will be one of Norway’s most important industrial projects in the next 50 years, generating significant revenue. Photo: Bo B. Randulff, Equinor.

Wintershall submits PDO for Nova field development, in the Norwegian North Sea

Wintershall—alongside partners Capricorn, Spirit Energy, Edison and DEA—submitted the PDO for Nova field (formerly Skarfjell), in the Norwegian North Sea. It is the first PDO submitted for the Norwegian Continental Shelf this year. The field, which contains estimated recoverable reserves of about 80 MMboe, will be developed as a subsea tie-back, connecting to two templates that route to the nearby Gjøa platform. Gjøa also is expected to provide lift gas to Nova field, as well as water injection for pressure support. According to the company, investment in the Nova development is estimated at approximately NOK 9.9 billion. The partners will now enter the execution phase of the development, which includes field construction, ahead of its anticipated 2021 startup.

Europa nearly doubles estimate of prospective resources offshore Ireland

Europa Oil & Gas updated its prospect inventory, nearly doubling its estimate of gross mean un-risked prospective resources on FEL 3/13. The license, which is in the South Porcupine basin, is now believed to hold 2.9 Bboe—which is a 93% increase from previous estimates. According to the company, the increase is the result of a marked improvement in seismic quality and a substantial uplift to prospect inventory, following completion of pre-stack depth migration reprocessing of 3D seismic data acquired in 2013, as well as the confirmation and verification of the Beckett, Shaw and Wilde prospects. Europa is operator of all three licenses, with a 100% interest.

Total takes FID for Zinia 2 development, offshore Angola

Total has announced that it has taken the final investment decision to launch the Zinia 2 development in Block 17, approximately 93 mi offshore Angola. The project, which reportedly is the first of several potential short-cycle developments on the block, will have a production capacity of 40,000 bopd and will help sustain Pazflor field production. Pazflor, one of the world’s largest deepwater developments, has been onstream since 2011 and is said to contain estimated proved and probable reserves of 590 MMbbl of oil. It is made up of Perpetua, Hortensia, Acacia and Zinia fields, which lie in the eastern part of Block 17. Zinia 2 will connect satellite reservoirs to the existing Pazflor FPSO. It involves nine wells in water depths ranging from 1,968 ft to 3,937 ft. Total’s (operator, 40%) partners include Equinor (23.33%), ExxonMobil (20%) and BP (16.67%). Photo: Total.