PRODUCTION

CNOOC’s Huizhou project begins producing in the South China Sea 

The Huizhou 32-5 oil field comprehensive adjustment/Huizhou 33-1 oil field joint development project reportedly started production. The project, which is in the south-central part of the eastern South China Sea, is approximately 105 mi from Hong Kong. In water depths of about 377 ft, the project has one drilling and production platform that utilizes the existing infrastructure of Huizhou 25-8. According to CNOOC, the project has one producing well that is expected to reach a peak output of about 19,200 bopd in 2020. CNOOC Limited operates the development project with a 100% interest. The South China Sea has proven itself to be a valuable region for oil and gas E&P. It reportedly holds proven reserves of more than 7 Bbbl and natural gas reserves estimated at about 265 Tcf.

Lula consortium sees start-up of Lula North, in Brazil’s Santos basin

Just a few months following the start of production at Lula Extreme South with the P-69 FPSO, Royal Dutch Shell (25%)—alongside partners Petrobras (operator, 65%) and Galp subsidiary Petrogal Brasil (10%)—announced the start of production at the Lula North project. The deepwater project is situated in Brazil’s prolific Santos basin. Production at Lula North is being processed by the P-67 FPSO. It is the seventh FPSO to be deployed at Lula, and the third in a series of standardized vessels built for the Lula consortium. The FPSO is designed to process up to 150,000 bopd and 6 MMcmgd. Photo: Shell. 

Equinor, partners will invest millions to increase Gullfaks production 

The Gullfaks field partners—Equinor, Petoro and OMV—are working to improve oil recovery by as much as 17 MMbbl, through the use of water injection and new production wells in the Shetland/Lista phase 2 development. According to the companies, seven horizontal wells are planned to be drilled by existing drilling facilities on Gullfaks. A well test in 2012 reportedly proved that the carbonate reservoir lying above the main reservoir at Gullfaks had an oil production potential. Consequently, the partners have invested more than NOK $1 billion in production wells in the formation since 2013. So far, the investment has produced more than 6 MMbbl of oil from Shetland/Lista phase 1, according to Equinor. Arne Sigve Nylund, Equinor’s executive V.P. for development and production in Norway, said, “Our ambition is to maintain profitable production from the Norwegian Continental Shelf for several decades. Wells that can be drilled fast and at a low cost, near existing infrastructure, will be a major contributor.” 

EXPLORATION

BP reports two new oil discoveries in the U.S. GOM, east of Na Kika 

BP reported two new oil finds at the Manuel and Nearly Headless Nick prospects, in the Gulf of Mexico. The Manuel discovery is on Mississippi Canyon Block 520, east of BP’s Na Kika platform (pictured). The well reportedly encountered oil pay in high-quality Miocene sandstone reservoirs. The company says it plans to develop these reservoirs via a subsea tieback to the Na Kika platform. BP has a 50-50 partnership with Shell on the Manuel discovery. Likewise, the Nearly Headless Nick well encountered oil pay in high-quality Miocene sandstone reservoirs and is expected to be tied back to the Delta House facility. The discovery, operated by LLOG, is situated on Mississippi Canyon Block 387. BP’s partners in the Nearly Headless Nick discovery include LLOG, Kosmos Energy and Ridgewood Energy. 

CNOOC strikes gas on Glengorm prospect, offshore UK 

CNOOC Limited reported a discovery late last month on the Glengorm prospect, offshore the UK in the Central North Sea. The discovery is in License P2215, where water depths are approximately 282 ft. The exploration well had been drilled to a TD of nearly 16,588 ft, encountering net gas and condensate pay zones with a total thickness of over 121 ft. Partners of CNOOC Petroleum Europe Limited (operator, 50%) include Total E&P UK North Sea Limited (25%) and Euroil (25%). “Glengorm discovery demonstrates the great exploration potential of License P2215. We are looking forward to further appraisal,” said Xie Yuhong, executive V.P. at CNOOC, in a release.

Aker BP reports discovery on Froskelår Main prospect

Aker BP is drilling exploration well 24/9-14 on the Froskelår Main prospect. The prospect, which is in the Alvheim area, follows the company’s Frosk discovery last year. According to AkerBP, the majority of the discovery is in License 869 on the Norwegian Continental Shelf. After encountering oil and gas, preliminary analysis of the discovery reportedly indicates a gross discovery size in the range of 45 MMboe to 153 MMboe. The company will continue drilling, along with a comprehensive data collection program. AkerBP operates License 869 with a 60% interest. Partners include Lundin Norway (20%) and Vår Energi (20%).

Equinor reports Norwegian Sea gas discovery south of Kristin field 

Equinor—alongside partners Petoro, ExxonMobil and Total—struck a gas and condensate discovery in the Norwegian Sea. The Ragnfrid North exploration well was drilled by the West Phoenix rig, more than 12 mi south of the Kristin platform, and will aid in determining the area’s resource base over the next few years. According to the company, recoverable resources have been estimated between 6 MMboe and 25 MMboe. The discovery reportedly will now be evaluated for development and tie-in to Kristin field and further maturing of the Kristin South project. Equinor Senior V.P. for Norway and the UK Nick Ashton said, “Ragnfrid North will, together with the former discoveries Lavrans and Erlend East, give a more detailed picture of the potential in this area of the Norwegian Sea.” The company said that it expects the find to increase the probability of discoveries for other prospects, paving the way for more drilling operations in the area. It was reported that the West Phoenix rig will now move to the UKCS, where it will drill the Equinor-operated Bigfoot prospect, south of Mariner field. 

BUSINESS/DEVELOPMENTS

BP approves major expansion at U.S. GOM deepwater field 

BP has approved a major expansion at Atlantis field, in the U.S. Gulf of Mexico. Additionally, the company reported that significant additional resources have been identified that could create further development opportunities around its regional production hubs. The $1.3-billion Atlantis Phase 3 development will include construction of a new subsea production system from eight new wells that will be tied into the current platform, 150 mi south of New Orleans, La. The project should boost production at the platform by an estimated 38,000 boed, gross, at its peak. Additionally, it will access the field’s eastern area, where advanced imaging and reservoir characterization have identified an additional 400 MMbbl of oil-in-place at Atlantis field. “BP’s Gulf of Mexico business is key to our strategy of growing production of advantaged high-margin oil. We are building on our world-class position, upgrading the resources at our fields through technology, productivity and exploration success,” said BP Upstream Chief Executive Bernard Looney in a release. “And these fields are still young—only 12% of the hydrocarbons in-place across our Gulf portfolio have been produced, so far. We can see many opportunities for further development, offering the potential to continue to create value through the middle of the next decade and beyond.” Atlantis Phase 3 is expected to go onstream in 2020. 

Talos Energy further defines resource potential of Zama discovery

Talos has provided an update on its appraisal of the Zama discovery, in the U.S. Gulf of Mexico. The Zama-2 well, the first of three appraisals to be drilled by the consortium, reportedly was drilled in a down-dip location approximately 1.3 mi north of the Zama-1 discovery. According to the company, the well reached the top of the Zama reservoir at about 10,759 ft, TVD. Not only did the well give a better understanding of Zama’s resource potential, but it also provided further testing of a deeper exploration prospect—Marte. Although high-quality sands of consistent geological age were encountered in Marte, they reportedly were not hydrocarbon-bearing. “We are very pleased with the results of the Zama-2 well, as we were able to achieve our primary goals of understanding the depositional environment and the presence of thick sand bodies needed for robust aquifer support, both of which help with ultimate recovery. We also confirmed that this section of the reservoir has similar or better rock properties, as compared to Zama-1 discovery well and that the pressure information indicates connectivity to Zama-1. Perhaps most importantly, the oil-water contact was encountered at the predicted depth, if not slightly deeper,” said Talos President and CEO Timothy S. Duncan in a release. “We are staying focused on working with urgency to meet the project timeline to achieve first oil by the second half of 2022.”

Chesapeake completes acquisition of WildHorse Resources

Chesapeake Energy Corporation has completed its acquisition of WildHorse Resource Development Corporation. The merger was approved previously by company shareholders during a meeting on Jan. 31. Upon closing, Chesapeake shareholders reportedly own approximately 55% of the combined company, while WildHorse shareholders own approximately 45%. Chesapeake is adding approximately 420,000 high-margin net acres, about 80% to 85% of which is undeveloped. The acreage is in the Eagle Ford shale and Austin Chalk formations, with strategic access to premium Gulf Coast markets. The acquisition reportedly will double Chesapeake’s projected oil production by 2020, from stand-alone adjusted 2018 estimates. Production is expected to increase to an anticipated 125,000 to 130,000 bopd this year, and 160,000 to 170,000 bopd in 2020. Chesapeake says it expects over 80% of future drilling and completion activity to be directed toward high-margin oil opportunities. Chesapeake CEO said, “The addition of the WildHorse assets to our high-quality, diverse portfolio, combined with our operating expertise and experience, provides another oil growth engine with significant oil inventory for years to come and gives us tremendous flexibility and optionality to help achieve our strategic goals.”

Eni, BP work together on next big find in Oman 

Eni and BP have signed a head-of-agreement (HOA) with the Ministry of Oil and Gas of the Sultanate of Oman to work jointly toward a sizeable new discovery in that country. According to the companies, the HOA will see them working with the government of Oman toward the award of a new E&P sharing agreement for Block 77, in central Oman. Block 77 covers a total area of nearly 3,100 km² and is situated almost 19 mi east of BP-operated Block 61. The latter block is the area that contains the Khazzan gas project, as well as the Ghazeer project, which is still under development. It was reported that following the HOA, the companies will now enter discussions with the ministry to finalize details of the agreement.