E&P Notes (October 2021)
Authors: JPT staff _ 
Published: November 2021

CNOOC Turns On the Taps at Two Bohai Sea Fields

Production has begun at CNOOC Limited’s Luda 6-2 and Bozhong 26-3 oil field expansion in the Bohai Sea. Luda 6-2 is flowing ahead of schedule, utilizing existing processing facilities of the Suizhong 36-1 oil field. The project has built a new central platform. A total of 38 development wells are planned, including 29 production wells, eight water-injection wells, and one development-and-appraisal well. The project is expected to reach peak production of around 10,000 B/D in 2022.

The Bozhong 26-3 oilfield expansion project has also come online. In addition to fully utilizing existing processing facilities, new unmanned wellhead and power platforms were built for the project. A total of eight development wells are planned, including five production wells, two water-injection wells, and one development-and-appraisal well. The project is expected to reach peak production of 2,670 B/D in 2021.

CNOOC Limited holds 100% interest in both projects.

PPL Awarded Abu Dhabi Offshore Exploration Block

A consortium of four Pakistani companies led by Pakistan Petroleum Limited (PPL) was awarded the exploration rights for Offshore Block 5 in Abu Dhabi’s second competitive block bid round. The award marks the first Pakistani company investment in and planned exploration for oil and gas in an Abu Dhabi concession as well as the first partnership between the Abu Dhabi National Oil Company (ADNOC) and Pakistani energy companies.

Other companies in the consortium include Mari Petroleum Company Limited, Oil and Gas Development Company Limited, and Government Holdings (Private) Limited.

Under the terms of the agreement, the consortium will hold a 100% stake in the exploration phase, investing up to $304.7 million toward exploration and appraisal drilling, including a participation fee, to explore for and appraise oil and gas opportunities in the block that covers an offshore area of 6223 km2 and is located 100 km northeast of Abu Dhabi.

“The PPL-led consortium is delighted to be selected for the concession award of Abu Dhabi’s Offshore Block 5,” said Moin Raza Khan, managing director and chief executive of PPL. “This award is not only a watershed moment for Pakistan and the Emirate of Abu Dhabi towards bilateral energy cooperation and economic links, but also offers an opportunity to strengthen strategic cooperation with ADNOC to share technical know-how and expertise.”

Following a successful commercial discovery during the exploration phase, the consortium will have a production concession to develop and produce the discoveries. ADNOC has the option to hold a 60% stake in the production phase, which is 35 years from the commencement of the exploration phase. The block offers the potential to create significant in-country value for the UAE over the lifetime of the concession.

In addition to drilling exploration and appraisal wells, the exploration phase will see the consortium leverage and contribute financially and technically to ADNOC’s mega seismic survey, which is acquiring 3D seismic data within the block area. The data already acquired over a large part of the block, combined with its proximity to existing oil and gas fields, suggest the concession area has promising potential.

Hess Exits Denmark Upstream

Hess Corporation has completed the previously announced sale of its subsidiary Hess Denmark ApS, which holds a 61.5% interest in the South Arne Field, to Ineos E&P AS for a total consideration of $150 million.

“The sale of our Denmark asset enables us to further focus our portfolio and strengthen our cash and liquidity position,” said John Hess, chief executive of Hess. “Proceeds will be used to fund our world-class investment opportunity in Guyana.”

The transaction was effective 1 January 2021.

Beacon Offshore Secures Drillship for Shenandoah Work

Beacon Offshore awarded Transocean a $252-million contract for use of its newbuild ultradeepwater drillship Deepwater Atlas to work in the Shenandoah field in the US Gulf of Mexico (GOM). The deal also includes a $30-million mobilization fee from Southeast Asia to the GOM.

The Shenandoah program comprises two phases. Once delivered from the shipyard, the Deepwater Atlas is expected to begin operations in Q3 2022, initially using dual blowout preventers (BOP) rated to 15,000 psi. The duration of the drilling program is approximately 255 days and should result in $80 million in contract drilling revenue.

Upon completion of initial drilling, a 20,000-psi BOP will be installed on the rig, making it Transocean’s second asset with a 20,000-psi-rated well-control system. The BOP installation and commissioning is expected to last 45 to 60 days, contributing $17 million in revenue. Following the 20,000-psi BOP installation, the Deepwater Atlas will begin the well completion program. The approximate duration of this phase is 275 days and should contribute $125 million in contract drilling revenue.

Gambia Block Back on the Market

The A1 block offshore Gambia is available for licensing again following a $29.3-million settlement with BP for failing to meet its drilling obligations there, according to the Gambian government.

The oil major failed to drill a well before the initial exploration period expired on 29 July.

“The A1 Block will revert to the government, free of all encumbrances,” the government statement said. “With BP’s exit, the A1 Block will now be on the market for licensing.”

BP was awarded the block’s exploration rights in 2019.

Brazil’s 3R Petroleum Negotiating Potiguar Purchase

Petrobras is in talks with 3R Petroleum to sell a group of assets in the Potiguar basin for more than $1 billion. In a recent securities filing, Petrobras revealed that 3R presented the best offer in public bidding for the assets in the northeastern state of Rio Grande do Norte, known collectively as Polo Potiguar.

The assets include 23,000 B/D of onshore and shallow-water oil production, according to 2020 bidding documents. It also includes the Potiguar Clara Camarao Refinery, which has installed capacity of 39,600 B/D.

For 3R, the acquisition would more than double the company’s oil production and launch it into the top tier of Brazil’s independent producers, along with Enauta Participacoes and PetroRio.

A successful sale would eliminate a noncore asset for Petrobras in a bid to reduce debt and focus on deepwater oil production.

Petrobras Spuds Aram Block Wildcat

Petrobras has started drilling a wildcat well in the Aram block of the pre-salt of the Santos Basin using Constellation drillship Brava Star, according to the National Petroleum Agency (ANP).

The Aram block is operated by Petrobras (80%) in partnership with CNODC, a unit of China National Petroleum Corp. (20%). The two com­panies purchased the area in the only bid of the 6th Pre-­Salt Round in 2019. They paid $1.24 billion in signature bonuses and the minimum allowed profit oil of 29.96%.

Drilling at Aram began on 24 August. With the new Petrobras well, Brazil returned to record levels in exploratory activity seen only in the pre­-pandemic period. In all, five wells were drilled in the country during August—the highest number in a single month since May 2019.

DNO Begins Drilling at Gomez

DNO has kicked off an exploration well at its Gomez prospect on PL006C license offshore Norway. The probe will be drilled to a depth of around 3300 m below sea level, targeting Paleocene-­age formations.

DNO Norge AS holds a 65% operated interest in the license; Aker BP holds the balance. Aker BP originally had a 15% interest but recently acquired another 20% interest in PL006C from DNO under a swap agreement in which DNO picked up a 25% participating interest in PL1085 (Tanumåsen) and increased its share from 20 to 30% in PL906 (Mugnetind). The swap, pending government approval, will diversify Aker’s position in the southern North Sea.

The Gomez well is being drilled using the Borgland Dolphin. The well is expected to take 45 days. Pre­drill reserve estimates range from 26 to 80 million BOE. The well is close to existing infrastructure, including the Tor and Ekofisk complexes.

The Gomez well is one of three exploration wells scheduled this year. The first, Røver Nord (DNO 20%), resulted in what is likely a commercial discovery. Following Gomez, Mugnetind is expected to spud in Q4 2021.

Petrobras Starts Production of FPSO Carioca in Sépia Field

Petrobras began producing oil and natural gas from FPSO Carioca, the first platform in Sépia field, in the Santos Basin pre­salt. The FPSO is located approximately 200 km off the coast of Rio de Janeiro, in water depths of 2200 m. The FPSO, chartered from Modec, has the capacity to process up to 180,000 B/D and to compress up to 6 million m3 of natural gas.

Seven producing wells and four injection wells will be hooked into the FPSO. The oil production will be transported by offloading vessels, while the gas production will be moved through the pre­salt gas pipeline routes.

The project also has a system to remove CO2 from the gas produced and reinject it into the reservoir, reducing the release of carbon dioxide into the atmosphere and improving oil recovery.

The Sépia shared reservoir comprises the Sépia and Sépia Leste fields, located in the Transfer of Rights and Concession (BM­S­24) areas, respectively, and operated by Petrobras (97.6%) in partnership with Petrogal Brasil (2.4%).