E&P Notes (September 2019)
Authors: JPT staff _ 
Published: September 2019

E&P Notes

Pemex Unveils Plan To Undo “Failure of Energy Reform”

Pemex will implement a plan intended as “a rescue of the country’s energy industry after the resounding failure of the energy reform,” said Mexican President Andrés Manuel López Obrador during a presentation at the National Palace in Mexico City on 16 July.

The latest 5-year plan for Mexico’s state-owned oil and gas firm aims to balance its budget by 2021 and increase oil production to almost 2.7 million B/D by the end of 2024, the conclusion of Lopez Obrador’s presidential term. Pemex has more than $100 billion in debt and has suffered production declines for 15 consecutive years. In May, it produced just under 1.7 million B/D, according to statistics available on the company’s website, down from 3.4 million B/D during 2004.

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Eni Appraises Angola Discovery, Makes Another Off Vietnam

An appraisal well drilled by Eni offshore Angola confirmed the extension of the Agogo reservoir, while the Italian operator hit gas and condensate pay at its Ken Bau prospect offshore Vietnam.

The Agogo-2 appraisal well on Block 15/06 encountered 58 m net of 31° gravity oil in Miocene and Oligocene sandstones “with excellent petrophysical characteristics,” the Italian operator said. The results confirm the extension of the Agogo reservoir to the north of the Agogo-1 discovery well and below the salt diapirs.

Eni said Agogo-2 was drilled in a “highly deviated” manner to reach sequences below the salt diapirs and prove the existence of reservoir and oil charge in the Agogo megastructure. Data acquired from the well indicate a production capacity of more than 15,000 B/D of oil.

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Aramco Advances 550,000-B/D Expansion of Marjan, Berri Fields

Saudi Aramco has awarded 34 contracts worth a combined $18 billion for engineering, procurement, and construction work on the Marjan and Berri fields offshore Saudi Arabia. The agreements are part of Aramco’s plans to increase production capacity of the two fields by 550,000 B/D of crude oil and 2.5 billion•Bscf/D of natural gas.

Saudi-based firms took 16 of the contracts, while the rest of the contracts went to firms including Saipem, McDermott International, Subsea 7, Tecnicas Reunidas, China Petroleum & Chemical, Larsen & Toubro, and Hyundai Engineering & Construction. More than 90 entities were invited to bid on the packages.

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Petrobras to Sell Shallow-Water Campos, Santos Basin Fields

Brazil’s state-owned Petrobras has agreed to sell shallow-water assets in the Campos and Santos Basins to two companies for a combined $1.5 billion. The moves are part of the company’s multiyear divestment program.

In one deal, London-based Trident Energy will acquire 100% interest in the Pampo and Enchova clusters in the Campos Basin. In the other, Melbourne-based Karoon Energy will buy 100% interest in the Bauna field in the Santos Basin.

The Pampo and Enchova hubs off Rio de Janeiro include the Enchova, Enchova Oeste, MarimbÁ, Pirauna, Bicudo, Boni-to, Pampo, Trilha, Linguado, and Badejo fields, which produce a combined 25,500•B/D via the PPM-1, PCE-1, P-8, and P-65 platforms. The fields were developed in the 1980s. Trident will pay $851•million to Petrobras in two installments and could pay up to $200 million more depending on future crude oil prices.

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PTTEP Discovers Giant Gas Deposit Offshore Malaysia

PTT Exploration and Production Company (PTTEP) encountered 252 m of net gas pay while drilling the shallow-water Lang Lebah-1RDR2 exploration well on Block SK410B offshore Sarawak,•Malaysia.

The Thai operator drilled the well to a TD of 3,810 m primarily targeting the Middle Miocene cycle IV/V carbonate reservoir. The well was tested at a completion-constrained rate of 41.3•MMscf/D of gas and 246 B/D of condensate through a 40/64-in. choke.

Lang Lebah-1RDR2, the first exploration well in the 1,870-sq-km Sarawak SK410B project 90 km off Sarawak, is PTTEP’s largest-ever discovery, the company said. Further drilling will confirm its potential.

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Analytics Firm: Permian Fracturing Work Underreported by 21% in 2018

Findings from analytics firm Kayrros suggest the average well in the Permian Basin of west Texas and southeastern New Mexico is both less productive and more expensive than reflected in public data.

The firm, whose leadership includes former Schlumberger executives and founding group includes a former lead economist at the US Energy Information Administration (EIA), found that some 1,100 wells were completed in the Permian last year but not reported through state agencies or FracFocus. Kayrros made its assessment by pairing optical and synthetic aperture radar imagery with proprietary algorithms to identify rigs and frac crews.

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Shale Consolidation: Callon Acquiring Carrizo in $3.2 Billion Stock Deal

Callon Petroleum Company is making a move to acquire Carrizo Oil & Gas in an all-stock deal that is worth $3.2•billion, according to a release issued by the two Houston-based companies.

Based on current share prices, the equity value of the deal is about $1.2 billion. Callon shareholders will own about 54% of the combined company, while Carrizo shareholders will own the rest.•

“Together with Carrizo, we will accelerate our free cash flow, capital efficiency, and deleveraging goals through an optimized model of large-scale development across the portfolio,” Callon’s Chief Executive Officer Joe Gatto said in a statement.

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Wood Mackenzie: Peak Oil Demand Is Coming, Will Transform Exploration Sector

The global trend toward alternative energy sources and shifting stakeholder sentiments could mark the demise of the oil and gas exploration sector. It may also represent an opportunity to transform.

This is according to a new report published by Wood Mackenzie, a global research firm that has been analyzing the oil and gas industry since 1973. The report concluded that a number of driving forces indicate that peak oil demand is likely to manifest within the next 20 years—removing the need to tap many of the world’s undeveloped fields.

“But the pace and nature of the energy transition is highly uncertain,” noted Andrew Latham, vice president of exploration at Wood Mackenzie and author of the report. “The world might move more quickly to deeper decarbonization. Even if this happens, we still see a chance for exploration to success-fully re-invent itself and retain an important role.”

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Dominican Republic’s Offshore Future Begins With First Bid Round

The Dominican Republic officially kicked off its quest to become the central Caribbean’s next oil and gas hub with its first licensing round of 14 onshore and offshore blocks.

The country announced the terms of its historic auction in Houston where many of the potential suitors have a headquarters or a major presence. The largest exploration companies in attendance included Anadarko, Apache, Exxon Mobil, Noble Energy, CNOOC, Shell, and Repsol.

The Dominican Republic’s Ministry of Energy and Mines will base the awards on work commitments that include a minimum investment of $2 million for the onshore areas, and $4 million for the offshore blocks.