E&P Notes (February 2019)
Authors: Zborowski Matt , Jacobs Trent , Rassenfoss Stephen 
Published: January 2019

E&P Notes

CNOOC, Several International Firms Sign Agreements for Areas Offshore China

China National Offshore Oil Corporation (CNOOC) has signed strategic cooperation agreements with nine international firms for two offshore areas in the Pearl River Mouth Basin off China.

State-owned CNOOC said the agreements—which include Chevron, ConocoPhillips, Equinor, Husky, KUFPEC, Roc Oil, Shell, SK Innovation, and Total—are a first step in establishing what could be long-term cooperation on exploration and development of offshore Areas A and B. Each international firm has existing upstream operations in China.

The 15,300-sq-km Area A lies in 80–120 m of water. Firms are open to explore its deep layers below the Paleogene Enping formation. The 48,700-sq-km Area B lies in 500–3,000 m of water. Firms can explore each layer beneath the surface of that area.

 

How Does Vaca Muerta Stack Up vs. US Shale? Data Tell the Tale

Matt Zborowski, Technology Writer

For what seems like forever, the upstream universe has awaited the emergence of Argentina’s Vaca Muerta Shale as the international answer to US shale.

In many regards, it already holds its own. In others, there is still much work to be done. Either way, 2018 and 2019 will mark a promising step forward for the play, according to data from research and consulting firm Rystad Energy.

US shale plays grew exponentially during their development phases, with the number of horizontal wells completed shooting up year-to-year in their first 5 years of relevancy. Vaca Muerta shows potential for a similar activity surge given geology “as good or better than the majority of the US plays,” noted Ryan Carbrey, Rystad senior vice president, shale research, during a recent Vaca Muerta-focused webinar.

 

Global Oil and Gas Exploration, Project Sanctions Expected to Rise in 2019

Matt Zborowski, Technology Writer

Global discovered oil and gas resources and big project sanctions are expected to remain on the upswing through next year, according to separate industry outlooks from Rystad Energy and Wood Mackenzie.  

Internalizing lessons from a difficult last few years, operators are choosing investments more wisely and are now better prepared to deal with volatile oil markets, the consultancies concluded. “Oil and gas companies can cope with whatever is thrown at them in 2019,” said Tom Ellacott, Wood Mackenzie senior vice president. “Portfolios are set to weather low prices, and the recent slide in prices justifies the sector’s conservative mindset.”

 

Straight Out of OPEC, Qatar Flexes Global Ambitions

Trent Jacobs, JPT Digital Editor

Fresh on the heels of its announcement to leave OPEC, Qatar is positioning itself to become an increasingly active player in global energy projects through minority partnerships with big explorers. Its most recent acquisition involves a 35% stake in Italian operating company Eni’s interest offshore Mexico.

Late last year Qatar said that it would withdraw its 57-year membership in the Organization of Petroleum Exporting Countries and focus on increasing its natural gas production. Qatar is currently the world’s third-largest supplier of liquefied natural gas (LNG) behind Australia and the US.

 

ExxonMobil Makes 10th Discovery Off Guyana, Lifts Resource Estimate by Another Billion Barrels 

Matt Zborowski, Technology Writer

ExxonMobil’s Pluma-1 well off Guyana encountered 37 m of high-quality hydrocarbon-bearing sandstone reservoir, marking the firm’s 10th discovery in South America’s newest oil powerhouse. 

Located 27 km south of the Turbot-1 discovery on the southeast portion of the 26,800-sq-km Stabroek Block, Pluma-1 was drilled to 5,013 m in 1,018 m of water by the Noble Tom Madden drillship, which spudded the well 1 November.

The major now estimates that its discovered recoverable resources for the block total 5 billion BOE, up 1 billion BOE from its previous estimate made over the summer, around the time that it announced its eighth discovery, Longtail, also on the southeast part of the block. Its ninth discovery came via the Hammerhead-1 well to the west.

 

Mexico’s Giant Zama Discovery Gets New Interest Owner

Matt Zborowski, Technology Writer

Germany’s DEA Deutsche Erdoel AG has agreed to acquire privately held Sierra Oil & Gas, interest owner in six blocks in Mexico, including the giant Zama discovery.

Sierra holds a 40% nonoperated interest in the 465-sq-km Block 7 containing much of the shallow-water Zama discovery, where appraisal drilling is under way. Zama is estimated to hold 400–800 million BOE of recoverable resources with estimated peak output of 150,000 BOE/D. Production is expected to start up by 2022–2023. Talos Energy is operator and Premier Oil is the other partner.

 

Total Begins Production From Nigeria’s Giant Egina Field

Total advanced its global deepwater campaign 29 December with the launch of production from the Egina Field 150 km offshore Nigeria.

The Egina floating production, storage, and offloading vessel, which Total says is its largest ever, will be connected to 44 subsea wells and produce up to 200,000 B/D of oil. The field lies in 1600 m of water on Oil Mining Lease (OML) 130.

Total says the project was developed 10% under budget, resulting in savings of more than $1 billion, driven in large part by a 30% reduction in average drilling time per well. The French major’s operating costs in Nigeria have been slashed by 40% during the last 4 years, Arnaud Breuillac, Total president, exploration and production, said in a news release.

 

Oil Prices Take a 2014-Size Hit

Stephen Rassenfoss, JPT Emerging Technology Senior Editor

Oil prices fell sharply in late 2018, similar to 4 years ago, but this time around oil companies seem better able to make money at these price levels.

The US Energy Information Administration (EIA) made those observations in a new report released in December, after a day of trading in which the benchmark US price closed at $47.20/bbl. Brent closed at $56.49/bbl.

Companies that survived the price downturn that began in 2014 are in better shape now. “Most measures of profitability and balance sheet fitness indicate companies should be able to weather the recent price downturn,” the EIA report said.