E&P Notes (January 2019)
Authors: Zborowski Matt , Whitfield Stephen 
Published: December 2018

E&P Notes

US Oil, Gas Reserves Hit All-Time Highs

Matt Zborowski, Technology Writer

US proved reserves of crude oil and natural gas reached all-time highs at year-end 2017, as higher commodity prices encouraged more drilling and expanded the scope of what operators deem economically recoverable.

Proved oil reserves for the year totaled 39.2 billion bbl, jumping 19.5% from a year earlier and edging higher than the 1970 record, according to an annual report from the US Energy Information Administration (EIA). Accounting for lease condensate, proved reserves were just under 42 billion bbl, up 19% year-over-year.

Proved gas reserves were 464.3 Tcf, a 36.1% spike from a year earlier and well-above the 2014 all-time mark.

GE Speeds Up Plan To Sell Stake in Baker Hughes

Stephen Whitfield, Senior Staff Writer

In an effort to reduce its debt levels and simplify its portfolio, GE has announced an acceleration in its proposed plans to reduce its stake in Baker Hughes, a GE company (BHGE). GE will sell as much as 20% of its majority share through a secondary offering and a repurchase of shares by the oil services firm, which would raise nearly $4 billion in cash based on the 13 November share price of $23.76. GE said in a statement that it will maintain a stake in Baker Hughes greater than 50% after the transactions.

The two companies will continue to share various oil and gas technologies and they have agreed to a 6-month lockup of GE’s remaining stake. They will create a joint venture focused on rotating equipment technology, which is primarily used in Baker Hughes’ LNG, pipeline, and industrial businesses. Baker Hughes has also entered into a long-term supply and distribution agreement with GE for heavy-duty gas turbine technology. BHGE and GE Digital have extended their exclusive supplier relationship for digital oil and gas applications, and GE has agreed to maintain current operations and pricing levels within Baker Hughes’ control product line.

Total, ADNOC To Explore for Unconventional Gas in Abu Dhabi

Matt Zborowski, Technology Writer

French major Total and UAE state-owned Abu Dhabi National Oil Company (ADNOC) will jointly explore for gas on the 6000-km2 Ruwais Diyab Unconventional Gas Concession.

Total has been granted a 40% stake in the concession along with operatorship, with ADNOC retaining 60%. The agreement calls for a 6-to-7-year exploration and appraisal phase followed by a 40-year development and production period. If exploration is successful, the companies plan for a staged development depending on UAE gas demand and export opportunities.

“The Diyab play has the potential to be a high-impact play ranking along-side the most prolific North American shale gas plays,” said Patrick Pouyanne, Total chairman and chief executive officer. The Diyab concession is west of the 21000-km2 ADNOC Onshore concession, of which Total holds a 10% interest.

New Oil Sands Development Gets Green Light

Matt Zborowski, Technology Writer

ExxonMobil’s majority-owned Imperial Oil has made a final investment decision on its 75,000-B/D Aspen oil sands project, the first new oil sands development to be approved in 5 years.

Construction on the $2-billion project, located 45 km northeast of Fort McMurray, Alberta, will begin in the fourth quarter, and bitumen production is expected to launch in 2022. Average output could be doubled to 150,000 B/D in future years depending on project performance and business and market conditions, Imperial said in a news release.

Approval follows Western Canada Select crude oil prices sliding below $20/bbl as insufficient takeaway capacity has plagued the region. Adding to the glut has been Suncor Energy’s Syncrude oil sands facility, which recently returned to normal operating rates after a major power outage over the summer. Imperial owns a 25% stake in that project.

Israel Launches New Bid Round

Israel will auction off 19 new offshore blocks in a second bid round to grant exploration licenses for natural gas and oil in Israel’s economic waters in the Eastern Mediterranean. The country held an initial bid round 2 years ago that granted 6 licenses, with drilling on some of these blocks beginning in a few months, the energy ministry said.

“This bid is intended to continue the development of the natural gas market in Israel, increase competition by the entry of new international energy companies, and broaden Israel’s energy security,” said Israeli Energy Minister Yuval Steinitz. “These efforts correlate with the progress of the subsea pipeline between Israel and Europe, which will allow us to export the gas to Greece, Italy, and the rest of Europe.”

BP, Chevron Bring Two More Offshore Projects on Stream

Matt Zborowski, Technology Writer

BP and Chevron have overcome development challenges to recently launch production from two offshore projects that were years in the making.

The British major said 23 November that oil is flowing from its giant Clair Ridge project in the West of Shetland region offshore UK. Two days earlier, San Ramon, California-based Chevron said that it started production from the deepwater Big Foot field in the US Gulf of Mexico.

Clair Ridge, the larger of the two projects, is the second phase of development of the Clair field, targeting 640 million bbl of oil reserves with output expect to ramp up to a peak of 120,000 BOPD. BP’s pound 4.5-billion investment involved the construction of two new bridge-linked platforms along with oil and gas pipelines. The facilities, 75 km West of Shetland, are designed to operate for 40 years.