E&P Notes (February 2022)
Authors: JPT staff _ 
Published: March 2022

Shell Signs Concession for Oman Block 10

Shell, along with its partners OQ and Marsa Liquefied Natural Gas LLC (a joint venture between TotalEnergies and OQ), have signed a concession agreement with the Ministry of Energy and Minerals on behalf of the government of the Sultanate of Oman to develop and produce natural gas from Block 10. The parties also signed a separate gas sales agreement for gas produced from the block. The two agreements follow an interim upstream agreement signed in February 2019.

The concession agreement establishes Shell as the operator of Block 10, holding a 53.45% working interest, with OQ and Marsa LNG holding 13.36% and 33.19%, respectively. For the initial phase, Petroleum Development Oman (PDO) is building the infrastructure for the project, including the main pipeline to the Saih Rawl gas processing facility, on behalf of the Block 10 venture partners. The venture will drill and hook up wells to maintain the production beyond the initial phase. The block is expected to reach production of 0.5 Bcf/D. Startup is expected within the next 2 years.

In addition, Shell and Energy Development Oman (EDO) signed an agreement to process

the natural gas from Block 10 in EDO’s Saih Rawl facility. Shell and the government have agreed that, in parallel to the development of Block 10, Shell will develop options for a separate downstream gas project in which Shell could produce and sell low-carbon products and support the development of hydrogen in Oman.

Equinor Encounters Oil at Toppand

Equinor has discovered oil in the Troll and Fram area in exploration wells 35/10-7 S and 35/10-7 A in the Toppand prospect. Preliminary calculations indicate between 21 million and 33 million BOE of recoverable reserves.

Well 35/10-7 S encountered an oil column of around 75 m in the lower part of the Ness formation and in the Etive formation. There were also traces of hydrocarbons in the shale- and coal-dominated upper part of the Brent Group. A total of around 68 m of effective sandstone reservoir of good to very good reservoir quality was encountered in the Ness and Etive formations combined.

Exploration well 35/10-7 A encountered a 60-m oil-filled sandstone-dominated interval in the lower part of the Ness formation and in the Etive formation. A total of around 67 m of effective sandstone reservoir of good to moderate quality were encountered in the Ness and Etive formations combined.

Geir Sørtveit, senior vice president for exploration and production west operations for Equinor, said, “We are pleased to see that our success in the Troll- and Fram area continues. We also regard this discovery to be commercially viable and will consider tying it to the Troll B or Troll C platform. Such discoveries close to existing infrastructure are characterized by high profitability, a short payback period, and low CO2 emissions.”

These wells are the second and third exploration wells in Production License 630. The license was awarded in the 2011 Award in Predefined Areas. The wells were drilled around 8 km west of the Fram field and 140 km northwest of Bergen.

Equinor holds a 50% stake and operates Toppand. Partner Wellesley holds the remaining 50% interest.

Petrobras Sells Polo Carmópolis Stake to Carmo

Petrobras has signed a deal to sell its stake in the onshore Polo Carmópolis area to Carmo Energy for $1.1 billion.

The operator said $275 million would be paid up front, another $550 million when the deal closes, and a further $275 million 1 year after closure of the deal, which still needs regulatory approval. The Polo Carmópolis area comprises 11 onshore concessions in the state of Sergipe.

Petrobras said in a statement that it is increasingly concentrating its resources on deep and ultradeepwater assets, where it has shown a competitive edge over the years, producing better-quality oil and with lower greenhouse-gas emissions.

The Carmópolis Cluster recorded an average production of 7,600 BOPD and 43,000 m3/D of gas from January to November 2021.

Eni, EGPC in $1-Billion Pact To Explore Gulf of Suez, Niger Delta

Egyptian General Petroleum Corp. (EGPC) has signed an agreement with Italian energy group Eni for oil exploration in the Gulf of Suez and Nile Delta regions. The deal is valued at no less than $1 billion of investments, the petroleum ministry said in late December.

The agreement also included a commitment from Eni to additionally spend “not less than $20 million” to drill four wells, the ministry added in a statement.

The deal comes as part of the ministry’s strategy to increase production rates and to attempt to offset the natural decline of wells by using the latest technologies in oil-producing areas.

Last October, Eni announced three new discoveries in the Meleiha and South West Meleiha concessions in the Western Desert. Eni has been operating in Egypt since 1954 with a current production of about 360,000 BOED.

Chevron Transfers Stake in Suriname Block 5 to Shell

Chevron has transferred one-third of its 60% equity interest in an offshore Suriname block for which it has a production-sharing agreement to a unit of Royal Dutch Shell, Suriname’s state oil company confirmed.

Paradise Oil Company, a subsidiary of Suriname’s state-run Staatsolie, retains its 40% stake in the Block 5 venture as a nonexecutive partner, according to the farmout contract.

Staatsolie and Chevron signed a production-sharing contract last October for Block 5, which covers an area of 2235 km2. The deal marked the first time that Staatsolie will participate as a partner in offshore activities.

Equinor Increases Ownership in the Statfjord Field

Equinor has entered into an agreement to acquire all of Spirit Energy’s production licenses in the Statfjord area which spreads across the Norwegian and UK continental shelves and are developed by three integrated production platforms (Statfjord A, B, C). All licenses are operated by Equinor.

Equinor will pay $50 million, plus a contingent payment linked to commodity prices for the period between October 2021 to December 2022.

The transaction has a commercial effective date from 1 January 2021, which is expected to result in a net payment to Equinor at closing. Spirit Energy’s daily production from the Statfjord area in the third quarter of 2021 was around 21,000 BOED.

The transaction is part of a larger deal including Spirit Energy’s shareholders, Centrica Plc and Stadtwerke München, who are exiting their portfolio in Norway and selling their assets to Sval Energi. The sale to Sval Energi includes all assets with the exclusion of Statfjord.

Statfjord marked its 40th year of production in 2019. One of the earliest oil fields on the Norwegian Continental Shelf, it has produced 5.1 billion BOE. Equinor has recently launched a plan to extend the life of the field toward 2040.

The closing of the transaction is subject to certain conditions, including customary government approval, and is expected to be completed by the first half of 2022.

Shell Hits Oil at Blacktip North in US GOM

Shell has struck oil at the Blacktip North prospect located in the Alaminos Canyon block 336 in the deepwater US Gulf of Mexico. The Blacktip North well encountered about 300 ft net oil pay at multiple levels. The well was drilled to a total depth of 27,770 ft by Transocean drillship Deepwater Poseidon.

Blacktip North is about 30 miles northeast of the Whale discovery, 4.5 miles northeast of the 2019 Blacktip discovery, and 42 miles from the Perdido spar hub platform.

Shell operates the Blacktip North prospect with an 89.49% interest. Spain’s Repsol holds the remaining 10.51% stake.

Petrobras Plans Equatorial Margin Drilling Program

Petrobras is preparing to drill the first of 14 planned wells at South America’s new deepwater frontier, the Equatorial Margin at its Northern maritime border, a company executive told the World Petroleum Congress in December.

Petrobras plans to invest $2 billion in exploration at the Equatorial Margin through 2026, Reservoir Executive Manager Tiago Homem said. The company estimates an overall investment of $2.5 billion in seismic activities over the same period.

CLOV Tieback Goes Onstream Offshore Angola

TotalEnergies, operator of Block 17 in Angola, has begun production from the CLOV Phase 2 project, connecting to the existing CLOV FPSO. The tieback project is expected to reach a production of 40,000 BOED in mid-2022.

Located about 140 km from the Angolan coast, in water depths from 1100 to 1400 m, the CLOV Phase 2 resources are estimated at around 55 million BOE.

Block 17 is operated by TotalEnergies with a 38% stake, Equinor (22.16%), ExxonMobil (19%), BP Exploration Angola Ltd. (15.84%), and Sonangol P&P (5%). The contractor group operates four FPSOs in the main production areas of the block: Girassol, Dalia, Pazflor, and CLOV.

Canacol Strikes Gas With Siku-1 in Colombia

Canacol Energy’s Siku-1 exploration well encountered 33 ft true vertical depth of net gas pay with an average porosity of 20% within the primary Cienaga de Oro sandstone reservoir target. The company has completed casing the well and will return with a workover rig in early 2022 to complete and tie the well into permanent production. The well was drilled to a total depth of 8,825 ft.

The rig was mobilized to drill the Clarinete-6 development well, which reached a total depth of 7,478 ft measured depth and encountered 174 ft true vertical depth of net gas pay. The well was tied into the Clarinete production manifold and has been placed on permanent production.

Next up for the rig is the Toronja-2 development well, which is targeting gas-bearing sandstones within the Porquero sandstone reservoir. Following the completion of that well, the rig will be mobilized to spud the Carambolo-1 exploration well, expected in the second half of February. The well is expected to take 5 weeks to drill and complete.