Eni has signed two new concession agreements for the North El Hammad and North Ras El Esh, located in the shallow waters in Egyptian Mediterranean Sea, as a result of the EGAS 2015 international bid round.
The Hebron oil field is located offshore Newfoundland and Labrador, Canada in the Jeanne d'Arc Basin.
The past year has undoubtedly been one of the toughest for the oil & gas industry in recent memory. As we enter 2017 we consider three key themes that could shape the industry over the year ahead.
Kosmos Energy (NYSE:KOS) announces that it has entered into a partnership with BP (LSE:BP) in Mauritania and Senegal that combines Kosmos’ exploration expertise with BP’s deepwater development, and LNG production and marketing experience.
Under the terms of the agreement, BP will assume named operatorship and acquire a 62 percent working interest in Kosmos’ licenses covering blocks C6, C8, C12, and C13 offshore Mauritania, as well as an effective 32.49 percent working interest in the licenses covering the Saint Louis Offshore Profond and Cayar Offshore Profond blocks offshore Senegal. Kosmos will maintain a 28 percent and 32.51 percent effective working interest in the licenses offshore Mauritania and Senegal, respectively, and will continue as exploration operator.
Andrew G. Inglis, Kosmos Energy’s chairman and chief executive officer said: “This agreement with BP demonstrates the value of our strategy, together with the quality of the basin we have opened offshore Mauritania and Senegal. Following a thorough farm-out process, BP emerged as the right partner to help us advance the Tortue gas project at pace and take forward a multi-well exploration program that will test the basin’s liquids potential beginning in mid-2017. We are pleased to have secured a super-major partner that brings financial capability, deepwater development and LNG expertise, and a vision that is fully aligned with the interests of both countries.”
Bernard Looney, BP upstream chief executive said: “The Mauritania-Senegal basin is an asset with world-class scale and potential, and we look forward to working with the team at Kosmos and the governments of Mauritania and Senegal to efficiently explore and develop its full potential. We believe the basin will become an important profit center for our upstream business.”
Under the terms of the agreement, Kosmos will receive fixed consideration of $916 million, including:
$162 million in cash up front;
$221 million carry on exploration and appraisal, including a drill stem test (DST) on Tortue expected to be completed in 2017; and
$533 million maximum carry on development costs until first gas production on the Tortue project, including a front end engineering and design (FEED) study to be completed in 2017 with the objective of reaching a final investment decision (FID) by 2018.
Kosmos will also receive a contingent bonus of up to $2 per barrel, for up to 1 billion barrels of liquids, structured as a production royalty, subject to a future liquids discovery and oil price.
Commenting on the commercial terms of the transaction, Mr. Inglis said: “The transaction strengthens our balance sheet by materially reducing our capital expenditure requirements, effectively funding our Mauritania-Senegal work program for the next several years. The enhanced free cash flow generation will enable us to continue to pursue other growth opportunities in our portfolio with discipline.”
Additionally, Kosmos and BP have entered into an exclusive exploration partnership covering potential new ventures opportunities in Mauritania, Senegal and The Gambia. Kosmos will remain exploration operator of all new ventures acquired within the areas of interest, while BP will become development operator.
Kosmos will provide additional information about the transaction during a conference call on January 4th, 2017 at 10 a.m. EST. The call will be available via telephone and webcast.
Dial-in telephone numbers:
U.S. / Canada: +1.877.407.3982
International: +1.201.493.6780
Webcast: investors.kosmosenergy.com
Closing of the transaction is expected in the first quarter of 2017 with an effective date of July 1, 2016 and is subject to customary conditions including government approvals.
Maersk Drilling has been awarded a one well contract with Repsol Colombia for the deepwater semi-submersible, Mærsk Developer. The contract covers the drilling of the Siluro-1 Exploration Prospect well, estimated to have a duration of 42 days. The estimated contract value is USD 12 million, including mobilization and demobilization.
Ashtead Technology has announced the acquisition of Abu Dhabi based TES Survey Equipment Services LLC for an undisclosed sum.
Ecopetrol S.A. (BVC: ECOPETROL; NYSE: EC) announces the discovery of oil at the Warrior well located in deepwater of the Green Canyon in the Gulf of Mexico.
Ecopetrol's US subsidiary, Ecopetrol America Inc., owns 20% of the field, operated by Anadarko Petroleum Corporation and Anadarko US Offshore LLC, with a 65% stake. MCX Exploration (USA) LLC has the remaining 15%.
The drilling penetrated a layer of water of 1,263 meters and an extension below the seabed of 6,953 meters, for a total depth of 8,216 meters. The Warrior exploratory well found more than 210 net feet (64 meters) with high quality oil in multiple reservoirs from the Miocene era.
This discovery is a result of Ecopetrol's new exploratory strategy, which includes partnerships with leading global companies to diversify risk, increase exploration and increase likelihood of discovery.
The new strategy seeks hydrocarbons (oil and gas) near existing infrastructure to achieve production in the short term. The Warrior well is expected to take advantage of the production facilities of the Marco Polo platform, also operated by Anadarko.
Ecopetrol is already a partner with 9.21% in another near field, K2, where the Company produces about 2,000 barrels per day. Warrior, K2 and Marco Polo are located within a radius of five kilometers away.
Warrior is the fifth discovery of Ecopetrol in the United States, after Rydberg and Leon in 2014, and Dalmatian South and Parmer in 2012.
In the Gulf of Mexico, Ecopetrol went from producing 3,500 barrels per day in July 2016 to about 12,000 barrels today, demonstrating the region's growing strategic value for the Company. The majority comes from the Gunflint well, in which Ecopetrol America Inc. owns 31.5%.
Ecopetrol increased its stake in Warrior from 15% to 20% in August 2016, within a strategic decision that today brings benefits to the Company.
Anadarko Petroleum Corporation (NYSE: APC) announces it has closed the acquisition of Freeport-McMoRan Oil & Gas's deepwater Gulf of Mexico assets. The transaction is effective Aug. 1, 2016. Anadarko also increased its oil-growth expectations and discussed plans to further accelerate its rig activity in the Delaware and DJ basins. In addition, the company provided an update on its deepwater drilling activities in the Gulf of Mexico, highlighted by successes at Warrior and Phobos, which add to its inventory of future tieback opportunities, as well as a successful development well in the Heidelberg field.
"As a result of closing this transaction, Anadarko now operates the largest number of floating production facilities in the deepwater Gulf of Mexico, which provides a competitive advantage to leverage this infrastructure into attractive new investment opportunities," said Anadarko Chairman, President and CEO Al Walker. "This region continues to play a key role in our portfolio by contributing to our higher-margin oil growth profile, while generating substantial future free cash flow to accelerate the growth of our world-class U.S. onshore assets in the Delaware and DJ basins. The expanded portfolio of deepwater facilities provides numerous hub-and-spoke opportunities that can generate rates of return of better than 50 percent at today's prices. Given our industry-leading capabilities in deepwater project management, production solutions and exploration success, adding these high-quality assets greatly improves our ability to deliver strong performance in a volatile commodity environment."
At the time the acquisition was announced, Anadarko indicated the acquired assets would generate substantial free cash flow over time, which would facilitate increased investment in the U.S. onshore and position the company to deliver a five-year compounded oil growth rate of 10 to 12 percent in a $50 to $60 oil-price environment. As previously announced, in anticipation of closing the acquisition, Anadarko added two rigs in each of its Delaware and DJ basin positions early in the fourth quarter. Going forward, the company plans to further increase activity in each area, with expectations of ending the first quarter of 2017 with 14 operated rigs in the Delaware Basin and six operated rigs in the DJ Basin. This compares to seven operated rigs and one operated rig in each of these basins, respectively, at the end of the third-quarter 2016. The company's new investments in these basins generate rates of return of 35 percent to more than 60 percent at today's prices.
"As a result of our large and well-located acreage positions, improving cost structure, midstream infrastructure advantages, and commodity-price outlook, we now believe we have the ability to deliver a five-year compounded annual oil growth rate of 12 to 14 percent, while investing within expected cash inflows," said Walker.
Further highlighting the value of Anadarko's deepwater Gulf of Mexico tieback and exploration program, the company also has announced its Warrior exploration well encountered more than 210 net feet of oil pay in multiple high-quality Miocene-aged reservoirs. The Warrior discovery is located approximately 3 miles from the Anadarko-operated K2 field and is expected to be tied back to its Marco Polo production facility. Anadarko is the operator at Warrior with a 65-percent working interest. Other partners include Ecopetrol (20 percent) and Mitsubishi Corporation Exploration Co., Ltd. (15 percent).
At the Phobos appraisal well, which is located approximately 12 miles south of the Anadarko-operated Lucius facility, the company has already encountered more than 90 net feet of high-quality oil pay in a Pliocene-aged reservoir similar to the nearby Lucius field. This secondary accumulation was present in the Phobos discovery well and will be evaluated for tieback to the Lucius facility. Meanwhile, drilling is ongoing toward the primary objective in the Wilcox formation. Anadarko has a 100-percent working interest at Phobos.
At the Heidelberg field, the fifth production well currently being drilled has encountered the reservoir sand with more than 150 net feet of oil pay to date. The well will be completed immediately following drilling operations and is expected to be brought on production early next year.
"The successes to date at Warrior and Phobos further demonstrate the value of our assets in the deepwater Gulf of Mexico and our tieback strategy. It also illustrates why we have tremendous confidence in the potential of our '3 Ds' – the Deepwater, Delaware and DJ – to drive growth and value for many years to come," added Walker. "We look forward to providing further details on these successful developments and other results during the first quarter of next year."
McDermott International, Inc. (NYSE:MDR) announces a contract award from Saudi Aramco for the engineering, procurement, construction and installation (EPCI) of four jackets and three gas observation platforms offshore Saudi Arabia. The total weight of all structures combined is 11,595 tons.
The three year contract extension for AOD III potentially worth US$ 112 million follows previous extensions awarded to AOD I and AOD II. All AOD rigs now have contracts serving a reputable client in the Middle East to 2019.
U.S. Secretary of the Interior Sally Jewell applauded President Obama’s announcement that he is withdrawing offshore areas in the Atlantic and Arctic Oceans from future mineral extraction to protect these ecologically sensitive marine environments from the impacts of any future oil and gas exploration and development.
Photo credit: Patrick Kelley, USCG
The withdrawal does not restrict other uses of these federal waters on the Outer Continental Shelf, and will help to sustain commercial and recreational fisheries in the Atlantic to support fishing-dependent communities, as well as the harvest of marine resources on which many Alaska Native communities rely for subsistence use and cultural traditions.
“The President’s bold action recognizes the vulnerable marine environments in the Arctic and Atlantic oceans, their critical and irreplaceable ecological value, as well as the unique role that commercial fishing and subsistence use plays in the regions’ economies and cultures,” Secretary Jewell said. “The withdrawal will help build the resilience of these vital ecosystems, provide refuges for at-risk species, sustain commercial fisheries and subsistence traditions, and create natural laboratories for scientists to monitor and explore the impacts of climate change.”
The withdrawal areas announced encompass 3.8 million acres in the north and mid-Atlantic Ocean off the East Coast and 115 million acres in the U.S. Arctic Ocean. Including previous presidential withdrawals, today’s action protects nearly 125 million acres in the offshore Arctic from future oil and gas activity.
In the Atlantic, the withdrawal decision protects 31 canyons, extending from Heezen Canyon offshore New England to Norfolk Canyon offshore of the Chesapeake Bay. The largest, Hudson Canyon, reaches depths greater than 10,000 feet, comparable in scale to the Grand Canyon, which is 6,093 feet at its deepest. The canyons are regions of enhanced biodiversity, home to numerous species including deep-water corals, deep-diving beaked whales, commercially valuable fish, and significant numbers of habitat-forming soft and hard corals, sponges and crabs.
The canyon region is home to several fish stocks managed as Highly Migratory Species, including commercially valuable marlin, sailfish, swordfish, tuna and sharks. These geologic features also provide important habitat for a number of protected species including beaked, sperm and sei whales, many of which show an affinity to canyon ecosystems as compared to other Atlantic waters.
The President’s action will preserve critical ecological hot spots, helping to protect habitats important to Atlantic fisheries. The designation also affords long-term opportunity for research and exploration, and helps ensure that species dependent on the canyon habitats are protected. It also builds on protections established by the recent creation of the Frank R. Lautenberg Deep Sea Coral Protection Area. This protected region, created by the Mid-Atlantic Regional Fishery Management Council and approved by NOAA, prohibits bottom trawling in all the canyons in the region.
In addition to numerous requests from local and regional officials to protect these offshore resources, 145 prominent marine scientists issued a public letter in September 2015, voicing their conclusion that the threats to the unique marine environment in this region warranted permanent protection to preserve intact ecosystems. These concerns are informed by a number of research findings, including a National Oceanic and Atmospheric Administration study that found ocean temperatures in the Northeast U.S. Shelf are projected to warm three times faster than the global average and a climate vulnerability assessment on fish and invertebrate species in the region that concluded warming oceans due to climate change threaten the majority of fish species in the area, including salmon, lobster, and scallops. The President’s action builds on his establishment of the Northeast Canyons and Seamounts Marine National Monument, which protects 4,913 square miles of marine ecosystems located 130 miles southeast of Cape Cod. The withdrawal protects major Atlantic canyons that are not in the National Monument.
The President’s Arctic withdrawal, which encompasses the entire U.S. Chukchi Sea and significant portions of the U.S. Beaufort Sea, will provide critical protection for these vibrant and fragile offshore ecosystems, which are home to marine mammals and other important ecological resources and marine species on which many Alaska Native communities rely for subsistence and cultural traditions. These include several species of seals; Pacific walrus; polar bears; more than 98 fish species; a number of whale species, such as the bowhead, gray and beluga; many bird species, including waterfowl such as eiders, long-tailed duck and geese; and shorebirds such as the red-necked phalarope.
“Risks associated with oil and gas activity in the remote, harsh and undeveloped Arctic are not worth taking when the nation has ample energy sources near existing infrastructure,” said Abigail Ross Hopper, the Director of Interior’s Bureau of Ocean Energy Management. “Oil spill response and clean-up raises unique challenges in the Arctic and a spill could have substantial impacts on the region, particularly given the ecosystem fragility and limited available resources to respond to a spill.”
The withdrawal does not affect existing leases in these federal offshore waters and would not affect a nearshore area of the Beaufort Sea, totaling about 2.8 million acres, that has high oil and gas potential and is adjacent to existing state oil and gas activity and infrastructure. While there are significant concerns about oil and gas activity occurring in this area, it will be subject to additional evaluation and study to determine if new leasing could be appropriate at some point in the future. Interior’s five year offshore leasing program for 2017-2022 does not include lease sales in this area or in the withdrawn areas.
The U.S. Arctic Ocean is characterized by harsh environmental conditions, geographic remoteness, and a relative lack of fixed infrastructure and existing oil and gas operations. Despite the substantial steps this Administration has taken to improve the safety of potential Arctic exploration, there would still be significant risks associated with offshore drilling operations and the consequences of an oil spill in this region could be substantially detrimental to the ecosystem.
Climate change-induced temperature increases are occurring fastest in Polar Regions, including the U. S. Arctic, resulting in a disproportionate amount of changes to the Arctic environments, including reduction in seasonal ice cover. Loss of sea ice coverage reduces the available habitat for ice-dependent species such as seals, polar bears, and Pacific walrus. Such conditions and stressors may increase the vulnerability of these species and habitat and reduce their resilience to impacts of oil and gas activities. The Arctic withdrawals build on past actions the President has taken to protect fragile ecosystems and build resilience in the face of climate change, including the Northern Bering Sea Climate Resilience Area; Chukchi and Beaufort Seas areas placed off limits to oil and gas leasing earlier this year; and the Bristol Bay withdrawal in 2014.
Further scientific analysis related to the President’s withdrawal proclamation is available here for the Arctic and here for the Atlantic.
Maps of the areas related to President’s withdrawal proclamation are available here for the Arctic and here for the Atlantic.
Decommissioning models are receiving greater attention as challenging economic realities call into question the continued commercial viability of assets already beyond their design lives. On the other side of the equation, the bill for decommissioning is massive for operators worldwide.[1]
In the North Sea alone, it could cost up to USD82 billion (bn) from 2016-2040, with as much as USD51bn of that in the UK sector.[2]
The Norwegian Petroleum Directorate estimates that total decommissioning costs for offshore Norway will be NOK160bn (USD19bn). An equivalent forecast for Gulf of Mexico is USD26bn.[3]
“Experience in this type of activity is still relatively limited,” said Graeme Lamont, business development manager, UK & West Africa, DNV GL - Oil & Gas. “This presents opportunities for greater collaboration, knowledge sharing, and clearer guidance to minimize disruption to neighbouring fields. Activity needs to be carried out in a safe, environmentally conscious and cost-effective way.”
Allseas Pioneering Spirit, which can remove huge topsides and jackets in a single lift, is an innovative response to decommissioning costs. Photo: Allseas
For more than a decade, DNV GL engineers have supported platform removal operations right through from desktop assessments and offshore supervision to environmental and safety studies. Workscopes during dismantling and removal of major topsides have also included studies which balance efforts to control operational and technological risks in various decommissioning phases.
Most recently, the technical advisor has brought its worldwide experience to its role as a workstream ‘champion’ for an online platform being developed by the UK industry forum Decom North Sea (DNS) to facilitate knowledge sharing.
In this capacity, DNV GL vets and manages the quality of content produced by collaborative efforts to make it easier and more cost effective for operators to comply with the UK's regulations governing the cessation of production (CoP) and dismantling and removal of offshore infrastructure.
Regulatory compliance is one of 10 decommissioning workstreams on which operators, contractors and other stakeholders are collaborating to develop DNS’s Late Life Planning Portal (L2P2).
These areas of work require attention and management as a company and its assets move from normal operations through late life to CoP and decommissioning.
Once online, L2P2 will help oil and gas professionals to plan and execute projects. Its development marks a change in the mind-set of companies. “They are starting to understand the value of collaboration,” said Karen Seath, general manager, DNS.
She added: "The cost and complexity of decommissioning is forcing a long, hard think about how best to utilize capabilities and resources. The sector is realizing that effective collaboration can achieve things much more cost efficiently and effectively than going it alone.”
One operator and contractor have co-located their teams working on a major North Sea decommissioning project offshore UK, and aligned organizational structures for the duration, for example.
“We are also seeing port owners and public agencies collaborate with contractors and suppliers to improve onshore locations as logistics hubs for decommissioning,” Seath said.
“L2P2 is a true collaborative knowledge hub for sharing tools, experiences, lessons and new ideas to help plan and execute decommissioning projects. Case studies from completed projects will help others by sharing what went well and not so well,” she said.
The regulatory compliance workstream recommends that operators should start monitoring UK regulations more than 10 years before CoP, said Lamont.
“Experience reflected in the L2P2 suggests that preliminary regulatory discussions in the UK should best take place between about five to 10 years before CoP, and that a draft decommissioning programme should be drawn up three to five years before production ceases. Formal submission to regulators is around three years before CoP, and regulatory compliance still needs managing after last oil or gas has flowed.”
Regulatory compliance meshes with other workstreams: business strategy; commercial; liability economics; project management; production operations; well plug and abandonment; contracting strategy; technology; and stakeholders. These are aligned in the L2P2 so users can see what could or should happen in each workstream at milestones along a timetable reflecting good practice based on industry experience.
Proof of the L2P2 concept is due online in May 2016. A landing page for the portal will signpost visitors to content supporting any function or timeframe of the decommissioning process.
The scale of decommissioning activities DNV GL supports globally has ranged from whole platforms to individual work packages and isolated subsea infrastructure. High profile completed or ongoing North Sea decommissioning projects with DNV GL involvement include: in the UK – Amethyst, Maureen, Miller, Murchison, NW Hutton, and Welland; offshore Norway – Asgard, Ekofisk and Frigg.
Recommended practices and service specifications relevant to aspects of offshore decommissioning include: DNV-RP-H101 Risk management in marine and subsea operations; DNV-RP-H102 Marine operations during removal of offshore installations; DNV-RP-H103 Modelling and analysis of marine operations; and DNV-OSS-300 Risk-based verification.
Also, the Offshore Standard, DNV-OS-H102 Marine operations,design and fabrication was published in 2012. A DNV GL Guideline, Risk based abandonment of offshore wells, was issued in 2015.5
[1] ‘Decom provisions on the rise, report oil majors’, decomworld.com, 16 March 2016
[2] ‘North Sea decommissioning market forecast 2016-2040’, Douglas-Westwood, February 2016
[3] ‘Offshore decommissioning report 2015: Gulf of Mexico 6th edition’, Mark J Kaiser, Decomworld, March 2015
Cobalt International Energy, Inc. (“Cobalt”) (NYSE:CIE) has announced it has completed drilling operations on the North Platte #4 appraisal well.
ExxonMobil subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), has announced that it has awarded contracts to SBM Offshore for a floating production, storage and offloading (FPSO) vessel, a key step in moving the Liza field toward first production.
Under the contracts, SBM Offshore will perform front end engineering and design for the FPSO, and, subject to a final investment decision on the project in 2017, will construct, install and operate the vessel.
“Liza development activities are steadily progressing, and we’re excited to reach this important milestone,” said Neil Duffin, president of ExxonMobil Development Company. “We look forward to working with the government of Guyana to develop its valuable resources, which have the potential to provide long-term, sustainable benefits to the country.”
ExxonMobil submitted an application for a production license and its initial development plan for the Liza field in early December. The development plan, submitted to the Guyana Ministry of Natural Resources, includes development drilling, operation of the FPSO, and subsea, umbilical, riser and flowline systems.
The Liza field has a potential recoverable resource estimate in excess of 1 billion oil-equivalent barrels and is located in the Stabroek block approximately 120 miles (193 kilometers) offshore Guyana.
The Stabroek block currently comprises 6.6 million acres (26,800 square kilometers). Esso Exploration and Production Guyana Limited is the operator and holds a 45 percent interest in the Stabroek block. Hess Guyana Exploration Ltd. holds a 30 percent interest, and CNOOC Nexen Petroleum Guyana Limited holds a 25 percent interest.
Saipem Limited, a subsidiary of Saipem SpA, has been awarded a new contract in the North Sea utilizing the Saipem 7000, reinforcing Saipem’s presence in this highly strategic area where the Company has a long operating history.
Located in the UK sector of the North Sea, the Project is an EPRD contract for the decommissioning of the topsides and jacket of BP’s Miller Platform. The Saipem 7000 is one of the most technologically advanced vessels in Saipem’s fleet. It is equipped with a dynamic positioning system, has a 14,000-ton lifting capacity, and is capable of laying subsea pipelines in ultra-deep waters.
The use of the Saipem 7000 for projects such as the Miller Project eliminates the need for additional cargo barges and allows operations to be conducted in a much safer manner and in a less restrictive weather window. Over the last decade, Saipem has performed a variety of major decommissioning projects, including the Frigg Field decommissioning and, more recently, the removal of the Ekofisk 2/4 S jacket and the Ekofisk 2/4 G bridge.
Saipem Limited currently employs over 800 people, has operated in the UK since 1983 with offices in London and Aberdeen, and will carry out project management, engineering and operations work. For 2017 the Saipem 7000 has already been contracted to execute topside transportation and installation, decommissioning and renewable energy projects in the North Sea.
“Saipem, through its subsidiary Saipem Limited based in the UK, is pleased to see further traction in the decommissioning market with the BP Miller EPRD Project. The award builds on our experience in delivering decommissioning projects successfully and safely over recent years. When coupled with Saipem’s track record in the renewable energy sector, this strengthens the Group’s diversification, and assists our clients and, indeed, the countries in which we operate in the safe, environmentally responsible and cost effective removal of ageing infrastructure”, stated Stefano Porcari, Saipem Offshore Business Unit Executive Vice President.
Offshore Source keeps you updated with relevant information concerning the Offshore Energy Sector.
Any views or opinions represented on this website belong solely to the author and do not represent those of the people, institutions or organizations that Offshore Source or collaborators may or may not have been associated with in a professional or personal capacity, unless explicitly stated.