December 03, 2018

Global Upstream Projects Development Summary - October 2018

Stratas Advisors

Global Upstream Summary

In October, 18 featured upstream projects that were tracked announced either new or updated statuses. Key projects on the Stratas radar include the Kingfisher and Tortue projects in the Africa; Greater Western Flank Phase 2, Beryl and Lingshui 17-2 projects in Asia Pacific; Columbus, Ana and Diana, Finlaggan, Mariner, Martin Linge, Cape Vulture and Arran projects in Europe; West White Rose and Bay du Nord projects in North America; and the Lula Extreme Sul project in Latin America. On the exploration side, it is worth mentioning that Savannah Petroleum made the fifth consecutive oil discovery on the Agadem Rift basin in Niger. Meanwhile, 24 major companies involved in operating assets were involved with acquisition and divesture activities in October. Total deals could amount up to $6 billion in combined value.

 

Regional Highlights

Africa

Following the Eridal-1, Amdigh-1, Bushiya-1 and Kunama-1 discoveries in the R3/R4 production sharing contract (PSC) area on the Agadem Rift basin in Niger, Savannah Petroleum hit its fifth consecutive discovery with the Zomo-1 exploration well. The exploration well was drilled at the depth of around 8,200 feet and add an additional oil pay of about 5.4 meters in net oil-bearing reservoir sandstones. Further technical evaluation and testing will be needed to confirm the additional pay. Stratas Advisors expects further announcements on Savannah’s R3/R4 PSC area to be forthcoming in next few months.

 

Elsewhere, Kosmos Energy awarded front-end engineering and design (FEED) contract of Tortue gas development project offshore Mauritania and Senegal. The Tortue gas project is the first phase of the Greater Tortue complex sitting offshore Mauritania and Senegal. The FEED work is scheduled to be performed through the end of 2018. The final investment decision is expected toward the end of this year. The Tortue field is estimated to contain more than 15 trillion cubic feet of recoverable gas and is planned to be developed through an LNG plant, with cargoes ultimately headed to Senegal and Mauritania. Stratas expects first gas to start up in 2021.

 

Asia Pacific

 

In this region, two featured offshore gas projects started first production in October. One of the key projects is Woodside operated Greater Western Flank Phase 2 (GWF-2) gas development, which located at block WA 024L of North Carnarvon basin offshore Australia. Within the development area, there are six gas fields including Keast, Dockrell, Sculptor, Rankin, Lady Nora and Pemberton, which together contain estimated recoverable reserves of around 1.6 trillion cubic feet of natural gas and 43 million barrels of condensate. Stratas projects peak production could reach approximately 590 million cubic feet per day within first three years. The gas production from this project will be transported to an LNG plant and also add to domestic gas supplies.

 

Another gas project brought onstream in October was JX Nippon Oil & Gas operated Beryl gas field, located in block SK10 offshore Sarawak, Malaysia. This project is estimated to hold recoverable reserves of gas totaling 500 billion cubic feet. Stratas expects it could reach a production plateau of 140 million cubic feet per day of gas in 2020. Beryl gas field is using the existing infrastructure at the nearby Helang gas field, with gas to be shipped through subsea pipeline to MLNG Tiga LNG plant, located onshore Bintulu, Sarawak.

 

Europe

 

In October, two projects in the Black Sea of Romania delayed final investment decisions (FID) due to new offshore legislation and continuous changes. Black Sea Oil & Gas postponed the FID for the Ana and Doina gas project which holds estimated recoverable reserves of approximately 320 billion cubic feet of gas. The original schedule of FID was planned by the end of this year; however, the FID is pushed back until next year.

 

The second project that suffered FID postponement was Neptune Deep project in the Black Sea. The FID for this project is expected at around $1.1 billion. Previously, it was scheduled to be sanctioned in the fourth quarter of this year, but partner OMV and operator ExxonMobil need to review offshore laws and evaluate new legislation to understand how this will affect the offshore business. Therefore, the FID is potentially pushed back until next year.

 

In the North Sea UK, Shell took over the operatorship of Arran gas condensate field from Zennor Petroleum and made final investment decision on this project. Contrary to Marathon Oil, Chevron and ExxonMobil’s recent decisions to exit the North Sea assets and instead focus on onshore US shale. Shell continues to commit to UK North Sea assets. Peak production from Arran field is estimated to be 100 million cubic feet per day of gas and 4,000 barrels of condensate. Four new development wells are planned for this field and plans call for development to be done with subsea tie-backs to the Shearwater hub facilities.

 

What’s more, Equinor delayed two projects’ first production start-up schedule in October. The Mariner heavy oil project in the East Shetland was planned to launch first production by the end of 2018. Now first production will be pushed back to first half of next year. The reason is mainly due to challenging weather conditions and partially related to expanded hook-up and commissioning work scope. The estimated recoverable reserves was boosted to around 300 million barrels by 20% increase, but the cost of this project was unchanged and under control.

 

The other postponed project was Martin Linge located in North Sea. This project was originally scheduled to come on stream in 2016, but due to cost overruns and a fatal accident. This project had been pushed back twice. After Equinor took over the operatorship of this field from Total early this year, issues with costs and fabrication of topsides modules became apparent. Therefore, delays arose again on this project, shifting it from 2019 to 2020 and lifting estimated costs to $5.7 billion, a 12% increase over last year’s estimate.

 

Americas

In North America, Equinor started conceptual study on the Bay du Nord project offshore Newfoundland, Canada. The project is planned to be developed through an FPSO at an estimated total cost of $8.35 billion. At the same time, Equinor is planning to issue an invitation for tenders for topsides FEED work. The contract package also includes an EPC option. Preferred FEED contractors will be selected in the second half of 2019. The Bay du Nord field is estimated to hold around 300 million barrels of oil. Stratas Advisors expects first production could come on stream in 2025.

 

In South America, Petrobras started up first production of Lula Extreme South project, in the pre-salt province of Santos Basin offshore Brazil. The field is developed through the P-69 FPSO, which is the eighth facility installed in Lula field. The P-69 FPSO has a production capacity of 150,000 barrels per day of oil and 212 million cubie feet per day of gas, and it will produce via eight production wells and seven injection wells. This is an important milestone in the development on pre-salt for Petrobras. Stratas expects more developments and achievements will be accomplished by international consortium partners in the next few years from the recent fifth pre-salt licensing round result. Crude production from the pre-salt region is expected to increase and could contribute significantly in Brazil’s country level oil production through 2025.

 

Middle East

In Oman, Petronas decided to acquire a 10% stake of the giant Khazzan gas field located onshore Oman from Oman Oil Company at a current estimated payment of $1.3 billon. The Khazzan Tight Gas & Condensate project is operated by BP on 60% working interest with the state-owned Oman Oil Company which has 40% working interest. This project has been developed in two phases: phase 1 started in 2017 and phase 2 is planned to start-up in 2021. So far the project has produced around 1 billion cubic feet of gas and approximately 35,000 barrels per day of condensate. An estimated of recoverable reserves of this field is about 10.5 trillion of natural gas and 350 million barrels of condensate. Stratas Advisors’ production forecast shows that the phase 1 is going to develop 7 trillion cubic feet of gas, the plateau production can achieve 1 billion cubic feet of gas per day and 25, 000 barrels of condensate a day. The second phase is planned to produce additional 0.5 billion cubic feet of gas per day and 15,000 barrels of condensate per day.

 

Featured Developments

Licensing Round

 

Date Country Licensing Round Licenses/Blocks Status Basin Winning Consortium
10/18/2018 Ghana First Ever Competitive Bid Round Nine blocks blocks 2, 3 and 4 offered;
Block 1 is reserved for GNPC
Central Basin, Accra and Keta basins expected to announce successful
tenders in mid-August 2019

Exploration & Discoveries

Discovery Date New Discovery Region Country Primary Hydrocarbon Operator Water Depth (ft) Location Basin Block Well Depth (ft)
10/5/2018 Zomo-1 Africa Niger oil Savannah Petroleum 0 Onshore Agadem Rift R3/R4 8,199

 

Status Updates


Projects Name Field Name Region Country Primary Hydrocarbon Location Operator Basin Block Oil Capacity mb/d Gas Capacity mmcf/d Status First Production Project Updates
Greater Western Flank Phase 2 Keast,Dockrell,Sculptor,Rankin,Lady Nora and Pemberton Asia Pacific Australia gas Shallow Woodside North Carnarvon WA 024L 0 1400 Producing 2018 EPC to Producing
West White Rose Extension West White Rose Canada Canada oil Shallow Husky Jeanne D'Arc Grand Banks Territory 140 180 EPC 2022 FID to EPC
Columbus Columbus NW Europe UK gas Deep Serica North Sea 23/16f, 23/21a 0 60 FEED 2021 Onhold to develop
Ana and Doina Ana and Diana Black Sea Romania gas Shallow BSOG Black Sea 15 Midia 0 150 FEED 2021 FID postponed
Finlaggan Finlaggan NW Europe UK gas Shallow Zennor Petroleum North Sea 21/5c 0 40 EPC 2020 FID to EPC
Khazzan Tight Gas & Condensate Khazzan Middle East Oman gas Onshore BP Ad Dhahirah Governorate 61 0 1000 Producing 2017 Partnership changed
Neptun Deep Domino and Pelican South Black Sea Romania gas Deep ExxonMobil Black Sea Neptun 0 800 FEED 2021 FID delayed
Mariner Mariner NW Europe UK oil Shallow Statoil East Shetland 9/11A 55 0 EPC 2019 Start-up delayed
Lula Ext. Sul Lula Latin America Brazil oil Ultra Deep PETROBRAS Santos BM-S-11 150 212 Producing 2018 EPC to Producing
Beryl Beryl Asia Pacific Malaysia gas Shallow Nippon Sarawak SK10 0 150 Producing 2018 EPC to Producing
Lingshui 17-2 Lingshui 17-2 Asia Pacific China gas Deep CNOOC Qiongdongnan 64/11 0 400 EPC 2021 EPC bidding to EPC
Bay du Nord Bay du Nord North America Canada oil Deep Statoil Flemish Pass EL1112 145 10 Conceptual 2025 Appraisal to Conceptual
Tortue Phase 1 Tortue Africa Mauritania Oil Ultra Deep Kosmos Offshore Mauritania-Senegal C-8 (Mauritania) and St. Louis Offshore
Profond license area (Senegal)
0 334 FEED 2021 Conceptual to FEED
Rossukon Rossukon Asia Pacific Thailand oil Shallow Krisenergy Karawake G6/48 25 10 FEED 2025 Conceptual to FEED
Cape Vulture Cape Vulture Europe Norway oil Deep Statoil Norwegian Sea PL128 25 0 Conceptual 2027 Appraisal to Conceptual
Arran Arran Europe UK gas Shallow Shell North Sea P359a/b, P1051 and P1720 60 410 FID 2020 FEED to FID, operatorship taken over by Shell
Martin Linge Martin Linge NW Europe Norway oil Shallow Statoil Northern North Sea 29/9, 29/6, 30/4 and 30/7 100 0 EPC 2020 First production delayed;
cost increase
Kingfihser Kingfisher Africa Uganda oil Shallow Shell Lake Albert 3A 40 0 EPC bidding 2020 FEED to EPC bidding

A&D Activities

Company Country Location A&D Assets Sale and Purchase Agreement Partner Deal Amount
PetroRio Brazil Campos basin acquisition Frade field 18% Chevron not disclosed
Vitol Nigeria Oil Mining Lease 127 acquisition Agbami field,Akpo field and the Egina project 50% Petrobras $1.407 billion
Petronas Oman Block 61 acquisition Khazzan gas field 10% Oman Oil Company $1.3 billion
Whitebark Energy Australia TP/15 divesture Xanadu 15% Triangle Energy $3.5 million
Aker BP Norway licences 146 acquisition King Lear 78% Equinor $250 million
Shell Denmark North Sea divesture Halfdan, Gorm and Dan, as well as Tyra 100% Noreco $ 1.9 billion
Equinor Norway North Sea divesture Tommeliten discovery and PL 044 100% Polish group PGNiG $220 million
Hibiscus Petroleum UK North Sea acquisition blocks 15/13a and 15/13b 50% Caldera Petroleum $37.5 million
Chevron Norway Barent Sea divesture Korpfjell licence 20% DNO not disclosed
Rex International Trinidad & Tobago offshore divesture Steeldrum Oil 26% Columbus Energy $1.54 million
ENI Libya Ghadames basin and Sirt basin acquisition Contract area A, B and C 43% BP not disclosed
OMV Romania Moldova area divesture nine fields 100% Mazarine Energy not disclosed
Timor-Leste Government Australia PSC 03-19 and 03-20
Leases NT/RL2 and NT/RL4
acquisition Greater Sunrise 30% ConocoPhillips $ 350 million


Picture 1: Location Map of Global Upstream Projects Developments in October 2018

Global Upstream Project Analytics (GUPA) provides worldwide coverage of onshore and offshore projects, with a focus on recent and future developments. Stratas provides thorough and detailed coverage on multiple measures.  Please reach out to us with questions or additional requests.

 

 

 

 

 

 

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