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French oil major Total and Brazilian national Petrobras have finalized the US$1.95 billion transfer of interests in the pre-salt Santos Basin from Petrobras to Total. The companies called the move a “decisive milestone” in a strategic alliance they signed in March 2017 to combine their deep offshore expertise.

Source: Petrobras

Under the agreement, Total will acquire 35% rights and operatorship of the Lapa field in Block BM-S-9A, alongside Shell (30%), Repsol-Sinopec (25%) and Petrobras (10%). Lapa started production in December 2016 via the 100,000 b/d capacity Cidade de Caraguatatuba floating production storage and offloading vessel (FPSO).

Petrobras also will transfer to Total 22.5% of the rights to the Iara area, which includes the Sururu, Berbigão and Oeste de Atapu fields in Block BM-S-11A. Iara production is expected to begin this year through a 150,000 b/d capacity P-68 FPSO in in Berbigão-Sururu fields, followed by a second FPSO in 2019 in the Atapu field. Petrobras operates Iara with 42.5%. Partners include Shell (25%) and Petrogal (10%).

The $1.95 billion transaction amount does not include $400 million that can be triggered by Petrobras to carry part of its investment share in the Iara development fields and contingent payments, Total said.

In March 2017, the companies signed $2.2 billion agreements to transfer the interests in Iara and Lapa, as well as 50% interest in two onshore cogeneration plants, Rômulo de Almeida and Celso Furtado, in Bahia area, to Total. The two plants are connected to the regasification terminal located in São Francisco do Conde, also in Bahia, where Total will take regasification capacity to supply gas to the power plants.

In October 2016, the companies formed the strategic alliance for both upstream and downstream activities. The terms of the strategic alliance called for Total and Petrobras to join forces in key areas of mutual interest and evaluate opportunities in Brazil and internationally. The companies planned to focus on upstream in the agreement’s initial phase, with Petrobras proposing to partner with Total on Brazilian projects, and Total proposing Petrobras to partner in opportunities outside of Brazil.

As part of the strategic alliance, the companies announced in December 2016 plans for Total to become partner in the Iara fields and Lapa field. In return, Total would offer Petrobras the option of taking a 20% stake in the Perdido Belt deepwater exploration Block 2.

“These transactions represent a major step in our strategic alliance," said Pedro Parente, Petrobras CEO. "As Petrobras is a leader in the pre-salt exploration and Total is a leader in deep offshore West Africa, our partnership has potential to reduce our exploratory risks and make both companies more competitive."

Total CEO Patrick Pouyanné also celebrated the partnership with Petrobras. "We are especially pleased to be the first major to operate a pre-salt producing field in Brazil," he said."We intend to keep strengthening our strategic alliance with Petrobras thanks to our commitment to extend our technical cooperation in operations, research and technology, and to develop new synergies between both of our companies.”

In December, the Libra consortium selected Modec to charter an FPSO for the Mero field pilot project, formerly Libra Northwest. The FPSO will have a daily operational capacity rate of up to 180,000 b/d and 12 MMcm/d of gas, and be installed at Mero in the northwestern portion of the Libra block, 180km offshore Rio de Janeiro.  The Libra block achieved first oil in late November 2017.

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Thursday, 28 December 2017 13:10

BSEE to revise OCS production rule

Seeking to reduce “unnecessary regulatory burdens” while maintaining or advancing safety and environmental protection, the US Bureau of Safety and Environmental Enforcement (BSEE) plans to revise the Production Safety Systems Rule governing oil and gas production on the US Outer Continental Shelf (OCS), the agency reported today (28 December).

BSEE Director Scott A. Angelle

The Production Safety Systems Rule addresses safety and pollution prevention equipment, subsea safety devices and safety device testing for OCS oil and gas production, which are critical for protecting offshore workers and the environment.

In 2016, BSEE published a final rule substantially revising 30 CFR part 250, subpart-H. Since the rule took effect on 7 November 2016, BSEE has become aware that certain provisions in the rule created “unduly burdensome requirements” for OCS operators, but didn’t significantly increase worker safety or environmental protection, the agency said in the document it plans to publish on 29 December in the Federal Register outlining the new regulations.

BSEE’s proposal (which can be read here) would primarily revise subpart-H – "Oil and Gas Production Safety Systems." Amendments to the rule would add gas lift shutdown valves to the list of safety and pollution prevention equipment (SPPE). It would revise requirements for SPPE to clarify existing regulations, and remove the requirement for operators to certify, through an independent third party, that each device is designed to function in the most extreme conditions to which it will be exposed, and that the device will function as designed. Instead, compliance with various required industry group standards – such as the American Petroleum Institute and American National Standards Institute – will ensure each device will function in the conditions for which it was designed.

The updated rules would clarify and revise some production safety system design requirements, including revisions for the requirements for piping schematics, simplifying requirements for electrical system information, clarifying when operators must provide certain documents to BSEE or update existing documents.

The new regulations also would clarify failure reporting requirements, requirements for Class I vessels, requirements for the inspection of the fire tube for tube-type heaters, and the requirement for notifying district managers before production begins.

BSEE said that the proposed regulations could reduce industry compliance burdens by at least US$228 million over a 10-year period.

The rule change is part of the Presidential Order issued by President Trump earlier this year to reduce “undue burden” on the US oil and gas industry to maintain the United States’ position as a global energy leader and foster energy security.

“It’s time for a paradigm shift in the way we regulate the OCS,” said BSEE Director Scott A. Angelle (pictured above). “There was an assumption made previously that only more rules would increase safety, but ultimately it is not an either/or proposition. We can actually increase domestic energy production and increase safety and environmental protection.”

In April this year, President Trump signed executive orders to increase energy production in the OCS planning area, including areas that former President Obama banned towards the end of his time in office. Trump aimed to increase production through a review of the OCS five-year leasing program and review of regulations put in place in 2016 that could reduce OCS exploration and development. That order also directed Secretary of the Interior Ryan Zinke to implement a streamlined permitting approach for private funded seismic data collection to determine offshore energy resource potential.

The proposed regulations will be available for public comment over a 30-day period.

National Ocean Industries Association (NOIA) President Randall Luthi said oil and gas safety experts would now have a chance to comment on the regulation. “This ‘second bite at the apple’ provides an opportunity for further dialogue, discussion and debate to assure the nation’s offshore energy resources are developed safely and expeditiously – as required by the Outer Continental Shelf Lands Act,” Luthi said.

Luthi added that NOIA members also look forward to commenting on other important offshore rules currently under revision.

The OCS, which includes the Arctic, Gulf of Mexico, and Pacific regions, produces more than 550 million bo/year and 13 Tcf/year of natural gas.

Read more:

Well control rule under fire

New regulations for offshore operators

Thursday, 30 November 2017 10:36

Kraken production ramps up

EnQuest says its Kraken field is on track to reach 50,000 bo/d gross in the first half of 2018 after achieving month on month production growth since coming on stream June this year.

Armada Kraken FPSO

Early this month, Kraken reached average production rates of around 23,000 bo/d gross, the company reported today (30 November). The field’s second production processing train was brought on stream this month as well, reaching production of more than 40,000 bo/d.

The final drill center (DC) 2 production well also has come online. The company reports seeing excellent drilling performance for its DC3 wells, which are nearing completion ahead of schedule; the process of bringing these wells onstream is underway. EnQuest also says it is making plans to drill DC4 in 2018.

The company completed second and third cargo offloads from Kraken in October and November. The latest cargo sold was contracted for a discount to Brent of less than $5/bbl, EnQuest says in a 30 November operational update.

In August, the company reported that production from the UK North Sea heavy oil field was taking longer to ramp up than anticipated due to commissioning of the floating production storage and offloading vessel’s (FPSO) topsides equipment falling behind schedule. Despite this delay, EnQuest CEO Amjad Bseisu said the company was pleased with Kraken’s reservoir performance and flow rates achieved on individual wells.

The field, located about 125km east of the Shetland Islands off Scotland, started production on 23 June. The $2.5 billion Kraken development will have 25 wells, including 14 production wells and 11 injection wells, that will produce via Bumi Armada’s Armada Kraken FPSO. Wood Mackenzie reported in June that it expected Kraken production to peak at nearly 50,000 b/d in 2019, providing 4.5% of overall UK liquids production for that year.

The four wells from DC1 and three wells from DC2 have produced at initial gross rates above expectations and with stabilized rates that confirm EnQuest’s development plan. All DC1 wells have tested at a maximum rate of about 24,000 boe/d, and stabilized well rates at around 15,000 bo/d. One DC2 well has tested at a rate of over 10,000 bo/d, “demonstrating excellent reservoir properties and completion efficiency,” EnQuest says.

The company says it has been to reduce Kraken’s full cycle gross capital expenditures by 25% from its original sanctioned cost of $3.2 billion, thanks to the success of the DC3 drilling program and lower market rates for the remaining subsea campaign.

EnQuest holds 70.5% interest in Kraken; Cairn Energy is partner with 29.5%.

Read more:

Kraken comes on stream

Kraken commissioning behind schedule

Getting heavy

Hess has shut in production at its Baldpate, Conger and Penn State fields in the deepwater Gulf of Mexico in response to the fire that occurred last week at the Shell-operated Enchilada platform.

The Llano field. Source: Hess

Production is also shut in at the Shell-operated Llano field, in which Hess holds a 50% interest, Hess said in a 13 November press statement. Hess production at these fields is approximately 30,000 boe/d. Hess shut in the fields after Enbridge, which owns the Garden Banks Gas Pipeline system -- to which the Baldpate and Enchilada platforms are connected -- shut in production until further notice due to the fire. 

Shell reported on Sunday (12 November) that it was developing a plan to repair the damaged portions of the Enchilada asset and was redeploying personnel. There is no timeline to resume normal operations, the company said in a statement.

An assessment team on 11 November confirmed isolation of the platform from the 30-inch gas export pipeline and no presence of uncontained hydrocarbons.

Shell and the Bureau of Safety and Environmental Enforcement are investigating the cause of the incident. More than 70 people from Shell and the United States Coast Guard worked together to safely respond to this incident. Throughout the response, Shell said it did not observe any signs of oil on the water associated with this incident.

Read more:

Crews inspect Enchilada platform

[Updated] Enchilada fire injures 2

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