Two Jackups to Join Turkmen Drilling Project

 

Dragon Oil is currently employing one platform-based and two jackup rigs to develop the Cheleken Contract Area (CCA) fields in the Turkmen sector of the Caspian Sea.

They will soon be joined by the newbuild jackup Caspian Driller, which is undergoing commissioning in the CCA ahead of starting operations on the Dzheitune (Lam) field. The lease and management contract for this rig lasts for five years, with an option to extend by up to two more years.

Of the fleet in operation, the Elima jackup, contracted until May 2016, is at present drilling the Dzheitune (Lam) 13/199 well.

The Neptune jackup, currently completing the Dzheitune (Lam) C/198 development well, will remain available until Dragon takes delivery of Mercury, another newbuild jackup, later this year. Mercury will then work for the company under the remainder of its three-year lease with the drilling contractor.

Land Rig 2 is contracted to drill on the Dzhygalybeg (Zhdanov) A platform until it completes eight slots allocated for drilling with a land rig on this platform.

Dragon says a program to acquire water injection facilities for installation on the Dzheitune (Lam) field is in the approval stage. These will be used for pressure maintenance, to sustain production rates, and to increase reserves recovery.

Last year, the company commissioned a jet pumping system for two wells on the Dzheitune (Lam) 13 platform. It has since procured more jet pumping systems for other platforms and commissioning is scheduled to start later in 1Q 2015, with a view to increase production and enhance recovery.

In parallel, the company is considering use of electric submersible pumps with a pilot application to start later this year.

Fabrication has started of a new eight-slot wellhead and production platform Dzheitune (Lam) E and associated pipelines. The platform will be suitable for use with a jackup drilling rig. The platform is expected to be completed in 1H 2016.

 

Pemex to Join Sempra Affiliate on LNG Project

 

Mexico's state oil company, Pemex, said it is taking a first step into the LNG business in association with IEnova, the Mexican affiliate of Sempra.

Pemex said it has signed a memorandum of understanding with IEnova for the development of a natural gas liquefaction project at Sempra LNG's existing Energia Costa Azul plant at Ensenada, Baja California.

The accord sets the terms for the scope of each party's participation in the project, including the development, structure and terms under which Pemex could become either a client or investor, the state company said in a statement.

The statement added that Pemex said the agreement will allow it to strengthen its position in world natural gas markets, "reaping the economic benefits of the differential in prices."

Pemex recently used similar reasoning when it announced it could bring natural gas from a pipeline along the Isthmus of Tehuantepec between its Pajaritos refinery on the Gulf to Salina Cruz on the Pacific. At the time, Pemex said it wanted to cash in on high gas prices in Asia by shipping LNG from a terminal on the Pacific.

ExxonMobil Starts Production in Sakhalin

 

ExxonMobil has started light oil production from the Sakhalin-1 project’s Arkutun-Dagi field offshore eastern Russia. This is the last of the three fields to be developed in the concession – the location is 25 km (16 mi) off the northeast coast of Sakhalin Island.

Peak production from the giant Berkut platform is expected to reach 90,000 b/d, lifting output from Sakhalin-1 to more than 200,000 b/d. The other two fields – Chayvo and Odoptu – began production in 2005 and 2010, respectively.

Production from Sakhalin-1’s Arkutun-Dagi field will be routed through the existing Chayvo onshore processing facility on Sakhalin Island and delivered through pipelines to the De-Kastri oil export terminal located in Khabarovsk Krai, Russia.

According to consortium partner Rosneft, Sakhalin-1 is the first large-scale shelf project carried out in the Russian Federation under the 1996 production-sharing agreement conditions.

Exxon Neftegas Ltd. is the Sakhalin-1 consortium operator with 30% interest. Its partners in the consortium include Sakhalin Oil and Gas Development Co.

Aramco Extends Bidding for Shale Gas

 

State energy firm Saudi Aramco has extended the deadline for companies to bid for work on its unconventional gas facilities in the north of the country, signaling it remains committed to developing shale gas deposits, industry sources said.

The project, known as System A, will involve building processing facilities, wellheads and pipelines for gas in Turaif, where a big mining project called Waad al-Shamal is under development. No estimate for the total value of the contracts was given.

"They extended the bid closing date now is in March," said a source, adding that Saudi Aramco had sent companies additional requirements that would need their study. Bids were originally due to close in early December and the deadline has been extended several times, most recently to March 15. There was no immediate comment from Saudi Aramco.

Meanwhile, several companies have prequalified for another unconventional gas project involving pipelines, also in northern Saudi Arabia. That project, known as System B, is five times as big as System A, according to one source.

The search for natural gas is a priority for Saudi Arabia as it struggles to keep pace with rapidly rising domestic demand for power and its strategically important petrochemicals industry. It has been inspired by the shale gas surge in the United States, which has been transformed from the world's largest gas importer to an exporter.

Saudi Aramco's CEO Khalid al-Falih told a conference in Riyadh last month that Aramco had invested $3 billion in developing unconventional gas resources and had earmarked an additional $7 billion for it.

He did not reveal detailed plans, but said: "Saudi Arabia will be the next frontier after the US, where shale and unconventional will make a significant contribution to our energy mix, especially gas."

So far, a mining project and a power plant for Saudi mining company Ma'aden is projected to take 200 million cubic feet per day of unconventional gas by 2018.

US Oil Rigs Tumble Again

 

US oil and gas rigs continued to fall despite still-rising levels of production.

Drillers idled 48 rigs (37 of which were oil rigs), dropping the number to 1,310 and marking the 11th consecutive decline, Baker Hughes reported. The total US rig count is down 32 percent since October, an unprecedented retreat. The median forecast from a Bloomberg survey of ten Rig Count Guesses on Twitter was for a decline of 52.

The Baker Hughes rig counts is a newly popular and controversial signal for US oil watchers. Rigs are used to explore for new deposits and to drill new wells. The theory goes that when oil rigs decline, fewer wells are drilled, less new oil is discovered, and oil production slows. That would be good news for investors hoping for a rise in crude prices after the oil crash.

But production isn't slowing yet, and new efficiencies in US drilling and pumping may make raw numbers of rigs in the field misleading. The US will pump 9.3 million barrels a day this year, the most since 1972, despite the fewest rigs in the field in almost four years, the Energy Information Administration forecast.

Most analysts didn't follow rig counts closely until a surge in US production led to a crash in oil prices by more than half since June.

 

Russia Eyes 2nd Gas Deal With China

 

Russia’s energy minister has said the country’s gas giant, Gazprom, is expected to finalize a second contract for delivering gas to China in coming months.

“I hope that in the coming months the contract will be ready for signing,” RIA Novosti quoted Energy Minister Alexander Novak as saying.

The new planned pipeline, known as the “Western route”, would cut through Russia’s Altai Republic to connect fields in western Siberia to northwest China.

It is expected to carry 30 billion cubic meters (bcm) of gas annually. The volume may go up to 100 bcm a year.

Russia and China signed a $400-billion gas deal last year with exports via the Power of Siberia pipeline, also known as the “Eastern route”, whose construction is expected to be over in 2018.

In November, Russia and China inked a framework agreement for the second contract.

Gazprom’s CEO Alexey Miller said recently that the gas giant will meet all its obligations with regard to supplying gas to China.

"The works at the Chayanda and the Power of Siberia are in full swing. All Gazprom’s obligations to start supplying gas to China will be fully met on time," Miller said.