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  • International Petroleum News and Technology | www.ogj.com

    JULY 6, 2015 | USD 10

    MIDYEARFORECAST

    ETHYLENEREPORT

    EASTERN CANADA READIES DEEPWATER

    EARTH MODEL AIDS ASSET VALUATION

    OIL PRICES HISTORY REPEATING?

    UK GAS STORAGE DEVELOPMENT

    150706OGJ_C1 1 6/30/15 2:02 PM

  • LET'S WORK.

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    150706OGJ_C2 2 6/30/15 2:02 PM

  • Data integration for safer, more efcient production

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    2015 Honeywell International, Inc. All rights reserved.

    150706OGJ_1 1 6/30/15 1:47 PM

  • FIG. 1WORLD OIL MARKET AT A GLANCE

    FIG. 1a

    95

    96

    Supply

    Demand

    94

    93

    92

    91

    90

    89

    Million, b/d

    FIG. 1b

    2.0

    2.5

    1.5

    1.0

    0.5

    0.0

    -0.5

    -1.0

    Million, b/d

    OECDChinaNon-OECD excl. China

    Global oil demand, supply World oil demand growth, year-over-year change

    CONTENTSJuly 6, 2015 Volume 113.7

    OG&PE

    P1

    26

    SPECIAL REPORTMIDYEAR FORECAST

    SPECIAL REPORTETHYLENE REPORT

    COVERSuncor Energy Inc.s Montreal refnery,

    with a capacity of 137,000 b/d, produces

    gasoline, distillates, asphalts, heavy fuel oil,

    petrochemicals, solvents, and feedstock for

    lubricants. Oil & Gas Journals Midyear Fore-

    cast, starting on p. 26, provides updated

    global oil market data covering supply,

    demand, pricing, drilling, and economics.

    Photo from Suncor.

    REGULAR FEATURES

    NEWSLETTER 8

    LETTERS/CALENDAR 18

    JOURNALLY SPEAKING 22

    EDITORIAL 24

    SERVICES/SUPPLIERS 105

    STATISTICS 108

    MARKET CONNECTION 111

    ADVERTISERS INDEX 115

    EDITORS PERSPECTIVE/

    WATCHING GOVERNMENT 116

    Low-cost feed supports North American ethylene expansion plansRobert Brelsford

    74International survey of ethylene from steam crackers2015Leena Koottungal

    85

    Global oil glut continues despite increasing demandConglin Xu

    Laura Bell

    26

    GENERAL INTEREST

    Natural gas opposition has shifted to transportation, speakers sayNick Snow

    37

    Case for Keystone XL has grown stronger, TransCanada tells KerryNick Snow

    38

    Judges order delays BLMs implementation of fracing regsNick Snow

    40

    EIA: Argentina, China lead shale development outside North America40

    Gas faces more competition fromcoal, renewables, IEA official saysNick Snow

    41

    Senate Democrats outline broad energy goals to nations governorsNick Snow

    42

    US House committee leaders send letters to Plains, PHMSA about leakNick Snow

    43

    Group suggests principlesfor Alberta royalty review44

    Poor BIA management has hindered tribal energy development, GAO saysNick Snow

    45

    Oman lets contract for Sohar refinery unit revampRobert Brelsford

    46

    Precommissioning tests ongoing at Braskems Mexican petchem projectRobert Brelsford

    47

    150706OGJ_2 2 7/2/15 11:28 AM

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    150706OGJ_3 3 6/30/15 1:48 PM

  • Lubbock

    FIG. 1PERMIAN BASIN STRUCTURES

    NewMexico

    Texas

    Northwestshelf

    Delawarebasin

    Central basinplatform

    Midlandbasin

    Easternshelf

    Levelland

    Lamesa

    Snyder

    Sweetwater

    Midland

    Big Spring

    FIG. 1NORTH SEA COMPARISON: 1965-2010

    400

    500

    600

    700

    800

    900

    plo

    rati

    on w

    ells,

    no.

    1,800

    1,600

    1,400

    1,200

    1,000

    800 2D

    seis

    mic

    , 1

    ,00

    0 k

    m

    2D acquired (Norway)

    2D acquired (NL)

    Exploration wells drilled (Norway)

    Exploration wells drilled (NL)

    EXPLORATION & DEVELOPMENT

    Newfoundland, Labrador prepare for deepwater explorationTayvis Dunnahoe

    48

    Chinas Yanchi area, western Ordos basin derived from mixed source Zhou Shichao

    Wang Xingzhi

    Liu Xinshe

    Han Peng

    53

    DRILLING & PRODUCTION

    Earth model assists Permian asset valuationPatrick J. Curth

    James R. Courtier

    Gary B. Smallwood

    Rick Mauro

    Scot Evans

    64

    Innovation addresses US environmental regulations; more neededBennett Resnik

    Benjamin Nussdorf

    70

    TRANSPORTATION

    Lack of business drivers inhibits UK gas storage developmentAdrian Finn

    Zak Loftus

    100

    PROCESSING

    Low-cost feed supports North American ethylene expansion plansRobert Brelsford

    74

    International survey of ethylene from steam crackers2015Leena Koottungal

    85

    The price of oil and OPEChistory repeating?Manouchehr Takin

    Ramin Takin

    92

    Nelson-Farrar monthly cost indexesGary Farrar

    94

    NELSON-FARRAR QUARTERLY COSTIMATING: Indexes for selected equipment itemsGary Farrar

    98

    48

    64

    100

    T E C H N O L O G Y . . .

    150706OGJ_4 4 7/2/15 11:28 AM

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  • OGJ

    Drilling & Formation Evaluation ____

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    PennWell, Tulsa offce1421 S. Sheridan Rd., Tulsa, OK 74112 PO Box 1260, Tulsa, OK 74101 Tel 918.835.3161 / Fax 918.832.9290Senior Art Director Michelle Gourd,

    [email protected] Graphic Designer Lena Banuet,

    [email protected] Editor Laura Bell, [email protected] Illustrator Mike ReederProduction Director Charlie ColeProduction Manager Shirley Gamboa

    Ad Services Manager Zac Nash

    WashingtonTel 703.533.1552Washington Editor Nick Snow, [email protected]

    OGJ NewsPlease submit press releases via e-mail to:

    [email protected]

    Subscriber ServiceP.O. Box 2002, Tulsa OK 74101Tel 1.800.633.1656 / 918.831.9423 / Fax

    918.831.9482 [email protected] Circulation Manager Ron [email protected],

    PennWell Corporate Headquarters1421 S. Sheridan Rd., Tulsa, OK 74112

    P.C. Lauinger, 1900-1988Chairman Frank T. LauingerPresident/Chief Executive Offcer Robert F. BiolchiniChief Financial Offcer/

    Senior Vice President Mark C. Wilmoth

    Member Audit Bureau of Circulations & American Business Media

    Copyright 2015 by PennWell Corporation (Registered in U.S. Patent & Trademark Offce). All rights reserved. Oil & Gas Journal or any part thereof may not be reproduced, stored in a retrieval system, or transcribed in any form or by any means, electronic or mechanical, including photocopying and recording, without the prior written permission of the Editor. Permission, however, is granted for employees of corporations licensed under the Annual Authorization Service offered by the Copyright Clearance Center Inc. (CCC), 222 Rosewood Drive, Danvers, Mass. 01923, or by calling CCCs Customer Relations Department at 978-750-8400 prior to copying. Requests for bulk orders should be addressed to the Editor. Oil & Gas Journal (ISSN 0030-1388) is published 12x per year - monthly the frst Monday of each month in print and other Mondays in digital form by PennWell Corporation, 1421 S. Sheridan Rd., Tulsa, Okla., Box 1260, 74101. Periodicals postage paid at Tulsa, Okla., and at additional mailing offces. Oil & Gas Journal and OGJ are registered trademarks of PennWell Corporation. POSTMASTER: send address changes, letters about subscription service, or subscription orders to P.O. Box 3497, Northbrook, IL 60065, or telephone (800) 633-1656. Change of address notices should be sent promptly with old as well as new address and with ZIP code or postal zone. Allow 30 days for change of address. Oil & Gas Journal is available for electronic retrieval on Oil & Gas Journal Online (www.ogjonline.com) or the NEXIS Service, Box 933, Dayton, Ohio 45401, (937) 865-6800. SUBSCRIPTION RATES in the US: 1 yr. $89; Latin America and Canada: 1 yr. $94; Russia and republics of the former USSR, 1 yr. 2,200 rubles; all other countries: 1 yr. $129, 1 yr. premium digital $59 worldwide. These rates apply only to individuals holding responsible positions in the petroleum industry. Single copies are $10 each except for 100th Anniversary issue which is $20. Publisher reserves the right to refuse non-qualifed subscriptions. Oil & Gas Journal is available on the Internet at http://www.ogjonline.com. (Vol. 113, No. 7) Printed in the US. GST No. 126813153. Publications Mail Agreement Number 602914. Return Undeliverable Canadian Addresses to: P.O. Box 1632, Windsor, ON N9A 7C9.

    PennWell, Houston offce1455 West Loop South, Suite 400,

    Houston, TX 77027Tel 713.621.9720/Fax 713.963.6285/

    Web site www.ogjonline.comEditor Bob Tippee, [email protected] Technology Editor Warren R. True,

    [email protected] Editor-News Steven Poruban,

    [email protected] Editor-Technology Christopher E. Smith,

    [email protected] Editor Tayvis Dunnahoe,

    [email protected] Technology Editor Michael T. Slocum,

    [email protected] Technology Editor Robert Brelsford,

    [email protected] Editor-Economics Conglin Xu,

    [email protected] Writer Matt Zborowski,

    [email protected] Editor/News Writer Leena Koottungal,

    [email protected] Projects Paula Dittrick,

    [email protected] Correspondent Alan Petzet,

    [email protected] Assistant Vannetta Dibbles,

    [email protected]

    Editorial Advisory BoardPat Dennler Motiva Enterprises LLC, Port Arthur, Tex.Doug Elliot Bechtel Hydrocarbon Technology

    Solutions/IPSI (Advisor), HoustonAndy Flower Independent Consultant,

    Caterham, UKMichelle Michot Foss Bureau of Economic Geologys

    Center for Energy Economics, The University of Texas (Houston)

    Michael Lynch Strategic Energy & Economic Research Inc., Amherst, Mass.

    Tom Miesner Pipeline Knowledge & Development, Houston

    Ralph Neumann Badger Midstream Energy LPKent F. Perry RPSEA, HoustonIgnacio Quintero Chevron Pipe Line Co., HoustonBill Schlesing KBC Advanced Technologies Inc.,

    HoustonJohn A. Sheffeld John M. Campbell & Co.,

    Lechlade, UKAndrew J. Slaughter Deloitte Services LP, HoustonJohn Thorogood Drilling Global Consultant LLP,

    Insch, ScotlandSteven Tobias Hess Corp., HoustonShree Vikas Conoco Phillips Co., HoustonClark White Targa Resources, HoustonColin Woodward Woodward International Ltd.,

    Durham, UK

    Houston AdministrationPublisher Jim Klingele, [email protected]/Group Publishing Director

    Paul Westervelt, [email protected]/Custom Publishing Roy Markum,

    [email protected]

    150706OGJ_6 6 7/2/15 11:28 AM

  • Its time to

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    35%%65projects over $1Baround the world

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    40 percent of projects in the oil and gas industry are subject to budget and schedule overruns.Capital Project Execution in the Oil and Gas Industry. M. McKenna, H. Wilczynski, D. VanderSchee. 2006 Booz Allen Hamilton survey from 2006 of 20 companies (super-majors, independents and EPC firms).

    150706OGJ_7 7 6/30/15 1:48 PM

  • NewsletterOGJ

    International News for oil and gas professionals

    For up-to-the-minute news, visit www.ogjonline.com

    8 Oil & Gas Journal

    July 6, 2015

    GENERAL INTEREST QUICK TA K ES

    USGS: Water usage for fracing varies across shale playsThe volume of water required to hydraulically fracture wells

    varies widely across the country, according to the first national

    analysis and map of hydraulic fracturing water usage detailed

    in a recent US Geological Survey study.

    The analysis was published in Water Resources Research, a

    journal of the American Geophysical Union. Researchers found

    water volumes for fracturing varied from 2,600 gal/well to 9.7

    million gal/well.

    As of 2014, median annual water volume estimates for frac-

    turing in horizontal wells increased to more than 4 million gal/

    well for oil wells and 5.1 million gal/well for gas wells. That

    compared with an initial average of about 177,000 gal/well for

    oil and gas wells in 2000, the study said.

    One of the most important things we found was that the

    amount of water used per well varies quite a bit, even within

    a single oil and gas basin, said USGS scientist Tanya Gallegos,

    the studys lead author. A better understanding of the volumes

    of water injected for hydraulic fracturing could be a key to un-

    derstanding the potential for some environmental impacts.

    USGS noted that horizontal drilling accounted for the high-

    est average water use for fracturing in 52 out of the 57 water-

    sheds studied. The watersheds where the most water was used

    to fracture wells involved shale formations.

    Horizontal wells generally require more water than vertical or

    directional wells. USGS said this research was part of its larger

    effort to understand the resource requirements and potential en-

    vironmental impacts of unconventional oil and gas development.

    FWS issues LOA to Shell for Chukchi Sea leaseThe US Fish & Wildlife Service issued Shell Gulf of Mexico Inc. a

    letter of authorization (LOA) related to the potential disturbance of

    polar bears and Pacific walrus resulting from the companys pro-

    posal to operate two drilling rigs in the Chukchi Sea this summer.

    The letter, which is effective July 1 and expires Nov. 1, is

    one of the remaining permits that the Royal Dutch Shell PLC

    subsidiary must obtain to move forward with an exploration

    program continuing activity it began in 2012 on a federal lease

    it obtained in OCS Lease Sale 193 in 2008.

    Shell has proposed drilling as many as 6 wells from 2 off-

    shore rigs there from July 4 through Oct. 31, FWSs Alaska of-

    fice indicated in the June 30 LOA, which allows incidental, but

    not intentional, takes of game.

    It authorizes Shell to proceed, provided the company com-

    plies with mitigation, monitoring, and reporting measures under

    the Marine Mammal Protection Act, which include maintaining

    a 15-mile buffer between the rigs while they are in operation.

    Another US Department of the Interior agency, the Bureau

    of Safety and Environmental Enforcement, continues to review

    Shells drilling permit applications, DOI said. FWSs action nei-

    ther approves of nor precludes the companys proposed activity

    on its lease this summer, which will be subject to all applicable

    regulations and conditions, it emphasized.

    Survey begins of collaboration on the UKCSDeloitte has begun a survey about collaboration in the oil and

    gas producing industry of the UK Continental Shelf.

    With support from Oil & Gas UK, the business advisory

    firm is studying the level and quality of collaboration now oc-

    curring on the UKCS and how companies might work together

    in new ways.

    The survey asks participants what collaboration means,

    what constitutes effective collaboration, and how companies

    view themselves and each other as collaborators.

    Justin Watson, a partner in Deloittes consulting practice,

    said collaboration is a focus of many of the firms conversations

    with clients.

    With subdued oil prices set to continue, its more important

    than ever that companies look at what could be gained by work-

    ing more closely together to bring down costs, reduce complex-

    ity, and boost efficiency, he said. However, what collaboration

    means for the oil and gas industry is not well understood.

    Collaboration received emphasis in the 2013-14 Wood Re-

    view, which called for strategies aimed at achieving maximum

    economic recovery from remaining oil and gas resources of the

    UKCS (OGJ Online, Feb. 24, 2014).

    EXPLORATION & DEVELOPMENT QUICK TA K ES

    Lundin has spudded three wells offshore NorwayLundin Norway AS, a wholly owned subsidiary of Lundin Pe-

    troleum AB, has spudded three wells: its second Alta appraisal

    150706OGJ_8 8 7/2/15 12:12 PM

  • The power of our resources means nothing

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    We are looking for talented oil & gas

    professionals to join the team.

    To learn more, visit www.aramco.jobs/ogj

    people powered

    150706OGJ_9 9 6/30/15 1:48 PM

  • June 26June 24 June 25 June 29 June 30

    June 26June 24 June 25 June 29 June 30

    June 26June 24 June 25 June 29 June 30

    June 26June 24 June 25 June 29 June 30

    June 26June 24 June 25 June 29 June 30

    June 26June 24 June 25 June 29 June 301

    WTI CUSHING / BRENT SPOT

    $/bbl

    64.00

    63.00

    62.00

    61.00

    60.00

    59.00

    58.00

    57.00

    $/bbl

    61.50

    61.00

    60.50

    60.00

    59.50

    59.00

    58.50

    58.00

    NYMEX NATURAL GAS / SPOT GAS - HENRY HUB

    ICE GAS OIL / NYMEX HEATING OIL

    NYMEX GASOLINE (RBOB)2/ NY SPOT GASOLINE3

    ICE BRENT / NYMEX LIGHT SWEET CRUDE

    PROPANE - MT. BELVIEU / BUTANE - MT. BELVIEU

    /gal

    190.00

    188.00

    186.00

    184.00

    182.00

    180.00

    178.00

    176.00

    /gal

    57.00

    53.00

    49.00

    45.00

    44.00

    42.00

    40.00

    38.00

    /gal

    208.00

    205.00

    202.00

    199.00

    196.00

    193.00

    190.00

    187.00

    2.850

    2.825

    2.800

    2.775

    2.750

    2.725

    2.700

    2.675

    1Not available 2Reformulated gasoline blendstock for oxygen blending3Nonoxygenated regular unleaded

    $/MMbtu

    May 14 Jun. 14 Jul. 14 Jan. 15 Mar. 15Feb. 15 Apr. 15 May 15Oct. 14 Dec. 14Nov. 14Aug. 14 Sept. 14

    1,100

    800

    2,000

    1,700

    1,400

    250

    350

    650

    50

    BAKER HUGHES INTERNATIONAL RIG COUNT: TOTAL WORLD / TOTAL ONSHORE / TOTAL OFFSHORE

    3,900

    3,600

    3,300

    3,000

    2,700

    2,400

    2,100

    1,800

    600

    300

    0

    2,127

    1,810

    318

    Note: End of week average countNote: End of week average count

    BAKER HUGHES RIG COUNT: US / CANADA

    Note: Monthly average count

    135

    859

    4/17/154/17/155/2/145/2/14 5/16/145/16/14 5/30/145/30/14

    6/20/146/20/144/11/144/11/14 4/25/144/25/14 4/24/154/24/155/9/145/9/14 6/6/146/6/14

    6/13/146/13/14 6/27/146/27/14 6/26/156/26/15

    4/10/15 5/8/155/23/14 5/22/15 6/5/15 6/19/15

    4/18/14 5/1/15 5/15/15 5/29/15 6/12/15

    236

    1,873

    US INDUSTRY SCOREBOARD 7/6

    Motor gasoline 9,352 8,950 4.5 8,985 8,684 3.5 Distillate 3,841 3,874 (0.9) 4,021 3,885 3.5 Jet fuel 1,627 1,515 7.4 1,543 1,432 7.8 Residual 217 195 11.3 208 240 (13.3)Other products 4,792 3,960 21.0 4,806 4,464 7.7 TOTAL PRODUCT SUPPLIED 19,829 18,494 7.2 19,563 18,705 4.6

    Supply, 1,000 b/d

    Crude production 9,597 8,442 13.7 9,372 8,256 13.5 NGL production2 3,161 2,766 14.3 3,094 2,687 15.1 Crude imports 6,957 7,211 (3.5) 7,219 7,338 (1.6)Product imports 2,010 1,917 4.9 2,062 1,854 11.2 Other supply2 3 1,975 2,109 (6.4) 2,306 2,207 4.5 TOTAL SUPPLY 23,700 22,445 5.6 24,053 22,342 7.7 Net product imports (1,440) (1,172) (1,557) (1,572)

    Refining, 1,000 b/d

    Crude runs to stills 16,449 15,859 3.7 15,855 15,533 2.1 Input to crude stills 16,754 16,104 4.0 16,167 15,840 2.1 % utilization 93.7 90.3 90.6 88.5

    4 wk. 4 wk. avg. Change, YTD YTD avg. Change,Latest week 6/19 average year ago1 % average1 year ago1 %

    Product supplied, 1,000 b/d

    Latest Previous Same week Change,Latest week 6/19 week week1 Change year ago1 Change %Stocks, 1,000 bbl

    Crude oil 462,993 467,927 (4,934) 388,090 74,903 19.3 Motor gasoline 218,494 217,814 680 214,977 3,517 1.6 Distillate 135,428 133,591 1,837 120,566 14,862 12.3 Jet fuelkerosine 39,731 40,505 (774) 37,799 1,932 5.1 Residual 39,816 40,285 (469) 38,539 1,277 3.3

    Stock cover (days)4 Change, % Change, %

    Crude 28.1 28.5 (1.4) 24.8 13.3 Motor gasoline 23.4 23.2 0.9 24.0 (2.5)Distillate 35.3 34.0 3.8 31.1 13.5 Propane 88.8 86.1 3.1 65.0 36.6

    Futures prices5 6/26 Change Change %

    Light sweet crude ($/bbl) 60.06 59.89 0.2 106.58 (46.52) (43.6)Natural gas, $/MMbtu 2.77 2.85 0.1 4.64 (1.87) (40.3)

    1Based on revised figures. 2OGJ estimates. 3Includes other liquids, refinery processing gain, and unaccounted for crude oil. 4Stocks divided by average daily product supplied for the prior 4 weeks. 5Weekly average of daily closing futures prices.Source: Energy Information Administration, Wall Street Journal

    10 Oil & Gas Journal | July 6, 2015

    150706OGJ_10 10 7/2/15 12:12 PM

  • THE SAVINGS STAY.

    ILLUSION PLUGS DISSOLVE...

    COMPLETE

    LEADER.WITHTHE

    Signicantly reduce time to rst production.

    Introducing the industrys rst fully dissolvable frac plug. As it dissolves completely,

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    150706OGJ_11 11 6/30/15 1:48 PM

  • 12 Oil & Gas Journal | July 6, 2015

    well in the Barents Sea, an appraisal well on Edvard Grieg field

    in the Norwegian North Sea, and the partner-operated Zeppe-

    lin exploration well in the southern North Sea.

    Alta appraisal well 7220/11-3 in PL609 is 4.3 km south of

    Alta discovery well 7220/11-1 (OGJ Online, Mar. 25, 2015), and

    3.4 km northeast of recently completed appraisal well 7220/11-

    2 (OGJ Online, June 12, 2015). The first appraisal well encoun-

    tered a 50-m gas column in reservoir rocks of good-to-poor

    quality, with a sidetrack encountering gas and oil.

    The main objectives of well 7220/11-3 are to confirm the

    reservoir model and prove the presence of hydrocarbon col-

    umns and fluid contacts similar to those established in the Alta

    discovery well, and to test the reservoir properties of the Perm-

    ian carbonates, Lundin says.

    Drilled by Island Drillings Island Innovator semisubmers-

    ible rig, the well will reach a total depth of 2,070 m below mean

    sea level over a period of 60 days. Lundin Norway operates

    PL609 with 40% working interest, while DEA Norge AS and

    Idemitsu Petroleum Norge AS each hold 30%.

    Edvard Grieg appraisal well 16/1-23 S is in PL338 in the south-

    eastern part of Edvard Grieg field and 2.4 km southeast of the Ed-

    vard Grieg platform (OGJ Online, May 12, 2014; Apr. 14, 2015).

    Lundin says the objectives of well 16/1-23 S are to confirm

    the geological model at this part of the field so the company can

    optimize drainage strategy and the placement of development

    wells, and to test for upside reserve potential in the field, which

    is estimated at up to 50 million boe (gross).

    Drilled by the Rowan Viking jack up rig, the well will reach

    a total depth of 2,200 m below mean sea level over a period of

    60 days. Lundin Norway operates PL338 with 50% working

    interest. Partners are OMV Norge AS 20%, Statoil Petroleum AS

    15%, and Wintershall Norge AS 15%.

    Zeppelin exploration well 10/4-1 in PL734, operated by

    Wintershall, lies in the southern North Sea 35 km southeast

    of Yme field.

    The main objectives of well 10/4-1 are to prove the presence

    of hydrocarbons in sandstones of the Middle to Late Jurassic

    Vestland Group. Lundin estimates the Zeppelin prospect to

    have the potential to contain unrisked, gross prospective re-

    sources of 152 million boe.

    Drilled by Dolphin Drilling ASs Borgland Dolphin semisub-

    mersible rig, the well will reach 2,300 m below mean sea level

    over a period of 30 days. Wintershall operates PL734 with 40%

    interest, while Lundin Norway and Centrica Resources (Norge)

    AS each hold 30%.

    Junex provides update on Galt oil property drillingJunex Inc., Quebec City, Que., said it is finalizing construction

    of the surface drilling pad for the Junex Galt No. 5 horizontal

    well that the company plans to start drilling in late July.

    This well is on the companys Galt oil property where Neth-

    erland, Sewell & Associates Inc. recently provided an update of

    their best estimate of the total oil initially in place resources at

    557 million bbl for the Forillon and Indian Point formations.

    NSAIs best estimate of Junexs net share of the total recoverable

    oil resource volume is 55.7 million bbl of oil.

    Galt No. 5 horizontal well is the first well of the next phase

    of operations on the Galt oil property, which includes the drill-

    ing of the Galt No. 5 horizontal well, the completion of a de-

    tailed 3D seismic program, then the drilling of the Galt Nos. 6

    and 7 horizontal wells whose final locations will be determined

    from the 3D seismic data.

    The Junex Galt No. 5 horizontal well is planned to be drilled

    to a total measured depth of 2,500 m, of which 1,300 m is to be

    horizontal drilled within the Forillon oil reservoir. Similar to

    Junexs Galt No. 4 horizontal oil discovery well, the horizontal

    portion of the Galt No. 5 horizontal well is designed to intersect

    the maximum number of open, near-vertical, natural fractures

    in the Forillon oil reservoir.

    Junex holds a 70% interest in the Galt oil property and it

    holds 100% interest in the adjacent acreage. The adjacent 100%

    Junex acreage has not yet been independently evaluated for its

    resource potential. These properties are situated 20 km west of

    the town of Gaspe in eastern Quebec.

    DRILLING & PRODUCTION QUICK TA K ES

    Statoil submits amended PDO for Gullfaks licenseStatoil ASA has submitted an amendment to the plan for devel-

    opment and operations (PDO) for the Gullfaks license for the

    first phase of the Shetland-Lista development.

    Shetland-Lista has been producing under a test production

    license since 2013. The amendment submitted to Norways

    Ministry of Petroleum and Energy defines the longer-term de-

    velopment.

    The first phase involves depressurization down to bubble

    point pressure in the reservoir and will not require any new

    infrastructure. It is expected to add 18 million boe, using 15

    existing wells from Gullfaks platforms.

    By utilizing the existing infrastructure, we manage to re-

    cover new resources at a lower cost, thus sustaining profitable

    production and long-term activities on the Norwegian conti-

    nental shelf, said Ivar Aasheim, Statoil senior vice-president.

    Investment costs are estimated at 900 million kroner.

    Statoil said the Shetland Group and Lista Formation have

    different properties compared with deeper deposits of the Brent

    Group, where the main Gullfaks reservoirs are located. The

    producing interval in Shetland-Lista consists of thin limestone

    beds that are fractured.

    Good productivity was established in December 2012 and

    has been confirmed through perforation in another three exist-

    ing Gullfaks wells, which Statoil said has warranted commer-

    cial development.

    Statoil said current recovery rate from the main Gullfaks

    field is 59%. Since start of oil production in 1986, the field has

    produced more than 2.56 billion bbl of oil and exported more

    than 70 billion cu m of gas (OGJ Online, Apr. 19, 2013).

    150706OGJ_12 12 7/2/15 12:12 PM

  • 150706OGJ_13 13 6/30/15 1:48 PM

  • 14 Oil & Gas Journal | July 6, 2015

    CNOOC starts production from Bozhong 28/34 fieldsCNOOC Ltd. reported the start of production from its Bozhong

    28/34 oil fields comprehensive adjustment project.

    The Bozhong 28/34 oil fields lie in Bohai in an average of 22

    m of water. The project consists of three comprehensive adjust-

    ment projects, namely Bozhong 28-2S oil fields, Bozhong 34-1

    oil field, and Bozhong 34-2/4 oil field.

    The main production facilities of the project include 6 off-

    shore platforms and 79 producing wells. There are currently 39

    wells producing 22,000 b/d of crude oil.

    The adjustment project is expected to reach its designed

    peak production of 30,000 b/d of oil in 2016.

    The Bozhong 28/34 are independent oil fields in which

    CNOOC holds 100% interest and acts as operator.

    BHP, Woodside move to decommission StybarrowBHP Billiton Ltd. and Woodside Petroleum Ltd. have started

    preparations for decommissioning of the Stybarrow group

    of oil fields in production licence WA-32-L offshore Western

    Australia towards yearend. The field has been producing for

    8 years.

    As operator, BHP has lodged the first documents to the Na-

    tional Petroleum Safety and Environmental Management Au-

    thority to begin the abandonment process.

    The Stybarrow project, including Stybarrow and Eskdale fields,

    was originally flagged to produce 60-90 million bbl over 10 years.

    At the end of this year, 60 million bbl will have been produced.

    The fields were found in 2003 in 825 m of water and devel-

    oped using the Stybarrow Venture floating production, storage,

    and offloading vessel, which came on stream in 2007.

    The facility comprises 6 production wells, 2 gas-lift wells,

    1 gas-injection well, and 2 water-injection wells. Development

    costs were $760 million.

    The MODEC Inc.-operated FPSO, leased for an initial 10-

    year period with the option of 1-year extensions for a further 5

    years, will have its contract terminated early.

    Tullow provides update on Jubilee, other fieldsTullow Oil PLC reported that gross production for the Jubilee

    field offshore Ghana averaged 105,000 b/d in this years first

    half, up from 102,000 b/d in 2014 (OGJ Online, Jan. 15, 2015).

    Tullow said natural gas exports from Jubilee have averaged

    80 MMscfd since final commissioning of the onshore gas pro-

    cessing facility was completed in March.

    In Kenya, appraisal drilling and extended well tests are

    continuing in South Lokichar Blocks 10BB and 13T. Tullow is

    preparing for water injection tests into each of five completed

    reservoir zones in Amosing-2A (OGJ Online, Mar. 11, 2015).

    Tullow is also preparing for extended well tests in Ngamia

    field. Multizone completions have been installed in the Ngam-

    ia-8, Ngamia-3, and Ngamia-6 wells.

    The Ngamia-9 appraisal well was spudded in June by the PR

    Marriott 46 rig, which is also scheduled to drill the Twiga-3 and

    Amosing-5 appraisal wells.

    A basin-testing exploration well is planned this quarter at

    Cheptuket on Block 12A.

    PROCESSING QUICK TA K ES

    SIBUR plans MTBE expansion at TogliattikauchukRussian conglomerate OAO SIBUR Holding, Moscow, has

    started preparatory work for a project designed to expand pro-

    duction capacity for methyl tertiary butyl ether (MTBE) at its

    Togliattikauchuk petrochemical complex in Togliatti in Russias

    Samara region.

    The project, which involves construction of a new unit, will

    increase MTBE production capacity at the plant to 135,000

    tonnes/year from its current 75,000 tpy, SIBUR said.

    As part of the expansion, SIBUR will install 58 pieces of

    equipment, as well as upgrade existing equipment, with auto-

    mated process-control systems to improve efficiency and safety

    at the site, the company said.

    Feedstock for Togliattis expanded MTBE production will

    come from the plants own output of isobutaneisobutylene

    fraction, which SIBUR said it will boost to 130,000 tpy from its

    current 105,000 tpy.

    Preparation of the construction site is under way, as is develop-

    ment of project documents for an upcoming tender the company

    plans to issue for the purchase long-lead equipment, SIBUR said.

    The expansion project comes as part of SIBURs company-

    wide initiative to expand its MTBE production capacities to

    help meet industry demand in regional fuel markets for octane-

    enhancing additives, the petrochemical producer said.

    SIBUR disclosed no details regarding when the expanded

    plant would be commissioned.

    Ingleside lets contract for ethylene storageIngleside Ethylene LLC, a 50-50 joint venture of Occidental

    Chemical Corp. (OxyChem) and Mexichem SAB de CV (Mex-

    ichem), has let a contract to CB&I, Houston, to provide engi-

    neering, procurement, and construction for an ethylene storage

    complex in Markham, Tex. The complex will be built as part

    of the JVs ethylene cracker project now under way at nearby

    Ingleside, Tex. (OGJ Online, Dec. 17, 2014).

    CB&Is scope of work under the EPC contract will consist

    of surface installations and includes compression, dehydration,

    metering, and associated pipe fabrication at the salt cavern stor-

    age site, the service provider said.

    CB&I valued the contract at about $115 million.

    This latest contract follows OxyChems previous letting of a

    $1-billion EPC contract to CB&I for the cracker project, includ-

    ing associated utilities and offsites (OGJ Online, Dec. 2, 2013).

    First announced in November 2013 (OGJ Online, Nov. 1,

    2013), the 1.2 billion-lb/year ethane cracker will provide Oxy-

    Chem with an ongoing source of ethylene for manufacturing

    vinyl chloride monomer, which Mexichem will use to produced

    polyvinyl chloride resin and PVC piping systems.

    The cracker, which will process ethane feedstocks from

    150706OGJ_14 14 7/2/15 12:12 PM

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    150706OGJ_15 15 6/30/15 1:48 PM

  • 16 Oil & Gas Journal | July 6, 2015

    growing US shale gas supplies, received final greenhouse gas

    prevention of significant deterioration construction permits

    from the US Environmental Protection Agency last year (OGJ

    Online, May 29, 2014).

    CB&I said it also will provide licensing for ethylene technol-

    ogy to be used at the project, including five short-residence-

    time cracking heaters.

    Additionally, the project will use cracking furnaces equipped

    with selective catalytic reduction technology to control emis-

    sions of nitrogen oxides, according to EPA.

    At a total cost of about $1.5 billion, the ethylene project, which

    began construction in late 2014, is scheduled for start-up in 2017.

    Petronas lets contract for RAPID complexMalaysias state-run Petronas, through a contractor, has let a con-

    tract to Industrial Cooling Solutions Inc. (ICS), Lakewood, Colo.,

    to build a 28-cell cooling tower for its proposed refinery and petro-

    chemical integrated development (RAPID) complex at Pengerang

    in southeastern Johor, Malaysia (OGJ Online, May 13, 2011).

    ICS will design and construct the multimillion-dollar cooling

    tower to be used at RAPIDs steam cracker complex, ICS said.

    A precise value of the contract was not disclosed.

    With a planned capacity of 300,000 b/d, the proposed

    RAPID refinery will produce naphtha and liquid petroleum gas

    feedstock for the petrochemical complex, as well as gasoline

    and diesel meeting European specifications to help address

    Asia-Pacifics growing need for petroleum and petrochemical

    products (OGJ Online, Mar. 27, 2014).

    The refinery and petrochemical complex will have a com-

    bined capacity to produce 7.7 million tonnes/year of various

    grades of products, including differentiated and specialty

    chemicals products (OGJ Online, Oct. 23, 2014).

    Most recently, Petronas said it currently estimates RAPID

    will cost $16 billion, while associated installations for the proj-

    ect will involve an additional investment of about $11 billion

    (OGJ Online, July 25, 2014). RAPID is scheduled for start-up in

    early 2019, according to ICS.

    TRANSPORTATION QUICK TA K ES

    Shell unit takes interest in Poseidon oil pipelineShell Midstream Partners LP has completed its acquisition of

    36% equity interest in Poseidon Oil Pipeline Co. LLC from

    Equilon Enterprises LLC, a subsidiary of Shell Oil Products US,

    for $350 million.

    Poseidon is a proprietary 367-mile offshore crude oil pipeline

    with 350,000 b/d capacity transporting to Texas and Louisiana. It

    includes ownership of strategic platform South Marsh Island 205.

    This marks the second acquisition by Shell Midstream Part-

    ners following the initial public offering, said Peggy Montana,

    general partner board member (OGJ Online, Apr. 30, 2015).

    She said Poseidon is a key corridor pipeline for producers

    with close proximity to developments in the central and west-

    ern Gulf of Mexico.

    Woodside-led Browse FLNG venture enters FEED phaseThe Woodside Petroleum Ltd.-led Browse LNG joint ven-

    ture has entered the front-end engineering and design

    phase for a f loating LNG (FLNG) development of Torosa,

    Brecknock, and Calliance natural gas fields offshore West-

    ern Australia.

    The FEED process will finalize the costs and provide techni-

    cal definition for the proposed development leading to a sched-

    uled final investment decision in about 12 months.

    Woodside Chief Executive Officer Peter Coleman says the

    decision to enter FEED is a significant step towards developing

    what he calls a world-class resource.

    Two of the fields in the Browse basinTorosa and Brec-

    knockwere discovered in the 1970s. Calliance field was

    discovered in 2000. They have been in limbo for decades, de-

    spite numerous development studies, the penultimate of which

    involved plans for an onshore processing plant at James Price

    Point on the Kimberley coast.

    The latest FLNG concept comprises three FLNG vessels

    using Shells technology, pioneeredbut yet to be brought

    on streamat Prelude field, also in the Browse basin. Torosa,

    Brecknock, and Calliance have a combined 2C contingent re-

    source of 15.4 tcf of gas and 453 million bbl of condensate.

    This is the last undeveloped mega-LNG project left in Western

    Australia once Gorgon-Jansz, Wheatstone, Ichthys, and Prelude

    have been completed.

    Retention lease renewal offers covering the three fields have

    been offered by the government and accepted by the Woodside

    group following last weeks deal with the Western Australia

    government to reserve the equivalent of 15% of the LNG pro-

    duced from the two thirds of Torosa field that lies within state

    waters for domestic use.

    Woodside says the Browse LNG volumes for the remainder

    of the resource will be marketed on an equity basis from its

    growing LNG portfolio.

    Construction starts on Russia-China gas lineConstruction has begun on the Chinese section of the Russia-

    China Gas Pipeline, according to China National Petroleum Corp.

    The June 29 commencement ceremony took place at the

    construction site in Heihe, Heilongjiang province, and by video

    link to Beijing and Moscow. The Chinese section will extend

    from Heihe to Shanghai.

    CNPC and OAO Gazprom signed a 30-year gas purchase

    and sales contract for the eastern route pipeline in May 2014

    (OGJ Online, May 21, 2014).

    Construction of the Russian section, known as Power of Si-

    beria, began in September (OGJ Online, Oct. 14, 2014).

    Gazprom will start transporting gas to China via the eastern

    route in 2018. Gas delivery will gradually increase to 38 billion

    cu m/year.

    CNPC and Gazprom also have signed a heads of agreement

    for gas supply via a western route from Western Siberia to Chi-

    na (OGJ Online, May 11, 2015).

    150706OGJ_16 16 7/2/15 12:12 PM

  • 150706OGJ_17 17 6/30/15 2:57 PM

  • 18 Oil & Gas Journal | July 6, 2015

    2015 EVENT CALENDAR

    ipaa.org/meetings-

    events/ 5-7.

    KIOGE 2015 Kazakh-

    stan International Oil

    & Gas Conference &

    Exhibition, Almaty,

    Kazakhstan, web site:

    www.kioge.kz/en/ 6-9.

    International Confer-

    ence on Theoretical &

    Experimental Studies

    of Hydrocarbons

    (ICTESH), Athens,

    web site: www.ictesh.

    org 6-9.

    3P Arctic Polar Petro-

    leum Potential Confer-

    ence & Exhibition, St.

    Petersburg, web site:

    www.3parctic.com

    6-9.

    Equatorial Guinea Oil

    & Gas Conference &

    Exhibition, Malabo,

    Equatorial Guinea, web

    site: www.cwceg.com

    7-9.

    International Oil & Gas

    Expo, Jakarta, web site:

    www.pamerindo.com/

    events/6 7-10.

    PIRA New York Annual

    Conference, New York

    City, web site: www.

    pira.com 8-9.

    SPE Kuwait Oil & Gas

    Show & Conference,

    Mishref, web site:

    kogs2015.com 11-14.

    Gas-to-Liquids, Lon-

    don, web site: www.

    gas-to-liquids.co.uk/ogj

    12-13.

    Enterprise Mobility

    Nigeria Oil & Gas 2015,

    Lagos, web site: nog.

    cwcenterprisemobility.

    com 12-14.

    IADC Advanced Rig

    Technology Conference

    & Exhibition, Amster-

    dam, web site: www.

    Rice Global Engineering

    & Construction Annual

    Forum XVIII, Houston,

    web site: www.forum.

    rice.edu/ 21-22.

    Mozambique Gas

    Summit, Maputo,

    Mozambique, web site:

    www.mozambique-gas-

    summit.com 21-24.

    Upstream & Down-

    stream Oil & Gas Ex-

    hibition & Conference,

    Abuja, Nigeria, web

    site: www.oilandgasex-

    pos.com/ 22-24.

    Rio Pipeline Confer-

    ence & Exhibition, Rio

    de Janeiro, web site:

    www.ibp.org.br/ 22-24.

    LNG Global Congress

    Conference (LNGgc),

    London, web site:

    www.lnggc.com 22-25.

    Global Oil & Gas Black

    Sea & Mediterranean

    Exhibition & Confer-

    ence, Athens, web site:

    www.oilgas-events.

    com/Global-Oil-Gas-

    Black-Sea-Mediterra-

    nean 23-24.

    IADC Drilling HSE&T

    Europe Conference &

    Exhibition, Amsterdam,

    web site: www.iadc.org/

    event/euro-hset-2015

    23-24.

    IOGCC Annual Confer-

    ence, Oklahoma City,

    web site: iogcc.pub-

    lishpath.com/events

    28-30.

    SPE Annual Techni-

    cal Conference &

    Exhibition, Houston,

    web site: www.spe.org/

    atce/2015/ 28-30.

    OCTOBER 2015

    OGIS San Francisco,

    San Francisco, www.

    site: www.aapg.org/

    events/conferences/ice/

    details/articleid/5664/

    aapg-2015-internation-

    alconference-exhibition

    13-16.

    SPE North Africa

    Technical Conference

    & Exhibition, Cairo,

    web site: www.spe.

    org/events/natc/2015/

    14-16.

    SPE Reservoir Charac-

    terization & Simula-

    tion Conference &

    Exhibition, Abu Dhabi,

    web site: www.spe.

    org/events/rcsc/2015/

    14-16.

    Middle East Process

    Engineering Confer-

    ence & Exhibition

    (MEPEC), Manama,

    Bahrain, web site:

    www.mepec.org/

    14-17.

    SPE Middle East Intel-

    ligent Oil & Gas Confer-

    ence & Exhibition,

    Abu Dhabi, web site:

    www.spe.org/events/

    ieme/2015/ 15-16.

    Oil Sands Trade Show

    & Conference, Fort

    McMurray, Alta., web

    site: www.oilsand-

    stradeshow.com

    15-16.

    Pipeline Week, The

    Woodlands, Tex., web

    site: www.pipeline-

    week.com/ 15-17.

    IADC Asset Integrity &

    Reliability Conference

    & Exhibition, Houston,

    web site: www.iadc.org/

    event/2015-iadc-asset-

    integrity-reliability-

    conference-exhibition

    16-17.

    GPA Europe Annual-

    Conference, Florence,

    web site: www.gpaeu-

    rope.com 16-18.

    Salaam, Tanzania, web

    site: www.expogr.com/

    tanzania/oilgas/ 27-29.

    SEPTEMBER 2015

    Mexico Upstream Sum-

    mit, Mexico City, web

    site: www.cwcmexicoo-

    ilgas.com 1-3.

    SPE Liquids-Rich

    Basins Confer-

    enceNorth America,

    Midland, Tex., web site:

    www.spe.org/events/

    lrbc/2015/ 2-3.

    APPEA Health, Safety

    & Environment Confer-

    ence, Perth, web site:

    www.appeahseconfer-

    ence.com.au/ 7-9.

    European Associa-

    tion of Geoscientists &

    Engineers Petroleum

    Geostatistics, Biar-

    ritz, France web site:

    www.eage.org/event/

    index.php?eventid=

    1155&Opendivs=s3

    7-11.

    Africa Oil & Gas EXPO,

    Johannesburg, web

    site: www.africaoilexpo.

    com/ 8-9.

    World LNG Series: Asia

    Pacific Summit, Singa-

    pore, web site: www.

    asiapacific.cwclng.

    com/ 8-11.

    SPE Offshore Europe

    Conference & Exhibi-

    tion, Aberdeen, web

    site: www.offshoreeu-

    rope.co.uk/ 8-11.

    India Oil & Gas Review

    Summit & International

    Exhibition, Mumbai,

    web site: www.oilgas-

    events.com/india-oil-

    gas 9-10.

    AAPG International

    Conference & Exhibi-

    tion, Melbourne, web

    & Exhibition, Lagos,

    web site: www.spe.org/

    events/calendar/ 4-6.

    CCPS Latin American

    Conference on Process

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    web site: www.aiche.

    org/ccps/conferences/

    ccps latin-american-

    conference-on-pro-

    cess-safety/2015

    10-12.

    SPE Asia Pacific

    Enhanced Oil Recovery

    Conference, Kuala

    Lumpur, www.spe.

    org/events/eorc/2015/

    11-13.

    EnerComs Oil & Gas

    Conference, Den-

    ver, web site: www.

    enercominc.com/the-

    oil-and-gas-conference

    16-20.

    NAPE, Houston, web

    site: napeexpo.com/

    19-20.

    IADC/SPE Asia Pacific

    Drilling Technology

    Conference, Singapore,

    web site: www.spe.

    org/events/apdt/2016/

    22-24.

    Rocky Mountain En-

    ergy Summit, Denver,

    web site: rmesummit.

    org/wp 24-27.

    IADC Well Control Con-

    ference of the Americas

    & Exhibition, Galveston,

    Tex., web site: www.

    iadc.org/event/2015-

    iadc-well-control-

    conference-americas-

    exhibition 25-26.

    ACIPET International

    Petroleum Confer-

    ence & Exhibition,

    Bogota, web site: www.

    congresoacipet.com/

    en/ 26-28.

    Tanzania Oil & Gas

    Expo 2015, Dar-es-

    Denotes new listing or

    a change in previously

    published information.

    JULY 2015

    Gabon Local Content

    Summit, Libreville,

    Gabon, web site: www.

    gabon-local-content.

    com 6-8.

    SPE Latin American

    & Caribbean Health,

    Safety, Environment &

    Sustainability Confer-

    ence, Bogota, web site:

    www.spe.org/events/

    lahs/2015/ 7-8.

    API Offshore Safe Lift-

    ing Conference & Expo,

    Houston, web site:

    www.api.org/events-

    andtraining/calendar-

    ofevents/2015/offshore

    14-15.

    International Biotech-

    nology, Chemical Engi-

    neering & Life Science

    Conference, Hokkaido,

    Japan, web site: ibcelc.

    org 20-22.

    SPE/AAPG/SEG

    Unconventional

    Resources Technology

    Conference (URTeC),

    San Antonio, web site:

    urtec.org/2015 20-22.

    Asset Management

    & Data Analytics for

    Upstream Oil & Gas,

    Houston, web site:

    www.data-asset-man-

    agement-upstream.

    com/ 21-22.

    South Texas Oilfield

    Expo, San Antonio, web

    site: www.southtexasoil-

    fieldexpo.com 29-30.

    AUGUST 2015

    SPE Nigeria Annual In-

    ternational Conference

    150706OGJ_18 18 6/30/15 2:57 PM

  • Available data for review or purchase can be obtained from the Egyptian Natural Gas Holding Company (EGAS) premises:

    85 El Nasr Road, 1st District, Nasr City, Cairo Egypt, P.O. 11371The purchase of data package for each block is considered a requirement to bid for that block. Also the basic data, coordinates, procedures, terms and conditions and the Model Agreement for participation in this Bid Round can be obtained through the Egyptian Natural Gas Holding Company (EGAS) website : www.egas.com.eg

    The closing date will be on Thursday, 30th July, 2015 before 12:00 P.M (Cairo local time)For more information, please contact:

    Vice Chairman for Agreements and Exploration The Egyptian Natural Gas Holding Company (EGAS) Tel.: +202 24055830/ 31 Fax: +202 24055832

    TTTTTThhhhheeeee AAAAAArrrrraaaaabbbbb RRRRRReeeeepppppuuuuubbbbbllllliiiiiccccc oooooffffff EEEEEEgggggyyyyyypppppttttttTTTTTTTTTTTThhhhhhhhhhhheeeeeeeeeeee AAAAAAAAAAAArrrrrrrrrrrraaaaaaaaaaaabbbbbbbbbbbb RRRRRRRRRRRReeeeeeeeeeeeppppppppppppuuuuuuuuuuuubbbbbbbbbbbblllllllllllliiiiiiiiiiiicccccccccccc ooooooooooooffffffffffff EEEEEEEEEEEEggggggggggggyyyyyyyyyyyypppppppppppptttttttttttt

    TTTTThhhhheeeee EEEEEgggggyyyyyppppptttttiiiiaaaaannnnn NNNNNaaaaatttttuuuuurrrrraaaaalllll GGGGGaaaaasssss HHHHHooooollllldddddiiiiinnnnnggggg CCCCCooooommmmmpppppaaaaannnnnyyyyy TTTTTTTTTTTTThhhhhhhhhhhhheeeeeeeeeeeee EEEEEEEEEEEEEgggggggggggggyyyyyyyyyyyyyppppppppppppptttttttttttttiiiiiiiiiiiiiaaaaaaaaaaaaannnnnnnnnnnnn NNNNNNNNNNNNNaaaaaaaaaaaaatttttttttttttuuuuuuuuuuuuurrrrrrrrrrrrraaaaaaaaaaaaallllllllllll GGGGGGGGGGGGGaaaaaaaaaaaaasssssssssssss HHHHHHHHHHHHHooooooooooooollllllllllllldddddddddddddiiiiiiiiiiiiinnnnnnnnnnnnnggggggggggggg CCCCCCCCCCCCCooooooooooooommmmmmmmmmmmmpppppppppppppaaaaaaaaaaaaannnnnnnnnnnnnyyyyyyyyyyyyy

    EGAS

    Announcement For

    E-mail: [email protected]

    The Egyptian Natural Gas Holding Company (EGAS) announces extending the closing date of its International bid round of 2015 ( 8 offshore blocks ) for two months.And adds (4) new blocks ( blocks 12 , 13, 14 and 15), so the total blocks will be (12) offshore blocks in the Mediterranean Sea as shown in the following map , and in accordance with the Production Sharing Agreements (PSA) Model applicable in The Arab Republic of Egypt.

    Ministry of

    Petroleum and

    Mineral Resources

    Extending the International Bid Round of 2015 and The Addition of New Blocks

    International Bid Round of 2015

    150706OGJ_19 19 6/30/15 1:48 PM

  • 20 Oil & Gas Journal | July 6, 2015

    2015 EVENT CALENDAR

    iadc.org/event/rig-tech-

    nology-2015 13-14.

    Offshore Energy Exhi-

    bition & Conference,

    Amsterdam, web site:

    www.offshore-energy.

    biz 13-14.

    Deep Offshore Tech-

    nology International,

    The Woodlands, Tex.,

    web site: www.deepoff-

    shoretechnology.com/

    index 13-15.

    SPE Eastern Regional

    Meeting, Morgan-

    town, WVa., web site:

    nwvspe.org/regional-

    meeting.html?_ga=1.8

    4416921.107275622.1

    429302557 13-15.

    CEE & Turkey Refining

    & Petrochemicals,

    Budapest, web site:

    www.wraconferences.

    com/event/cee-and-

    turkey-refining-and-

    petrochemicals 13-15.

    SEG International Exposi-

    tion & Annual Meeting,

    New Orleans, web site:

    www.seg.org/web/seg-

    new-orleans-2015/ 18-23.

    API Fall Committee on

    Petroleum Measure-

    ment Standards

    Meeting, Atlanta, web

    site: www.api.org/

    eventsand-training/cal-

    endarof-events/2015/

    fallcopm 19-23.

    SPE Unconventional

    Resource Conference,

    Calgary, web site:

    www.spe.org/events/

    urc/2015/ 20-22.

    SPE/IATMI Asia Pacific

    Oil & Gas Conference &

    Exhibition (APOGCE),

    Bali, web site: www.

    spe.org/events/

    apogce/2015/ 20-22.

    PETROTECH Interna-

    tional Oil & Gas Confer-

    ence, New Delhi, web

    site: www.zapaday.

    com/event/67326/5/

    Petrotech.html 25-28.

    SPE Russian Petroleum

    Technical Conference,

    Moscow, web site:

    www.spe.org/events/

    rpc/2015/ 26-28.

    API Tank, Valves, Pip-

    ing & Pumps Confer-

    ence & Expo, Las Ve-

    gas, web site: api.org/

    events-andtraining/cal-

    endar-ofevents/2015/

    tvp 26-29.

    LAGCOE Louisiana

    Gulf Coast Oil Exposi-

    tion, Lafayette, web

    site: www.lagcoe.com

    27-29.

    Offshore Technology

    Conference Brazil,

    Rio de Janeiro, web

    site: www.otcbrasil.org

    27-29.

    Gastech Conference

    & Exhibition, Singa-

    pore, web site: www.

    gastechsingapore.com/

    27-30.

    Asian Downstream

    Week, Singapore, web

    site: www.downstream-

    asia.com 28-29.

    NOVEMBER 2015

    Basra Oil, Gas & Infra-

    structure Conference

    2015, Istanbul, web

    site: www.cwcbasraoil-

    gas.com 2-3.

    carbon-management-

    technology-confer-

    ence-2015-cmtc-2015

    17-19.

    Turkmenistan Inter-

    national Oil & Gas

    Conference (OGT),

    Ashgabat, web site:

    www.oilgas-events.

    com/OGT 17-19.

    Petroleum, Refining

    & Environmental Moni-

    toring Technologies

    Conference Exhibition

    & Seminars (PEFTEC),

    Antwerp, web site:

    www.peftec.com

    18-19.

    IADC Critical Issues

    Asia Pacific Confer-

    ence & Exhibition,

    Singapore, web site:

    www.iadc.org/event/

    asia-pacific-2015

    18-19.

    SPE Latin America &

    Caribbean Petroleum

    Engineering Confer-

    ence (LACPEC), Quito,

    Ecuador, web site:

    www.spe.org/events/

    lacpec/2015/en/

    18-20.

    NAPE, Denver, web

    site: napeexpo.com/

    9-10.

    SPE Asia Pacific

    Unconventional Re-

    sources Conference &

    Exhibition, Brisbane,

    web site: www.spe.org/

    events/urce/2015/ 9-11.

    Abu Dhabi International

    Petroleum Exhibition &

    Conference (ADIPEC),

    Abu Dhabi, web site:

    www.adipec.com 9-12.

    API Cybersecurity

    Conference & Expo,

    Houston, web site:

    www.api.org/events-

    and-training/calendar-

    of-events/2015/cyber-

    security 10-11.

    Mangystau Regional

    Oil, Gas & Infrastruc-

    ture Exhibition, Aktau,

    Kazakhstan, web site:

    mangystau.oil-gas.kz/

    en/ 10-12.

    Carbon Management

    Technology Confer-

    ence, Sugar Land, Tex.,

    web site: fscarbonman-

    agement.org/events/

    OPITO Safety & Com-

    petence Conference,

    Abu Dhabi, web site:

    www.opito-oscc.com 3.

    Deepwater Operations

    Conference & Exhibi-

    tion, Galveston, Tex.,

    web site: www.deep-

    wateroperations.com/

    index 3-5.

    SPE Annual Caspian

    Technical Conference

    & Exhibition, Baku,

    web site: www.spe.org/

    events/ctce/2015/ 4-6.

    IADC Annual General

    Meeting, San Antonio,

    web site: www.iadc.org/

    event/2015-iadc-annu-

    al-general-meeting 4-6.

    International Oil & Gas

    Exploration, Produc-

    tion & Refining Expo,

    Jakarta, web site:

    oilgasindonesia.com/

    about/about-oil-gasin-

    donesia/ 4-7.

    AIChE Annual Meeting,

    Salt Lake City, web site:

    www.aiche.org/confer-

    ences/aiche-annual-

    meeting/2015 8-12.

    150706OGJ_20 20 6/30/15 2:57 PM

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    150706OGJ_21 21 7/1/15 2:47 PM

  • JOURNALLY SPEAKING

    22 Oil & Gas Journal | July 6, 2015

    BOB TIPPEEEditor

    Big data, more oilDevelopment of unconventional resources soon will enter a phase promising to lower the cost of produc-ing oil from shale toward levels normally associated with Saudi Arabia.

    That phase, according to Mark P. Mills, senior fellow at the Manhattan Institute, will use big-data analytics to amplify benefits of technologies now allowing operators to produce hydrocarbons from low-permeability reservoirs.

    Big-data analytics can already optimize the subsurface mapping of the best drilling locations; indicate how and where to steer the drillbit; deter-mine, section by section, the best way to stimulate the shale; and ensure precise truck and rail opera-tions, Mills writes in a May report. Mobile com-puting, using app-centric analytics, can increase uptime, reduce maintenance, improve workforce productivity, reduce errors and rework, and enable low-cost compliance.

    Industry not aloneIn development of these abilities, of course, the indus-try that produces oil and gas from shale isnt alone. Other businesses are learning to profit from the bur-geoning availability and collection of data from ma-chines, services, and business operations, much of which remains disparate and disorderly, according to Mills, who also is chief executive officer of Digi-tal Power Group and faculty fellow at Northwestern Universitys McCormick School of Engineering and Applied Science. The use of big-data analytics offers nearly all industries the potential for unprecedented insight, efficiency, and economic value.

    For shale, the potential for improvement is es-pecially intriguing.

    What distinguishes shale, according to Mills, is its unique combination of youth, the diversity and scale of data associated with its operations, and the variety of environments in which opera-tions occur.

    And unproduced oil expands the potential.Citing data from Schlumberger and Bernstein

    Research, Mills notes that each long horizontal well drilled into shale is typically fractured in 24-36 stages and that only one fourth to one third of those stages are productive. With current technol-ogy, about 20% of frac stages account for 80% of the output.

    Bringing analytics to bear on the complexities

    of shale geology, geophysics, stimulation, and op-erations to optimize the production process would potentially double the number of effective stages, thereby doubling output per well and cutting the cost of oil in half, Mills says.

    He calculates that a doubling of well productivity would cut break-even costs of most US shale plays to $5-25/bbl and concludes, Americas shale fields would then be competitive in volume and in price with Saudi Arabias vaunted ultralow-cost oil fields.

    Mills expects adoption of big-data analytics to occur quickly and production from shale to be buoyant in the meantime.

    Although the rig count has plummeted, pro-ductivity gains evident before last years oil-price plunge, supplemented by withdrawals from hefty inventories, will sustain output. Returning to more-normal stock levels, Mills reckons, could mean nearly 500,000 b/d of oil from storage.

    Supply also will come from wells awaiting com-pletion, likely to total 5,000 by yearend. According to Mills, those wells could swiftly add 2-3 million b/d of oil to US supply.

    Responding to the price drop, meanwhile, op-erators will progress from the repetitive, factory-drilling approach many of them employedoften sacrificing innovation and efficiencywhile prices were above $100/bbl to a high-grading strategy re-quiring analysis not only to modify techniques for each well but also to use the best tools and tech-niques in only the best parts of the shale.

    This step, Mills says, will disprove conventional supply forecasts. Starting from historical averages based on the many low-performing wells drilled during the price boom, he explains, those predic-tions are too low.

    Shale 2.0While the high-grading strategy, leveraged by new technologies, will affect supply powerfully, however, it remains just a precursor to what Mills calls Shale 2.0, the emergence of which comes not from indi-vidual technologies or digital connectivity but from the use of big data for radically better asset optimi-zation and operations.

    Someday, bytes thus might become a central met-ric in Oil & Gas Journals Midyear Forecast. This years report, beginning on p. 26, sticks with barrels, of which the market already has way too many.

    150706OGJ_22 22 7/2/15 11:29 AM

  • They say American-Madeused to mean something.

    We say it still does.

    To learn more about Ariel Compressors, visit www.arielcorp.com/products

    For 50 years Ariel has worked diligently to cultivate and strengthen business

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    150706OGJ_23 23 6/30/15 1:55 PM

  • EDITORIAL

    24 Oil & Gas Journal | July 6, 2015

    Consideration of cost in regulatory decision-mak-ing should be a simple matter of common sense. At this moment in history, though, bureaucratic atten-tion to economic consequence requires a ruling by the Supreme Court.

    With a margin of just one vote, the high court upheld challenges to the Environmental Pro-tection Agencys Mercury Air Toxics Standard (MATS) on grounds of insufficient accounting for cost. The decision, disclosed on June 29, is intel-lectually satisfying. But thats about all.

    A broader problemThe court didnt reject the rule; it only said EPA should have considered costs when it determined, to satisfy the Clean Air Act, that applying MATS regulation to power plants was appropriate and necessary. The court also didnt address the broad-er problem: the agencys autonomous, multifront campaign against hydrocarbon energy, starting with coal.

    There, the MATS already has done its work. Its requirements, along with those of the Cross State Air Pollution Rule and pending Clean Power Program, have raised the costs of generating elec-tricity from coal punishingly. During 3-plus years of MATS judicial review, power companies have been retiring coal-fired plants.

    Offering modest comfort is the prospect that the ruling will make EPA less willing to ignore cost in other initiatives. Some observers expect the agency be more careful about cost in its final Clean Power Plan, covering emissions of greenhouse gases from existing power plants.

    But EPA has earned profound suspicion for its analyses of costs and benefits. In the regulatory im-pact analysis accompanying the MATS, the agency estimated costs to power plants at $9 billion/year and benefits of lowering emissions of covered sub-stances, to the extent it could assess them, at only $4-6 million/year. Yet what EPA called ancillary benefitsmainly reductions in emissions of sul-fur dioxide and particulatescame to an estimated $37-90 billion/year.

    The higher benefit numbers made regulation seem advantageous. But they were based mainly on estimates of premature deaths averted by the regulation. When policy-makers pretend to be

    able to quantify gruesome ambiguity, anything can happen. In the MATS analysis, it did. Inde-pendent analysts have challenged EPAs estimates, saying the agency toughened particulate stan-dards and overestimated prevention of premature death to inflate its benefit estimates. Costs then looked proportionately lower. No matter. EPA saw no reason to incorporate estimates of the regula-tory impact analysis in its appropriate-and-neces-sary finding.

    For EPA, statistical misdirection was nothing new. Last year the agency skewed the cosmetics of its Clean Power Program by pairing global estimates of the climate benefits with cost assessments confined to the US. The ratio thus exaggerated the apparent desirability of the policy. And, as usual, the agencys cost estimates fell far below those of the targeted industry. As it did with the MATS proposal, more-over, EPA magnified the supposed health gains of its proposal to cut emissions of greenhouse gases by including benefitssuch as preventing asthma attacks and more of those premature deathsby cutting emissions of other substances.

    So if the EPA repairs its MATS proposal with a court-ordered cost estimate, why should anyone believe it? Its assessments of costs and benefits amount to propaganda serving a grab for control of a large and important part of the economy.

    Oil, gas affectedThe oil and gas industry should understand that whatever benefits it receives from EPAs anticoal rampage, mainly elevated demand for natural gas in power generation, are transitory. The agencys expansionism, motivated by President Barack Obamas late-term grandstanding on the climate, threatens all forms of fossil energy with overregula-tion and economic restriction.

    So far, the Supreme Court hasnt addressed the main problemthe making of energy law by the Executive Branch. Americans havent voted for an overhaul of energy production and consump-tion. EPA is just pressing ahead and encounter-ing alarmingly little resistance from the Judicial Branch. When the costs hit energy bills, however, Americans will demand their say. If courts wont stop a stampeding agency, economicsexpressed politicallyeventually will.

    Considering cost

    150706OGJ_24 24 7/2/15 11:29 AM

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  • 26 Oil & Gas Journal | July 6, 2015

    GENERAL INTEREST

    Conglin Xu

    Senior Editor-Economics

    Laura Bell

    Statistics Editor

    A year since crude prices plunged, over-supply lingers, evident in a record-setting stock build, as produc-tion by members of the Organization of Petro-leum Exporting Coun-tries remains far above the group target, squeezing high-cost producers elsewhere.

    This oversupply, however, is see-ing signs of easing, stemming from rising global oil demand growth and the slowdown in non-OPEC supply, notably in the US.

    Global oil demand, after bottom-ing out to a 5-year low in second-quarter 2014, has steadily increased, supported by lower oil prices, cold weather in Europe, and additional economic gains. Demand from the Organization for Economic Coopera-tion and Development, after a long-standing decline, has started to show a rising trend.

    A drop in drilling activity is grad-ually starting to take its toll on US production, and the growth of non-OPEC supply is expected to slow.

    In the US natural gas market, supply growth will exceed the level needed to balance the market, lead-ing to hefty inventories and lower prices.

    Global oil glut continuesdespite increasing demand

    SPECIALREPORT

    WORLDWIDE SUPPLY AND DEMAND Table 1

    2014 2015 1st 2nd 3rd 4th 1st 2nd 3rd 4th Qtr. Year Qtr. Year Million b/d

    DemandOECDNorth America 23 9 23 6 24 2 24 5 24 0 24 2 23 8 24 3 24 5 24 2 Europe 13 0 13 4 13 9 13 6 13 5 13 6 13 5 13 9 13 6 13 7 Asia/Pacifc 8 9 7 7 7 7 8 3 8 1 8 7 7 8 7 9 8 3 8 2 Total OECD 45.7 44.7 45.8 46.3 45.6 46.5 45.1 46.1 46.5 46.0

    Non-OECD FSU 4 6 4 8 5 1 5 0 4 9 4 6 4 7 4 8 4 8 4 7 Europe 0 6 0 7 0 7 0 7 0 7 0 7 0 7 0 7 0 7 0 7 China 10 2 10 4 10 4 10 8 10 4 10 5 10 8 10 7 11 0 10 8 Other Asia 12 2 12 1 11 8 12 3 12 1 12 5 12 6 12 3 12 8 12 6 Latin America 6 6 6 8 6 9 6 9 6 8 6 7 6 8 7 0 7 0 6 9 Middle East 7 8 8 2 8 6 8 0 8 1 7 9 8 3 8 7 8 1 8 3 Africa 3 9 3 9 3 8 3 9 3 9 4 0 4 1 4 0 4 1 4 1 Total non-OECD 46.0 46.9 47.3 47.5 46.9 47.0 47.9 48.3 48.5 47.9

    Total demand 91.7 91.6 93.1 93.8 92.6 93.5 93.1 94.3 95.0 94.0

    SupplyOECD North America 18 2 18 8 19 1 19 7 19 0 19 9 19 5 19 3 19 5 19 6 Europe 3 5 3 2 3 1 3 5 3 3 3 4 3 3 3 2 3 4 3 3 Asia 0 5 0 5 0 5 0 5 0 5 0 4 0 5 0 5 0 5 0 5 Total OECD 22.2 22.6 22.8 23.7 22.8 23.8 23.3 23.0 23.5 23.4

    Non-OECDFSU 13 9 13 8 13 8 13 9 13 9 14 0 14 0 13 8 13 8 13 9 Europe 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 China 4 2 4 2 4 2 4 3 4 2 4 3 4 3 4 2 4 2 4 3 Other Asia 3 5 3 5 3 4 3 6 3 5 3 7 3 7 3 7 3 8 3 7 Latin America 4 2 4 3 4 5 4 6 4 4 4 6 4 5 4 5 4 5 4 5 Middle East 1 4 1 3 1 3 1 3 1 3 1 3 1 2 1 2 1 2 1 2 Africa 2 3 2 3 2 3 2 3 2 3 2 4 2 3 2 3 2 3 2 3 Total non-OECD 29.8 29.6 29.7 30.2 29.8 30.5 30.2 29.9 30.0 30.1

    Processing gain 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 Other biofuels 1 7 2 3 2 5 2 3 2 2 1 8 2 3 2 6 2 3 2 2

    Total non-OPEC 55.9 56.6 57.2 58.3 57.0 58.3 58.0 57.7 57.9 58.0

    OPEC Crude 30 0 30 1 30 5 30 5 30 3 30 5 31 3 31 3 30 8 31 0 NGL 6 3 6 3 6 4 6 5 6 4 6 5 6 6 6 6 6 7 6 6 Total OPEC 36.3 36.4 37.0 37.0 36.7 37.0 37.9 37.9 37.5 37.6

    Total supply 92.2 93.0 94.1 95.3 93.7 95.3 95.9 95.6 95.4 95.6

    Stock change 0 5 1 4 1 1 1 4 1 1 1 9 2 8 1 3 0 4 1 6

    Totals may not add due to rounding

    Source: International Energy Agency; OGJ estimates for OPEC 2nd, 3rd and 4th quarter 2015 crude supply

    150706OGJ_26 26 7/2/15 11:29 AM

  • Oil & Gas Journal | July 6, 2015 27

    World economic outlook

    After hitting a soft patch at the start of the year, global activity is expected to finally achieve a higher growth trajec-tory, helped by low commodity prices and accommodative financial market conditions.

    US economic activity stalled in this years first quarter as the result of another cold winter, port labor dis-putes, and cutbacks in capital expen-ditures by oil and gas companies. US real gross domestic product decreased 0.2% in the first quarter, according to the third estimate of the Bureau of Economic Analysis.

    As weather and strike-related dis-ruptions receded, the US economy is showing signs of rebounding, led by consumer spending and housing ac-tivity. The Federal Reserve projected US real GDP growth this year to reach 1.8-2%.

    The eurozones economic recov-ery has been unexpectedly swift since late 2014. This is mainly thanks to the decline in oil prices, the weaker euro, and the European Central Banks stim-ulus policies. Growth remains fragile, however, with high debt levels and po-litical uncertainty. The sovereign debt crisis in Greece also is a source of great concern.

    In Japan, the consumption tax hike in April 2014 is still hurting consum-er demand. But domestic spending is benefiting from the Bank of Japans ex-pansionary monetary policy. A weaker yen also makes exports more competi-tive.

    While the recovery in developed countries is gathering momentum, growth in developing countries, espe-cially oil exporters, is slowing down. A strengthening US dollar also is rais-ing concerns about balance-sheet ex-posures in developing countries with weakened local currencies and sizable dollar-denominated liabilities.

    In China, cyclical deceleration con-tinues, led by the downward trend in investment and the slower pace of ex-ports.

    The stagnation of the Latin Ameri-

    OGJ FORECAST OF US SUPPLY AND DEMAND Table 2

    First half 2015 Year 2015 Volume % change Volume % change 1,000 b/d from 2014

    1 1,000 b/d from 2014

    1

    DEMAND

    Motor gasoline 8,952 2 1 9,010 1 0 Dist 1-4 7,402 2 1 7,462 1 0 Dist 5 1,550 2 1 1,548 1 0 Jet fuel 1,515 5 8 1,503 2 2 Dist 1-4 1,064 5 8 1,058 2 2 Dist 5 451 5 5 445 2 2

    Distillate 4,130 2 0 4,100 2 2 Dist 1-4 3,611 2 0 3,574 2 2 Dist 5 519 2 0 526 2 2

    Residual 230 (5 7) 220 (14 4) Dist 1-4 125 (5 7) 120 (14 4) Dist 5 105 (5 7) 100 (14 4)

    LPG and ethane 2,470 5 8 2,520 6 9 Dist 1-4 2,439 5 8 2,493 6 9 Dist 5 31 5 8 27 6 9

    Other products 1,943 0 5 2,027 0 4 Dist 1-4 1,757 0 5 1,842 0 4 Dist 5 186 0 5 185 0 4

    Total domestic demand 19,240 2 5 19,380 1 8 Dist 1-4 16,399 2 6 16,552 2 0 Dist 5 2,841 2 3 2,828 0 7

    Exports 4,585 15 9 4,680 12 0 Dist 1-4 4,098 15 9 4,205 12 0 Dist 5 487 15 9 475 12 0

    Total Demand 23,825 4 9 24,060 3 6 Dist 1-4 20,498 5 0 20,758 3 9 Dist 5 3,327 4 0 3,302 2 2

    SUPPLYDomestic productionCrude & condensate 9,482 13 1 9,450 8 5 Dist 1-4 8,347 15 0 8,318 9 4 Dist 5 1,135 0 6 1,132 2 2

    NGL 3,140 11 1 3,180 7 3 Dist 1-4 3,071 11 1 3,113 7 3 Dist 5 69 9 3 67 7 3

    Total domestic production 12,622 12 6 12,630 8 2 Dist 1-4 11,418 14 0 11,431 8 8 Dist 5 1,204 1 1 1,199 2 4

    Renewable fuels and oxgyenates 1,050 (0 7) 1,060 (1 1) Dist 1-4 1,029 (0 7) 1,037 (1 1) Dist 5 21 (5 2) 23 (1 1)

    ImportsCrude oil 7,173 (1 8) 7,150 (2 5) Dist 1-4 6,098 (1 8) 6,080 (2 5) Dist 5 1,075 (1 8) 1,070 (2 5)

    Products & unfnished oils 2,178 12 4 2,050 8 8 Dist 1-4 2,005 12 4 1,858 8 8 Dist 5 173 13 2 192 7 6

    Total Imports 9,351 1 2 9,200 (0 2) Dist 1-4 8,103 1 4 7,938 (0 1) Dist 5 1,248 1,262 (1 0)

    Processing gain, loss, etc 1,025 (4 5) 1,045 (3 8) Dist 1-4 850 (4 5) 864 (3 8) Dist 5 175 (5 0) 181 (3 8)

    Total new supply 24,048 6 5 23,935 3 8 Dist 1-4 21,401 7 3 21,271 4 3 Dist 5 2,647 0 2 2,664 0 3

    Stock change 223 (125) Dist 1-4 903 514 Dist 5 (680) (639)

    Crude runs to stills 15,850 2 1 15,980 0 9 Total Input to stills 16,130 1 8 16,280 0 8 Total refning capacity 17,880 (0 2) 17,920 0 3 Refning utilization, % 90 2 2 5 90 8 0 5

    Total industry stocks2 1,256 15 2 1,215 4 2 Refned products 788 11 6 776 0 5 Crude oil 468 21 9 439 11 4 SPR crude oil stocks 692 (0 1) 692 0 1

    IMPORT DEPENDENCY Total imports % domestic demand 48 6 47 5 Net imports % domestic demand 24 8 23 3

    1Compared to preliminary EIA fgures 2Million bbl at end of period

    150706OGJ_27 27 7/2/15 11:29 AM

  • GENERAL INTEREST

    28 Oil & Gas Journal | July 6, 2015

    World oil demand

    Global oil demand in 2015s first half outperformed due to additional eco-nomic gains, lower oil prices, and cold winter weather conditions in Europe. According to the latest Oil Market Re-port from the International Energy Agency, global oil demand averaged 93.3 million b/d in this years first half, up 1.6 million b/d on the year.

    Demand in the developed countries of OECD has been much more volatile than non-OECD demand, contribut-ing to major shifts in market balances. The biggest change in oil markets re-cently, from a demand perspective, has been the evolution of OECD demand from a long declining trend to a rising one, according to IEA. OECD demand, which last year fell 460,000 b/d, was up 800,000 b/d to 46.5 million b/d in this years first quarter, year-over-year.

    Because of low motor fuel taxes and no negative effect from a strengthen-ing US dollar, the spillover effect of low crude prices on private consumption has been most significant in the US. In 2015s first 3 months, with West Texas Intermediate averaging below $50/bbl, total US oil demand rose 480,000 b/d year-on-year to 19.29 million b/d, ac-counting for one third of the worlds gain in oil demand in that quarter, ac-cording to EIA data.

    However, as both lower price sup-ports and additional winter heating demand fall out of the outlook, IEA forecasts OECD demand growth to de-celerate through the end of the year.

    Crude oil demand throughout Asia has been exceptionally strong over the first quarter of 2015, as the Chinese re-fineries increased run rates and strate-gic reserv


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