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January 2016
Introducing Meagan Wall, Project Manager 



We are proud to announce a new addition to our North American team: Meagan Wall, Geochemist and Project Manager.

A self-described army brat born in Stillwater, Oklahoma, Meagan's training includes a Bachelors of Science in Geology from the University of Pittsburgh and a Masters in Petroleum Geology she earned at Kansas State University with an emphasis on geochemistry.  Her professional background includes experience in sales, management and administration, as well as service in the United States Army.

Meagan visited StratoChem (and Egypt) for the first time this past December. We're very pleased and honored to have her on the team!

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StratoChem No Longer With Leeds Group
We wish to inform you, our clients and partners, that StratoChem Services and The Leeds Group are no longer in partnership.  We have enjoyed our time as an Associate Member of The Leeds Group, greatly appreciate Mr. Leeds's work on our behalf, and wish him the greatest success in all future endeavors.
Oil Prices

 

 
Industry News
Amerca's First Shale Export Terminal Starts Production 
December 31st, 2016
 
             
          
Cheniere Energy Inc. began production at what will become the first terminal to export natural gas from America's shale formations, according to ING Capital LLC, which helped finance the project.

The company is receiving about 50 million cubic feet of fuel a day, chilling it into liquefied natural gas at the Sabine Pass terminal in Louisiana, and storing it in tanks before the first export, Richard Ennis, Head of Natural Resources at ING, said by e-mail on Wednesday. Ennis said he receives regular updates from the company and that he hadn't been informed of a delay in the startup. Cheniere spokeswoman Faith Parker didn't immediately respond to telephone and e-mailed requests for comment on Wednesday.

Cheniere has previously said the inaugural cargo will leave the complex in January by tanker and that U.K.-based BG Group Plc is contracted to take the first shipment. Sabine Pass is "on schedule," Ennis said. "You can't dock a ship to offtake the LNG until you have a full shipload of LNG in the tanks, which is planned to happen in January."

The start at Sabine Pass paves the way for other planned liquefied natural gas terminals that are projected to turn the U.S. into one of the world's largest suppliers. The country may be capable of exporting 7.76 billion cubic feet of gas a day by 2019, a Bloomberg New Energy Finance analysis shows. While the U.S. has been sending gas abroad from Alaska for years, Cheniere's cargo would mark the first to leave from the lower 48 states, a testament to surging shale supplies that have sent domestic stockpiles to record levels.

Shale Boom

Cheniere's export terminal underscores how dramatically the shale boom has reshaped the natural gas market. Before drillers started pulling the fuel out of tight-rock formations using hydraulic fracturing and horizontal drilling, Cheniere was building import terminals in anticipation of a domestic shortage. Following the onslaught of shale gas, Cheniere started retrofitting terminals for exports.

Natural gas futures have plunged more than 80 percent from 2008 highs to a 16-year low earlier this month on the New York Mercantile Exchange. February contracts rose 5.6 percent to settle at $2.337 per million British thermal units on Thursday.

The U.S. cargoes will mark "a paradigm shift for the industry," Hadi Hallouche, Head of Liquefied Natural Gas trading at Trafigura Beheer BV, said by phone from Geneva.

Pipeline Nominations

The supply of natural gas scheduled to arrive at Cheniere's Sabine Pass terminal from two pipelines for liquefaction surged to 128,987 dekatherms on Wednesday from just 6,720 a month ago.

Sabine Pass still needs authorization from the Federal Energy Regulatory Commission's Director of Energy Projects "to initiate commercial service" of its first liquefaction plant, Tamara Young-Allen, a spokeswoman at the Washington-based agency, said in an e-mail Thursday.

"Commissioning and testing activities will initially produce minimal quantities of liquefied gas and is expected to increase in quantity during start-up activities, which are required to bring the train online to verify performance and functionality," she said.

Cheniere has had a rocky year, dealing with a slide in U.S. natural gas prices, the ouster of its co-founder and Chief Executive Officer, Charif Souki, and scrutiny from billionaire activist investor Carl Icahn. While the company's stock gained almost a dollar on Thursday, it has fallen 47 percent this year.

With gas demand in parts of Asia weakening, U.S. suppliers are turning their attention to Europe as their primary market. BG Group spokeswoman Kim Blomley referred a request for comment on the startup to Cheniere on Wednesday.

Plants such as Sabine Pass will cool and liquefy natural gas to 1/600th of its volume for easier loading onto tankers. Cheniere plans to build at least six "trains" that produce LNG at Sabine Pass by late 2018, allowing the terminal to supply more than 3.5 billion cubic feet per day. The project is estimated to cost at least $15 billion.
Iran opens offshore fields to outsiders
November 30th,2015
( www.offshore-mag.com)

The Iranian government is opening 18 offshore projects to international oil and gas companies and a similar number of exploration blocks.

Under the new framework, National Iranian Oil Co. (NIOC) will establish joint ventures for crude oil and gas production with international companies which will be paid with a share of the output.

This replaces the previous system of buyback deals, under which the government paid the contractor (oil company) an agreed price for the entire volume of hydrocarbons the contractor produced.

According to news service Shana, Pars Oil and Gas Co. (POGC) is opening four of its offshore fields to international involvement: North Pars, Golshan, Ferdows, and the South Pars oil layer.
POGC currently produces more than 400 MMcm/d (14 bcf/d) of natural gas from the fields but is seeking to double output.

Ehsan Mohammadi, a POGC official, said the company needs $64 billion to attain its production goals. 

The South Pars oil layer is thought to contain 1.5-4 Bbbl in place, with a projected recovery rate of nearly 21%, Mohammadi said. 
Pre-startup of the first oil layer platform is 90% complete: it will have a capacity to process 35,000 b/d of crude oil.

However, Iran does not plan to offer the Phase 11 development of the South Pars gas field under its new contract model (IPC), Shana reported.
This phase is being developed to recover 56 MMcm/d (2 bcf/d) of sour gas for use as LNG, and 80,000 b/d of gas condensate. 

Development of the upstream section of Phase 11 was originally awarded in 2000 to Total and Petronas. After work on the project stalled, NIOC re-offered the project to Chinese contractor CNPC in 2009, although this contract too was eventually canceled.

Instead, NIOC opted to assign development to an Iranian contractor, with the gas to be processed by refineries at the Pars Special Economic Energy Zone.
The Saipem 10000 drillship arrives at Zohr-2 well location
December 31st, 2016
( www.energyegypt.com)

Egypt Flag Flat
The giant drilling vessel Saipem 10000 arrived at the site of Zohr-2 well to start drilling operations, announced Eng. Tarek El-Molla, Minister of Petroleum and Mineral Resources. Eng. El-Molla made his announcement as he chaired Petrobel's General Assembly Meeting.

The Saipem 10000 is a 5th generation ultra-deepwater drillship, designed and built by Samsung Heavy Industries in 2000. The vessel has recently departed San Giorgio del Porto shipyard in Genoa after maintenance work.

Eng. El-Molla noted that a new company named Petro Shorouk has been established for the development of the Zohr field, speeding up the development phase, and plans for production from the first wells to start by the end of 2017.
Developing Uganda's and Kenya's oil discoveries
December 22nd, 2015
( www.oilreviewafrica.com)

East Africa's onshore oil promise has now been a few years in the making.

The first Ugandan oil discoveries were made in 2006, while in 2010-12 discoveries were also made in Kenya. Optimism was naturally very high with oil around US$100/barrel. However even today, IOCs seem keen to move forward - at least in theory.

The main obstacle for FIDs (Final Investment Decisions) and development progress is export lines from what, in effect, for now, remain stranded assets. The difficulty in agreeing to an export line has several layers. In Uganda, for a long time, there was disagreement between IOCs and the government, with the former preferring export of all the crude to a sea coast and the latter advocating that all or most of the crude would supply an integrated refining project, supplying refined products for the wider East and Central African region.

Ugandan hopes for a large export refinery have since abated, as realism about the limits of regional demand and costly logistics have set in. Plans have been gradually revised down to a possible small 30,000 bpd refinery, which would leave most crude available for export. Reluctance from IOCs to commit to developing the oilfields in western Uganda as long as the government pushed for an integrated refinery deal clearly helped to bring realism into the government's calculations on this point. IOCs were adamant that the economics of a regional export refinery, given the underdeveloped logistics and the weak regional market, were unattractive.

Finding an export route

Yet, finding an export route for the crude has proved tricky. The waxy Ugandan crude raises the technical requirements on the pipeline from the simplest technical options, which will be reflected in the project's cost.

Agreeing on a route through Kenya and on Kenyan transit fees has also proved difficult. Political security has become an issue too. After having been regarded as one of Africa's most stable economies for decades, the political situation in Kenya has changed for the worse over the past 10 years. Militant infiltration from Somalia is one issue, which in the past few years has continued to pose a significant security risk to one of the proposed pipeline routes to Kenya's northern port of Lamu.

Fundamentally worse is the political instability and internal violence which erupted in 2007-2008 following the contested presidential elections. Effects from that conflict continue to simmer and investors have not been entirely confident something similar could not happen again. Another reason for why the export pipeline project has not gotten off the ground is that Kenya is unclear whether to combine the Ugandan export project with its own need for a link to northwestern Kenya.

Initially, Uganda and Kenya had a preference for the Ugandan crude to move through a pipeline passing Nairobi and reaching the sea at the port of Mombasa, while Kenyan crude would run in a northern corridor to Lamu, which, from northwestern Kenya, could be extended to South Sudan - and in the case of discoveries - also to southern Ethiopia.

The latter project was launched as the LAPSSET (Lamu Port - South Sudan - Ethiopia Transport Corridor) scheme. However, Kenya only has so far proven-up 0.6mn barrels of reserves, including other volumes in order to make the project feasible from the onset.
Cyprus extends Eni-KOGAS offshore exploration license
January 1st, 2016
( www.offshore-mag.com)

The presidential cabinet of the government of Cyprus has approved a request by the Eni-KOGAS consortium to extend its exploration activities by two more years, according to an online report on the Cyprus Mail website.

The exploration license was renewed for offshore blocks 2, 3, and 9 in Cyprus' exclusive economic zone. The consortium's concession was due to expire in February 2016; it has now been extended to February 2018.

Energy Minister Giorgos Lakkotrypis was quoted to say that the consortium had asked for more time in order to "re-assess the energy potential, which is all the more necessary now after the developments in Egypt's exclusive economic zone and the discovery of the Zohr gas reservoir."

Last summer, Eni found gas in the Zohr prospect in Egyptian waters - reportedly the largest gas find ever made in the Mediterranean. Zohr is located about 6 km (3.7 mi) from the boundaries of Cyprus' block 11 and about 90 km (56 mi) from the Aphrodite reservoir in block 12.

According to a preliminary plan shown to the government a few months ago, Lakkotrypis said that the consortium would place its next drill around mid-2017. But he added that this plan depended on the consortium's re-evaluation of its geologic model. He said that an Eni team is currently working on the geologic model for blocks 2, 3, and 9.

The report noted that the minister could have been referring to a new model employed by Eni which tracks carbonate reservoirs rather than sand reservoirs. It was this model that Eni used to discover the Zohr prospect in nearby Egyptian waters.

Lakkotrypis was quoted as saying: "I hope and I expect that within January we shall have the first results from this re-evaluation."

Previously, following two unsuccessful exploration drills in Cyprus' block 9, Eni had been reportedly considering abandoning its operations here.

Earlier in December, the government also approved the extension of energy giant Total's exploration license in block 11 for two years.
BP Egypt to acquire additional interest in the West Nile Delta project
December 10th, 2015
( www.bp.com)

Egypt Flag Flat
BP Egypt has announced today the completion of its acquisition of 22.75% in the North Alexandria Concession and 2.75 per cent in the West Mediterranean Deep Water Concession from Hamburg-based DEA Deutsche Erdoel AG.
The acquisition will bring BP's working interest in both concessions of the West Nile Delta project to 82.75 per cent.

The West Nile Delta project agreement, concluded in March 2015, involves the development of 5 trillion cubic feet of gas resources and 55 million barrels of condensates. Production from WND is expected to be around 1.2 billion cubic feet a day (bcf/d), equivalent to about 25% of Egypt's current gas production. All the produced gas will be fed into the country's national gas grid. Production is expected to start in 2017.

Commenting on the deal, Hesham Mekawi, BP North Africa Regional President, said: "BP is proud of the successful partnership it has had with Egypt for more than 50 years, and its role in the development of Egypt's energy sector. We are pleased to be increasing our interest in the WND project, which is a strategic project for BP and will play a key role in helping to secure Egypt's energy supply for many years to come. This deal is another example of our commitment to help unlock Egypt's oil and gas potential through continued investments."

Notes:
  • BP has a long and successful track record in Egypt stretching back 50 years with investments exceeding $25 billion, making BP one of the largest foreign investors in the country. In Egypt, BP's business is primarily in oil and gas exploration and production. BP is working to meet Egypt's domestic market growth by actively exploring in the Nile Delta and investing to add production from existing discoveries.
  • To date, BP Egypt, in collaboration with the Gulf of Suez Petroleum Company (GUPCO), BP's joint venture (JV) Company with the Egyptian General Petroleum Company (EGPC), has produced almost 40% of Egypt's entire oil production, and currently produces almost 10% of Egypt's annual oil and condensate.
  • In addition, through joint ventures with EGPC/EGAS and IEOC (ENI) the Pharaonic Petroleum Company (PhPC) and Petrobel BP currently produces close to 30% of Egypt's total gas.
  • The West Nile Delta (WND) Project is a strategic project for BP. BP is the operator of the project.
  • BP has made a series of discoveries in Egypt in recent years including Taurt North, Seth South and Salmon and Rahamat, Satis, Hodoa, Notus, Salamat and Atoll.
  • BP is a 33 per cent shareholder of a natural gas liquids (NGL) plant extracting LPG and propane, United Gas Derivatives Company (UGDC) in partnership with ENI/IEOC and GASCO (the Egyptian midstream gas distribution company).
  • BP is also present in the downstream sector through Natural Gas Vehicles Company (NGVC, BP 40 per cent) which was established in September 1995 as the first company in Africa and the Middle East to commercialize natural gas as an alternative fuel for vehicles.
In This Issue
Upcoming Events

2/10 - NAPE Summit: Houston, Texas, USA

2016 will showcase a whole new StratoChem, and we're giving you, our clients and friends, a sneak preview.  The link above is the first of a series of promotional videos and new marketing initiatives we have planned for the coming year.  Other things to look forward to include:
  • A virtual tour of our lab, featured on our website for those of you we haven't been lucky enough to host in Cairo.
  • A series of films showcasing our labs and explaining our analytical methods.
  • A revamped newsletter with more content and a new layout.
  • A revision of our website, including new material, videos, and a section aimed at our customers outside Egypt.

Have a suggestion for something you want to see from StratoChem? Contact us at <hunter.eden@stratochemlabs.com> and let us know! 

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