Page 8 - NorthAmOil Week 46

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BP Midstream considering Mars pipeline expansion
GULF OF MEXICO
PowerNap will be tied back to Shell’s Olympus production hub.
BP Midstream Partners is considering expand- ing its Mars crude oil pipeline to accommodate new offshore output from the US Gulf of Mexico.
Speaking on the company’s third-quarter earnings call last week, BP Midstream’s chief financial officer, Craig Coburn, said the poten- tial expansion was being considered to accom- modate rising volumes from offshore projects including Vito and PowerNap, which are being developed by Royal Dutch Shell.
PowerNap will be tied back to Shell’s Olym- pus production hub, and is due to start up in late 2021. Vito will be a standalone development and is also due to start up that year.
Coburn did not provide further details, say- ing they would be included in updated guidance that is due to be provided in early 2020.
Mars has a mainline capacity of about 400,000 barrels per day (bpd). Shell Midstream Partners is the majority owner in the pipeline with a 71.5% stake, while BP Midstream holds the remaining 28.5%.
BP Midstream’s gross third-quarter pipe- line throughput was over 1.6mn barrels of oil equivalent per day (boepd). This was slightly lower than throughput in the previous quarter, according to Coburn. This was attributed to disruptions related to Hurricane Barry, which passed through the Gulf in July, as well as to maintenance on certain offshore platforms.
The affected infrastructure included the Cae- sar and Ursa oil pipelines, as well as the Cleopatra natural gas pipeline, which all reported lower throughput.
Coburn said the gross throughput impact of Barry was around 100,000 boepd. However, he added that record throughput on the BP 2 pipe- line had offset the disruptions, reaching 316,000 bpd in the third quarter of 2019. This is the high- est level of throughput recorded on BP 2 since BP Midstream’s initial public offering (IPO) in 2017.
“We expect pipeline gross throughput in the fourth quarter to be higher than first quarter,” Coburn said.™
INVESTMENT
Ecopetrol, Occidental finalise Permian joint venture agreement
PERMIAN BASIN
COLOMBIA’S Ecopetrol and US-based Occi- dental Petroleum announced on November 13 that they had completed a previously announced transaction to form a joint venture focused on the Permian Basin.
The partnership covers development of roughly 97,000 net acres (393 square km) in the Permian’s Midland sub-basin. Teaming up with Ecopetrol will allow Occidental to accelerate development in a part of the Permian where it currently has minimal activity, the US firm said in a statement.
The deal is worth $1.5bn in total, comprising $750mn in cash and another $750mn in carried capital. Under the joint venture, Ecopetrol has acquired a 49% stake in the Rodeo Midland Basin entity, while Andarko will retain the other 51%. Ecopetrol has made an initial payment of around $876.5mn. This comprises roughly $750mn for its share of the joint venture and $126.5mn for estimated development expendi- tures during the period from the effective date of the partnership, August 1, 2019, to the end of this year.
Ecopetrol said in a statement that there were currently two rigs operating in the area the joint venture will develop. Two wells have been drilled there so far, and are due to be completed and brought online by the end of the year. Activ- ity is then expected to ramp up over the course of next year, with four rigs due to be in opera- tion on the acreage by the end of 2020. Ecopet- rol anticipates incorporating proven reserves of around 160mn barrels of oil equivalent (boe) by the end of 2019 thanks to its participation in the partnership.
At the same time as it announced the closing of the joint venture agreement, Occidental also said it had completed the sale of around $200mn worth of non-core assets. The company, which quadrupled its debt with its acquisition of Ana- darko Petroleum to $40bn, said the proceeds would go towards its deleveraging efforts.
“We are highly confident that the actions we already have in progress will allow us to exceed the upper end of our original $10-15bn divesti- ture goal by the middle of 2020,” said Occiden- tal’s president and CEO, Vicki Hollub.™
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w w w . N E W S B A S E . c o m Week 46 20•November•2019