E&P Highlights: Dec. 30, 2024

From plans to develop new geothermal plants in Utah to new oil and gas waste regulations in Texas, below is a compilation of the latest headlines in the E&P space.

Activity

Big Drop in Permian Basin Methane Emissions in 2023

Permian Basin oil and gas operators reduced methane emissions by 26% in 2023, according to a new analysis by S&P Global Commodity Insights.

Methane emissions fell by 34 Bcf to 96 Bcf, even as total oil and gas production increased, the analysis showed. On a rate basis, the emissions amounted to 0.63% of boe produced in the region, down from 0.92% boe in 2022.

The 34 Bcf reduction is equivalent to 18.5 million tons of CO₂ emissions avoided, S&P Global said. The 2023 emissions are equivalent to the annual gas usage of 1.7 million households.

The analysts said more and better technology was helping the industry detect leaks more quickly and accurately.

ProPetro Agrees to Provide Electric Fracking Services to Permian Operator

ProPetro Holding Corp. has entered into a term contract to provide electric hydraulic fracturing services to an unnamed large independent Permian-focused oil and gas operator.

The company now has four of its Force electric frac fleets on term contracts, ProPetro CEO Sam Sledge said.

Contracts and company news

Energy Transfer’s Lake Charles LNG Closer to FID with Chevron Deal

Energy Transfer LP has entered into a 20-year LNG sale and purchase agreement with Chevron U.S.A. Inc. to supply 2 million tonnes per annum at its Lake Charles LNG project in Louisiana—a deal that brings the facility closer to a final investment decision (FID).

The 16.45-mtpa Lake Charles project would be constructed on the existing brownfield regasification facility site and will capitalize on four existing LNG storage tanks, two deep water berths and other LNG infrastructure, Energy Transfer said.

The project has a direct connection to Energy Transfer's existing Trunkline pipeline system, the company said, allowing access to the Haynesville, the Permian and the Marcellus Shale.

Vermilion Energy to Acquire Canada's Westbrick for $745MM

Canada’s Vermilion Energy Inc. has entered into an agreement to acquire gas-heavy production and assets from privately held Westbrick Energy Ltd. for CA$1.075 billion (US$746 million), Vermilion said Dec. 23.

Vermilion said it will acquire Calgary, Alberta-based Westbrick’s portfolio of Alberta Deep Basin assets, including more than 700 drilling locations and 50,000 boe/d (75% gas, 25% liquids) and four operated gas plants with 102 MMcf/d of capacity.

Vermilion will acquire 770,000 net acres of land, although the deal excludes undeveloped Duvernay rights on approximately 290,000 net acres retained by Westbrick shareholders.

"The strategic acquisition of Westbrick represents a significant step forward in Vermilion's North American high-grading initiative to increase operational scale and enhance full-cycle margins in the liquids-rich Deep Basin," Dion Hatcher, president and CEO of Vermilion, said in a press release. "The Deep Basin is an area Vermilion has been operating in for nearly three decades and is currently the largest producing asset in the Company.”

STEP Energy Services Drops Go-Private Deal as Shareholders Balk

Hydraulic fracturing servicer STEP Energy Services has terminated its agreement with ARC Energy Fund 8 to go private in an all-cash transaction after determining that it couldn’t get enough support from shareholders.

In the agreement announced Nov. 4, STEP said its board of directors unanimously approved the acquisition of ARC, a private equity fund advised by ARC Financial Corp., for CA$5 per share (US$3.48).

“The termination is without liability or cost to any party,” the company said in a Dec. 19 news release. STEP provides coiled tubing, fluid and nitrogen pumping and hydraulic fracturing solutions in the U.S. and Canada.

DNO Farms into Mistral Exploration Well Through Horatio Swap

Norwegian oil and gas operator DNO ASA announced Dec. 19 that its wholly-owned subsidiary DNO Norge AS has entered into a swap agreement with OKEA ASA to farm into a 10% interest in PL1119 containing the Mistral prospect. In exchange, OKEA will pick up a 10% interest in PL1109 containing the Horatio prospect.

The Mistral prospect is located just south of the Åsgard area in the Norwegian Sea. Drilling is expected to commence shortly, targeting estimated predrill volumes of 19 MMboe to 57 MMboe with a medium chance of success. Total drilling time is estimated at 60 days in case of a discovery. Other Mistral partners include Equinor Energy AS (50% and operator), Pandion Energy AS (20%) and OKEA (20% after the transaction).

DNO will retain a 20% interest in PL1109 following OKEA’s entry. In this license, the Horatio well is scheduled for drilling in the first quarter of 2025. Other Horatio partners include OMV (Norge) AS (30% and operator), Aker BP ASA (20%) and Pandion (20%).

The transaction still needs government approval.

Regulatory updates

RRC Adopts New Oil, Gas Waste Management Rules

The Texas Railroad Commission passed new rules regulating oil and gas waste management facilities at its meeting Dec. 17. It’s the first overhaul of the commission’s waste management rules in four decades.

The regulations cover waste from operations, such as rock and other material pulled up from the ground during drilling, as well as waste from other operations including geothermal, carbon sequestration and brine mining wells.

The commission said the rules will help improve its ability to track and collect data on oilfield waste transported throughout Texas.

The new rules can be found at https://rrc.texas.gov/general-counsel/rules/proposed-rules/  under “Chapter 4: Environmental Protection.”

North Dakota Issues Final Permits for Cerilon Gas-to-Liquids Plant

Cerilon Inc. announced that the North Dakota Department of Environmental Quality has issued the final permit needed for its gas-to-liquids project planned near Williston, in the state’s northwest corner.

Cerilon GTL North Dakota will be the first large-scale, natural gas-fed gas-to-liquids facility in North America, converting natural gas into synthetic products such as base oils, ultra-low-sulfur diesel and naphtha.

Cerilon, based in Calgary, said the plant will be able to provide excess electricity it generates to the power grid once it’s up and running. It will also feature carbon capture and sequestration.