Oil country hot line

Indonesian oil/gas industry very active

Unocal Corp. and Lasmo plc discovered two gas finds offshore Kalimantan, Indonesia. The Gada 2 and Gula 1 wells, in the Ganal Production Sharing Contract area, were drilled to depths in excess of 15,000 ft in over 6,000 ft of water. Together, the gross potential in the structures will be in the 2 – 3 Tcf range. Additional drilling will reveal both prospects full resource potential. Also, Gulf Indonesia Resources discovered oil in Northwest Natuna Block 1 PSC. The Ande Ande Lumut-1 well is the first well drilled by operator Premier Oil plc. in the PSC area.

Meanwhile, the Indonesian government signed seven oil/gas contracts to four foreign and three local companies. Total investment exceeds $112 million for 10 years.

BP Amoco makes oil/gas finds, merger deals

BP Amoco is not only exploring fields, but acquiring companies also. Located off the southeast coast of Trinidad (216 km east of Galeota Point) is the Manakin 1, BP Amoco’s third natural gas discovery in three years. The discovery, Trinidad’s first deepwater find, is estimated at 2 Tcfg. And, on Block 18 offshore Angola, the company successfully drilled the Galio-1, which tested at 4,770 bopd of 34° API gravity.

Meanwhile, following the European Merger Task Force approval, BP Amoco plans a 3-billion-sterling acquisition of Burmah Castrol. Also, Vastar Resources, Inc. has approved an $83-per-share, cash merger offer from the UK-based firm to acquire about 17.7 million shares of its common stock that is currently held publicly.

GOM treaty signed by U.S., Mexico

Last month, President Clinton and Mexican President Ernesto Zedillo witnessed the signing of an agreement giving Mexico 62% of an area (the polygon) in the Gulf of Mexico with potentially significant hydrocarbon reserves. After more than two years of negotiations, the finalized accord allows the countries to declare a 10-year moratorium on exploration and drilling in a strip that runs along the dividing line of the polygon. Although, presently not commercially viable for state-owned Pemex to exploit, the 4,100 sq mi zone (lying more than 2,000 ft below water) can only be exploited by Mexico.

African areas see various oil/gas endeavors

Esso Exploration has made a deepwater discovery, its seventh oil find on Angola Block 15 – a development with recoverable-reserves potential in excess of 2 billion bbl oil equivalent. The Mondo discovery, located 230 mi northwest of Luanda, tested at 4,200 bpd in 2,400 ft of water.

Meanwhile, Nigeria’s Department of Petroleum Reserves claims that at the current rate of depletion (about 763.2 million bbl/yr), Nigeria’s crude oil reserves (about 27 billion bbl) will not last another 35 years. And, in Mozambique, South African energy firm Sasol ended a deal with U.S. Corp. Enron to consolidate the companies’ natural gas / pipeline rights.

Brazil’s exploration auction succeeds

In its 2nd Round auction of exploration licenses, Brazil received $260 million in winning bids from groups comprised of 44 oil companies. The net oil importer did better than expected, selling rights to all but two of the 23 blocks offered. Again, Petrobras (prompting gripes from some losers) was the largest winner, gaining block in the highly sought after Santos basin (with potential reserves of up to three billion bbl), plus two onshore areas. However, in 2001, Petrobras may be forced to renounce a number of blocks that it has failed to develop. Other big-name winners were Chevron, Amerada Hess and Royal Dutch / Shell, which gained a deepwater tract.

Hurricane forecasts threaten oil industry

An anticipated, above average, Atlantic hurricane season daunts the oil/gas industry. The National Oceanic and Atmospheric Administration expects 11 tropical storms and three or more major hurricanes in the 2000 season (June 1 to November 30). The threat is greatest in the GOM – heavily clustered with many offshore, oil-production fields and refineries, which account for about half of the nation’s oil production. The closure of a major GOM refinery has been known to raise gasoline futures prices as much as a nickel a gallon in a single day’s trade on the (NYMEX). Last year, Hurricane Floyd caused more than a half dozen refineries to shut along the Gulf / East coasts.

Venezuelan oil revenues prosper

In Venezuela, oil revenue is expected to reach at least $21 billion this year. As of May 26, the average Venezuelan market basket price was $24.77/ bbl. Meanwhile, Tecpetrol upped western Venezuela’s Colon oil field production 35%, to 13,000 bpd. The country’s oil minister and president of OPEC, Ali Rodriguez, said the oil cartel will not change the current price band system this year. This is because the market is stable and more time is needed to assess its value.

NPC study reveals U.S. gas gap

A National Petroleum Council report issued by the Energy Secretary’s oil and gas advisory committee stated that gas demand could grow to 29 Tcf/yr from 22 Tcf/yr by 2010. This increase is influenced primarily by growth in the economy and increased reliance on natural gas for electricity generation.

Correction

The following is a clarification of a Hotline item that appeared in the May 2000 issue.

The item stated that Mexico’s proven crude reserves dropped in 1999, to 34.103 million bbl from 34.180 million bbl. It should have stated that Mexico’s proven crude reserves dropped a fraction in 1999, to 34.103 billion bbl from 34.180 billion bbl.