Oil country hot line

Despite problems, Oxy stays in Colombia

Repeated pipeline bombings, reduced oil output and widespread rumors to the contrary, Occidental Petroleum seems likely to remain in Colombia, with additional capital projects planned. The list of disincentives begins with continual bombings of the major oil export pipelines, particularly Oxy’s Caño Limon route. Recent bombings were severe enough that the firm had to declare force majeure on production (a legal act that temporarily suspends contractual obligations) at Caño Limon field. So far, the Caño Limon pipeline has been bombed about 500 times. Compounding the difficult operating environment is a 14% drop in Colombian output, to 710,328 bopd. Various factors have contributed to Colombia’s output decline. One is that a number of the significant fields are experiencing natural declines in productivity. Another factor is the country’s need to make major new discoveries, to prevent a dive toward net oil importer status by 2005. Nonetheless, government officials insist that not only will Oxy remain in Colombia, the firm will make significant new expenditures. For instance, Oxy plans to develop Gibraltar oil field’s reserves, estimated at 1.4 billion bbl.

Brazil sells shares, plans further seismic

As part of its plan to privatize the E&P sector, the Brazilian government sold 180 million common shares of state firm Petrobrás. Foreign investors gained 60%, while the local market claimed 40%. Meanwhile, the National Petroleum Agency (ANP) plans to invest between $278 million and $334 million to conduct seismic studies of onshore sedimentary basins next year. This year, however, only $33.4 million may be used for similar studies. According to ANP General Director David Zylberstajn, Brazil’s marginal oil field licensing round will serve as a test for interest in onshore oil exploration in the country.

Firms succeed in striking GOM gas

Magnum Hunter Resources participated in two gas finds in the shallow-water shelf area of the Gulf of Mexico. The OCS-G 15231 #1 well, on South Marsh Block 235 and operated by Basin Exploration, was drilled to a 10,670-ft TVD, achieving 74 ft of net gas / condensate pay. An extension well is planned. The other gas find, on South Timbalier Block 250 and operated by Magnum Hunter, was drilled to 5,500 ft, with about 60 ft of net gas pay. First production for both wells is expected during first-quarter 2001. In addition to the South Marsh Block 235 find, Basin Exploration successfully deepened one GOM well (100 net ft of additional gas / condensate pay) and drilled or participated in two other exploratory successes (15 net ft of gas pay, and 113 net ft of oil and gas pay).

Texaco starts production at Petronius

Commercial oil and gas output has gone onstream at Texaco’s (50%) Petronius field in Viosca Knoll Block 786, in 1,754 ft of the Gulf of Mexico. The venture is shared with Marathon Oil (50%). Current output is 8,700 bopd and 6 MMcfgd. By October 2000, production is expected to reach 40,000 bopd and 35 MMcfgd, when three additional wells are brought onstream. Peak production rates should eventually be about 50,000 bopd and 70 MMcfgd, as additional wells are brought onstream between now and the beginning of 2001.

BP has record quarter, other good news

BP reported a record second-quarter performance for 2000, as pro forma results totaled $3.61 billion, up 164% from the same quarter in 1999. Chief Executive, Sir John Browne said the results "represent the cumulative impact of the progress we’ve made over the last few years – growth in volume and equally important, growth in total productivity." This record comes on the heels of a UK regulatory statement that claims BP is not guilty of misconduct linked to gas market manipulation. The Office of Gas and Electricity Markets’ (Ofgem’s) inquiry started in May, when it issued a warning to shippers that it believed placed the UK gas market in jeopardy by misrepresenting gas inputs, to manipulate prices. Meanwhile, Phillips Petroleum completed the final stage of its $965-million purchase of ARCO Alaska Inc. from BP. Assumed debt represented $265 million of the purchase price.

New discovery at Ceiba 5 well

Offshore Equatorial Guinea, Triton Energy found an additional, deeper oil pool in the Ceiba 5 step-out well after it confirmed the primary pool found in the Ceiba 1 through 4 wells. Triton President and CEO James C. Musselman said, "It is our most aggressive step-out well to date, confirming the lateral extent of the field in a new direction." The well, 23 miles off the coast on Block G, has a significantly deeper oil-water contact than other parts of the field. It was drilled to a 9,187-ft TD in 2,622 ft of water. The well has been suspended temporarily until initial production is achieved from the first four wells. Their output should go onstream by the end of 2000 in an early production system.

Myanmar search expands, Brunei’s shrinks

A contract offering exclusive rights to explore for oil and gas offshore Myanmar in the Bengal Gulf was signed between Daewoo Corp. and Myanma Oil & Gas Enterprise. The area is believed to hold an estimated 500 million bbl of oil deposits. Daewoo will have complete control of the project. Meanwhile, in Brunei, New Zealand’s Fletcher Challenge Energy (FCE) curtailed its exploration program after the third well, East Egret 1, failed to find any significant oil or gas plays. The company will postpone further exploration in the country, to enable learning from the three-well program that will be reviewed and integrated. The wells did provide good geological information that will help FCE evaluate more than 30 remaining prospects and leads.

Mitchell Energy hits four Texas gas finds

Mitchell Energy & Development Corp. completed three exploratory wells in the Lake Creek area near The Woodlands, with initial daily output totaling 13.5 MMcfg. A fourth well, in Fort Bend county southwest of Houston, produced more than 2 MMcfgd and 100 bcpd during initial tests. Mitchell owns a 100% working interest in all four wells.