Looking ahead

Gas producers should be able to meet growing demand. A new study from the Gas Research Institute (GRI) concludes that new technology and high success rates in drilling for natural gas will help producers meet an anticipated growth in U.S. gas demand over the next two decades. Increased offshore drilling also is expected to contribute to meeting the demand. The study said that ultra-deepwater drilling would increase from 3% of total offshore activity in 2000 to 24% in 2015. In terms of costs, GRI’s John Cochener said, "Technology is critical to drilling economics, and advances in drilling technology are allowing drillers to work much smarter. Technologies that improve drilling efficiencies reduce the required drilling time, resulting in lower costs."

Oil and gas industry prepares for 2000. API President Red Cavaney feels that by the third quarter of this year, the energy industry will be well prepared for Y2K. For more than five years, the industry has been working on the challenges of Y2K computer conversions. Contingency plans have been put into place to ensure a smooth transition when the new millennium arrives. In early 1997, API established a Year 2000 Task Force to help coordinate industry’s efforts and share technical information with oil and gas firms. A survey of 1,000 oil companies showed that 94% of the companies would be "Y2K ready" by Sept. 30, 1999.

Texaco CEO is optimistic for the company’s future. Chairman and CEO Peter Bijur expressed cautious optimism for the future at Texaco’s 98th annual shareholders meeting. Although Bijur is open to the idea of a merger or acquisition to increase cash flow, he feels that there are other methods of achieving growth and that his company is attaining those means. He pointed out Texaco’s strengths over the past year, which included a strong operational performance, increased production and aggressive cost reductions. Even though low oil prices are continuing to have an impact on earnings, the company sees indications that market conditions will improve. Bijur said, "As worldwide economic momentum builds, it will have a powerful and positive impact on the energy sector and on Texaco’s business. Given our economic outlook, we expect a pickup in demand for 1999, when world oil requirements will rise by 800,000 barrels per day — nearly double the increase in 1998."

U.S. companies to explore in Azerbaijan. Exxon, Mobil and Moncrief Oil have signed agreements to explore for oil in Azerbaijan. In cooperation with Production Caspian Sea Ltd., Exxon signed a PSA with state oil company SOCAR to search for oil in the deepwater Zafar / Mashal Block in the Caspian Sea, about 75 mi from the capital, Baku. Mobil also will explore a 316-sq-mi deepwater block about 130 mi from the capital. The company will conduct seismic work and drill at least two wells over the next three years. Onshore, Fort Worth-based Moncrief plans to explore a block in the Kura River Valley. The three projects could mean $10 billion over the next 30 years in investment for the Caspian Sea region.

Repsol is one step closer to YPF buyout. A bid from Spain’s Repsol to acquire Argentina’s YPF could lead to the latest merger in industry’s move toward consolidation. An investment bank currently is reviewing the $13.4-billion offer. If the deal goes through, Repsol could achieve double-digit earnings growth through 2002. The combined company would create one of the world’s 10 largest oil companies and rival other Latin American state oil companies.

Ecuador hopes to double its oil output by 2004. By opening up its oil industry to foreign investment, Ecuadorian officials plan to increase the country’s production from its current 400,000 bopd to over 700,000 bopd within the next few years. Later this year, Ecuador will invite private oil companies to join national oil company Petroecuador in producing crude, with the condition that the country receive 40% of production. Petroecuador President Jorge Pareja said that with the help of private firms, increased production could go as high as 800,000 bopd.

Libya invites new international oil investment. Libya plans to offer international firms 16 new blocks with a total onshore area of about 10,039 sq mi and an offshore area of about 1,544 sq mi. Opportunities in the country’s oil industry became available after the UN decided in April to suspend sanctions that had been in place against Libya for seven years. The country’s Energy Minister Abdullah al-Badril said that a final draft of a new petroleum law, which would replace 40-year-old legislation, is being reviewed. Meanwhile, Libya’s National Oil Corp. plans to move ahead with opening the new acreage and negotiating PSAs.

Output at Sakhalin field to begin next month. First oil from the Sakhalin II project in Russia’s icy waters is expected to flow in July. The Sakhalin Energy Investment Co. Ltd., a consortium including Marathon Oil, Royal Dutch / Shell, Mitsui and Mitsubishi, is developing two fields off Sakhalin Island that are said to have proven reserves of 1 billion bbl of oil and 14 Tcfg. A production platform has been installed and an FSO vessel is due on site this month. Production will begin in July, because Sakhalin waters freeze from December to June. First oil is expected to reach 90,000 bpd and 70 MMcfgd.

Copyright © 1999 World Oil
Copyright © 1999 Gulf Publishing Company