September 1999 Vol. 220 No. 9  Offshore

Robert E. Snyder,  Editor

Discoveries pace international offshore scene

As reported in The Offshore International Newsletter, Italy’s ENI affiliate Agip North Africa BV has reached an agreement with Libya’s state oil company National Oil Corp. to develop oil / gas / condensate reserves in Block NC 41 in the Mediterranean and onshore Block NC 169 near the Libyan-Algerian border. The offshore development is about 68 mi north of Tripoli in 590-ft water.

Agip will use a fixed drilling / production platform for the offshore field. Dual 34-in. and 10-in. pipelines will transport gas and condensate to an onshore processing plant at Melitah on the Libyan coast. About 80% of the gas processed will be exported via a 372-mi, 32-in. pipeline across the Mediterranean to southeastern Sicily. Agip Gas BV will serve as the project’s operator.

OIN says an international tender for basic engineering / project management has been issued and the contract should be awarded soon. International tenders for EPIC contracts to build the onshore and offshore infrastructure will be issued shortly. The two blocks reportedly hold about 1.8 billion bbl oil equivalent. First production is scheduled to begin in late 2003. Total field and pipeline project cost is estimated at $5.5 billion.

More international discoveries. Various press reports note several recent offshore discoveries. India’s Oil and Natural Gas Corp. (ONGC) reports a significant oil/gas discovery in offshore deepwater Well G-1AA in the Krishna-Godavari basin, 15 mi NE of the Amlapuram Coast in Andhra Pradesh state. The field is reportedly the first on the Eastern Coast and the first in deep water. Drilled with the company’s Sagar Vijay drillship, the well was flow tested at 3,600 bopd and 42 Mm³/d (1.45 MMcfd) gas.

Off Angola, Esso Exploration Angola reports a new deepwater oil discovery in Block 15, in 3,760-ft water. Named Chocalho, the discovery is the operator’s fifth oil find on the block, following Hungo, Kissanje, Marimba and Dikanza. OIN says Esso claims the discoveries indicate 2 billion bbl recoverable reserves, and a development concept is being finalized. In addition to Sonangol, partners in Block 15 include BP, Agip and Statoil.

Off the West Coast of Ireland, 40 mi from Achill Island in 1,100-ft water, Enterprise Oil (operator) with Saga, Statoil and Marathon, announced a successful second gas appraisal with Well 18/25-1 in Corrib gas field in Block 18/25 in the Slyne Trough. The well, drilled by the Sedco 711 semi to 12,270 ft TVD, is 1.2 mi from last year’s 18/20-2Z appraisal. The new well tested up to 64 MMcfd through a 1-1/4-in. choke.

Development, probably subsea, hinges on the Irish gas market which is described as small but rapidly growing, and presently served by the only indigenous gas source, the declining Kinsale Head field, and 50% by imports. Studies on pipeline and required infrastructure are underway according to Enterprise.

And to prove the shallow U.S. Gulf is still in the news, Basin Exploration (operator), with Duke Energy Hydrocarbons, announced an apparent discovery on West Delta Block 63. Reports say the 13,900-ft TVD well found some 117 net feet of oil / gas / condensate pay. Casing was set and development, into the area’s infrastructure, will probably follow testing of a second well in a separate fault block.

California offshore battles continue. While drilling rigs are rare off California’s coast anymore, there are 40 yet-to-be-developed leases. These offer the only possible new drilling sites along the West Coast until 2012, when the presidential moratorium expires. But the Coastal Commission is doing what it can to block development of the existing leases, at least until they are reviewed by apparently different standards than those under which the titles were obtained.

Minerals Management Service reportedly is about to approve or deny plans submitted by oil companies that hold the leases. However, the Commission wants to "jump in" and review these plans under stricter guidelines. The question is whether the older leases should be treated as "new" plans. The oil companies say they can meet state and federal standards, especially with advances in drilling technology. To set the tone of the battle, as quoted from The Associated Press, one of the Commissioners said, "As a resident of Santa Barbara and one who has to live with those god-awful ugly platforms off our coastline, I’m encouraged that so many of us are behind ensuring there won’t be any more of those."

In fact, platform construction is down. Whether it makes folks in Santa Barbara happy, or not, OIN’s July 26 Market Outlook report says that during the summer months, platform construction usually peaks, but not this year. In August, 358 fixed platforms were either planned or under construction worldwide, a 19% slide from summer’s peak last year. Of this number, platform installations are projected to total around 218 for 1999. By August 1998, 102 platforms were installed, compared to just 63 counted by the same date this year. During 1998, 239 were installed; total installations for 1999 could be close to the past three year’s average.

The report says data so far indicates that 2000 could experience even lower platform installation activity, as only 133 known projects are scheduled for completion. While that number is likely to increase as more projects are sanctioned, it is possible that total installations next year could fall to below 200 units.

Oil price problems have delayed plans. OIN says, inevitably, oil companies will undertake field developments, that have languished in the study phase, when the oil price climate is deemed favorable for necessary reserve replacement. "Recent announcements of upstream initiatives to boost oil and gas production worldwide in the next four years by companies like BG plc are a good sign that activity may improve."

Of the 358 installations planned and under construction from mid-1999 to year-end 2001, most of the structures are in water depths of 300 ft, or less — for the rest of this year, 85 of the total 155 are in water depths to 150 ft. Next year’s 133 platforms include 116 in up to 300 ft , nine in 301 to 450 ft, two in deeper water, and six unknown. Details on platform construction can be found in Offshore Data Services’ publication Offshore Field Development International.

Copyright © 1999 World Oil
Copyright © 1999 Gulf Publishing Company