Looking ahead

Naimi clarifies Saudi concept of investment. Saudi Arabian Oil Minister Ali Al-Naimi has not completely shut the door to foreign investment in the Kingdom’s upstream sector, but if it does happen, it will not occur for a number of years. At the Geopolitics of Energy Into the 21st Century Conference in Washington, D.C., Naimi said, "There is no principal position against foreign investment in either our upstream or downstream. It’s really a question of need, and at the moment, we do not need to discover any more oil or gas reserves. By now, we have discovered over 217 Tcf of natural gas. What we really need is people to invest in treating, processing and piping gas." Naimi said when world demand causes Saudi Arabia to use up its oil capacity. "At that point, we can allow foreign help in building new production capacity."

Industry moving to reduce greenhouse emissions. The oil/gas industry has made important strides in developing new technologies for controlling emissions of greenhouse gases, the American Petroleum Institute said at a recent API conference in Houston on climate change. President Red Cavaney said that while scientific debate surrounding global warming is unsettled, "Our companies are not waiting for all the answers before acting." The industry remains firmly opposed to the Kyoto Protocol which mandates sharp reductions in greenhouse emissions because it would harm the U.S. economy and does not include participation by developing countries. But, "Efforts to address climate, including collaboration with government and a host of other research initiatives are proceeding, despite differences over Kyoto," Cavaney added.

Technology cooperation on the UKCS. Sixteen of the world’s leading companies operating on the UK Continental Shelf have founded the Industry Technology Facilitator (ITF). The new company, formed in October 1999, is a small, efficient organization with the objective of fostering innovation and technology for application in the UKCS. With a core staff of seven, ITF aims to achieve this by managing effective communication between technology suppliers and users. In effect, its aim will be to set up joint industry projects (JIPs) by connecting: what industry needs; what researchers and "technology delivery" companies can provide; and what the public / private sectors want to fund.

Electricity: The fastest-growing gas market. Electricity generation will be the fastest-growing market for natural gas in the U.S. over the next 15 years, as independent power generators (IPGs) look to gas to help fuel an unprecedented 13-fold increase in market share. The 1999 Electric Generation Sector Summary by GRI projects IPGs will increase their share of the generating market from 3% in 1997, to 27% in 2015. Consumption of gas for electricity generation is projected to nearly double, from 5.6 quads in 1997, to 10.3 quads in 2015. In fact, nearly half of the increase in total U.S. gas demand projected by GRI between 1997 and 2015 (from 22.6 quads to 32.2 quads) will come from use of gas for electricity generation.

Remote gas development in Ethiopia. The Federal Democratic Republic of Ethiopia (FDRE) and Sicor, Inc. of Houston announced signing of a Memorandum of Understanding for a venture between them to cash flow remote natural gas and associated liquids discovered in 1973 by Tenneco, Inc., but which remained shut-in for lack of a market. The project, called the Gazoil Ethiopia Project (GEP) involves acquisition by GEP of two concessions in Calub and Hilala areas of the Ogaden basin, Southern Ethiopia, containing 4 Tcf gas and 13.6 MMbbl associated liquids. GEP will also acquire about 95% of the Calub Gas Share Co. (CGSC) from FDRE. CGSC has carried out all recent work on the concession areas. GEP will construct a 600-km, 24-in. gas pipeline to transmit gas / liquids to the Awash area, 220 km east of Addis Ababa. At Awash, GEP will construct a cryogenic liquids plant, then construct two gas-to-liquids process systems; total gas processed will be 200 MMcfd. GEP will construct a refinery at Awash to produce products. A large pipeline was selected to make additional capacity for future gas E&P.

Deep exploration play in California. The EKHO Project consortium of nine Canadian independent resource and venture capital companies, including Curlew Lake Resources, announced that the operator, Tri-Valley Oil & Gas Co. (TVOG), began preparation for the first well of its deep oil/gas exploration play east of Lost Hills, California, and expected to start rigging up by Dec. 6, 1999. EKHO’s first prospect is keyed to two deep wells, including the 1972 Tenneco / Great Basin’s 31X-10 and 66X-3, in the Great Central Valley. In the southern portion, the San Joaquin Valley’s deeper horizons are reportedly emerging as North America’s biggest onshore oil and gas plays, with targets in the billions of barrels oil and trillions of cubic feet of gas. The EKHO Project is beginning about eight miles east of the Bellevue 1 which blew out last year at "Middle East rates."

More deepwater licensing. Elf Petroleos do Brasil Ltda., a subsidiary of Elf Acquitaine, signed an agreement with Petrobras for a 15% interest in Block BFZ-2, operated by BP Amoco (35%), with Petrobras (30%) and Exxon (20%). The block is located 300 km northeast of the Amazon River mouth, with a surface area of 25,000 sq km, and water depths from 100 to 2,000 m. The region is still little-explored. Off West Africa, Vanco Energy Co. announced it was awarded the first deepwater license offshore Senegal. Called Dakar Offshore Profond, the deepwater block covers eight million acres, the largest offshore license awarded in this nation. Vanco signed the PSC with Petrosen, the state oil company, for a 100% interest. Its work program includes acquisition of 2,000 km of 2-D seismic by 2002, and further 2-D/3-D through 2003.

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Copyright © 2000 Gulf Publishing Company