March 2012

News & Resources

World of Oil and Gas

Cyprus offers seismic data for licensing round

Vol. 233 No. 3

WORLD OF OIL AND GAS

NELL LUKOSAVICH, SENIOR EDITOR

EXPLORATION

Cyprus offers seismic data for licensing round

As the Republic of Cyprus opened its 13-block second licensing round, further steps were taken to provide comprehensive data, including seismic, to potential bidders. Accordingly, Petroleum Geo-Services (PGS) is the official data provider and has furnished Cypriot officials with a dense multi-client (MC) seismic data grid. One component, the MC2D-CYP2006 survey, was acquired for the first licensing round and has 10-by-20-km coverage. In addition, another survey, MC2D-CYP2008, infills the previous work, thus providing 5-by-5-km coverage, on average. The most recent survey offers the best possible data quality. Following reprocessing in 2011, the original conventional data grid also has high data quality. Block 3 has the greatest MC data coverage, with 3D-quality data in part of the block. Geological interpretation reports based on these data, as well as hydrocarbon assessments, are available through the Ministry of Commerce, Industry and Tourism.

Rosneft obtains licenses for three Barents Sea blocks

Rosneft has obtained licenses for geological survey, exploration and production of oil and gas at three blocks on Russia’s Barents Sea shelf. The blocks are named Tsentralno-Barentsevsky, Fedynsky and Perseevsky. The blocks hold an estimated total resource potential of 3.3 billion tonnes of crude oil and gas condensate and up to 98.89 Tcf of gas. Exploration of the blocks envisages the acquisition of 6,830 linear mi of 2D seismic data and 1.35 sq mi of 3D seismic data, as well as the drilling of five wildcat wells.

Australian land exploration doubles over last year

Professional services firm Deloitte released its fourth-quarter, 2011, Drilling and Licensing Report, covering exploration and appraisal drilling, plus licensing and deal activity in Australia for the December quarter. The report states that onshore activity strengthened during 2011 as the year progressed, recovering from a spate of natural disasters that hampered drilling levels in the first quarter, to finish the year at close to pre-GFC (Global Financial Crisis) levels. Onshore activity continues to be dominated by smaller independents, with a 131% increase in wells spudded since 2010. Offshore activity has risen significantly, too, due largely to majors like Chevron and Woodside searching for further gas to feed their planned, floating and conventional LNG plants.

Buccaneer granted permits offshore Alaska

Buccaneer Energy has been granted two key permits for oil and gas exploration operations at the Southern Cross and Northwest Cook Inlet units offshore Alaska in the Cook Inlet. The company’s permitting plan was implemented approximately 18 months ago and is on schedule for completion prior to the arrival of jackup rig Endeavour-Spirit of Independence in the inlet.

UNCONVENTIONALS

Poland’s PKN Orlen to intensify drilling for shale gas in 2012

Polish state-controlled oil firm PKN Orlen plans to significantly intensify work on its shale gas concessions in Poland this year and has enough resources to continue exploration without partners, company executives said. PKN Orlen holds eight exploration licenses for shale gas in Poland, mostly in the country’s eastern area. The company finished vertical drilling on one of the licenses, Wierzbica, last year.

India delays shale gas auction to 2013

India’s Petroleum Ministry has again delayed its first-ever shale gas exploration round, and now plans to launch it in December 2013. The delays are attributed to regulatory regimes currently being put in place, including a resource assessment and policy framework for the upcoming rounds as well as the official identification of potential acreage to be auctioned. India’s shale gas rounds, which will include the Cambay, Assam-Arakan, Gondawana, KG, Cauvery and Indo Gangetic basins, have been delayed since 2011.

KBR, JV partners sign EPC contract for Ichthys LNG

KBR, along with its joint venture partners JGC and Chiyoda, signed a contract for engineering, procurement and construction activities on the Ichthys LNG project in northern Australia. The partners signed the $15-billion contract with Ichthys LNG project owners INPEX and Total. Gas from the Ichthys field, which is in the Browse basin about 124 mi off Western Australia, will be exported to onshore processing facilities in Darwin via a 552-mi subsea pipeline. The Ichthys project is expected to produce 389.5 Bcf of LNG and 18.9 million bbl of LPG per year, along with approximately 100,000 bcpd at its peak.

Chevron to explore for shale gas in China

Chevron confirmed that it has signed a joint agreement to explore for shale gas in China’s Qiannan basin. The company began seismic operations in July 2011. Chevron didn’t disclose its partner, but local press outlets have reported that the agreement is with a unit of China Petrochemical Corp., known as Sinopec Group. Qiannan basin is in the southwestern province of Guizhou.

PRODUCTION

Jubilee production misses output target

Oil and gas production activities in Tullow’s Jubilee field, situated off Ghana’s soutwestern coast, have been hit by problems, and, as a result, the projected output target for this year cannot be met. Last year, Tullow revealed that Ghana lifted 3.9 million bbl of crude, making over $444 million from its sale. The company said in January that it would not be able to meet its projected 120,000-bopd production target this year, but gave no reason why. Currently, the field is producing about 90,000 bopd.

CNPC to begin field development in western Uzbekistan

China National Petroleum Corp. (CNPC) plans to begin development of Eastern Alat gas-condensate field in the Bukhara-Khiva region of western Uzbekistan. CNPC opened the Eastern Alat gas-condensate field in the Karakul investment block in 2011. In the first half of this year, the company must submit a report to the Uzbek government about Eastern Alat and natural gas reserves to ensure continued protection in the State Reserves Committee. According to preliminary estimates, the first three years of development could require an investment of about $150 million.

Cascade, Chinook start producing

Brazil’s Petrobras started pumping crude oil from two fields in the U.S. Gulf of Mexico on February 25. FPSO BW Pioneer is now connected the the Cascade 4 well about 155 mi offshore Louisiana. Petrobras had originally expected to start output at Cascade and Chinook fields in 2010, but the project was delayed after the U.S. government banned deepwater drilling in the wake of the Macondo disaster.

BUSINESS

Mitsubishi to invest $2.9 billion in B.C. gas assets

Encana said that Japan’s Mitsubishi will invest about $2.9 billion to acquire a 40% stake in its undeveloped Cutbank Ridge natural gas assets in northeastern British Columbia. Calgary-based Encana had previously entered into a larger agreement to sell a 50% stake in shale gas assets in northeastern B.C. and northwestern Alberta to PetroChina Co. for $5.4 billion, but that deal fell through last year. Under the agreement, Mitsubishi will own 40% of the Cutbank Ridge partnership, which holds about 409,000 net acres of undeveloped Montney shale lands in B.C., plus additional development potential in the Cadomin and Doig geological formations.

BG Group to invest $20 billion in Tanzania gas exploration

BG Group plans to invest up to $20 billion to extract gas in Tanzania, Chairman Robert Wilson announced. BG has discovered huge reserves of natural gas in three wells in the Indian Ocean, including one in deep water. The firm invested $500 million in gas exploration in the country last year and plans to invest a similar amount this year. Wilson called on the government to join efforts to remove obstacles that challenge exploration and production activities in the Indian Ocean, especially in dealing with Somali pirates. BG entered Tanzania last year with the purchase of 60% of Ophir Tanzania, which had an exploration contract with the government and the Tanzania Petroleum Development Corp.

Petrobras signs deals for 26 deepwater rigs

Brazil’s Petrobras has approved contracts for 21 offline deepwater rigs with Sete Brasil, at an average day rate of $530,000, and for five dual-activity rigs with Ocean Rig, at an average daily rate of $548,000, all with 15-year terms. These rates could be cut, if tax exemptions are granted, as well as if operating costs can be reduced. All of the rigs will be built in Brazil, with the first units scheduled for delivery in four years. The final rig will be delivered in 7.5 years. These contracts mean that Petrobras has fully implemented its plan to contract 28 rigs to be built in Brazil, to meet the long-term demands of its drilling program, primarily for pre-salt oil wells, as well as a further five rigs not originally planned

El Paso to sell E&P company to Apollo, partners

El Paso has entered into an agreement to sell its exploration and production business, EP Energy Corp., for $7.15 billion to affiliates of Apollo Global Management and Riverstone Holdings, which are joined by Access Industries and other parties. The sale of EP Energy is dependent upon completion of the Kinder Morgan-El Paso transaction, which is expected to close in the second quarter of 2012. The sale of EP Energy is also expected to close around the same time.

REGULATORY AFFAIRS

Weatherford dismissed from all Macondo claims

All claims against Weatherford International in the multi-district litigation over the cause of the Macondo blowout and oil spill have been dismissed. In June 2011, Weatherford announced that its U.S. subsidiaries had reached agreements with BP to settle any claims that may arise between the companies relating to the Macondo blowout and oil spill. Under the agreement, BP agreed to indemnify Weatherford for current and future compensatory claims resulting from the incident. The entire cost of the $75 million agreement with BP was funded by insurance policies that Weatherford had in place at the time of the incident.

Repsol gets okay to develop gas fields in Algeria

The government of Algeria authorized Repsol YPF and its partners to develop gas fields in the North Reggane project. A Repsol-led consortium will invest more than $2.6 billion to develop 104 wells in six areas. The Spanish company has a 29.25% stake in the consortium, which also includes Algerian state energy company Sonatrach, and Italian and German firms. Repsol said that it plans to start producing in the middle of 2016 and carry on production for 25 years, with the first 12 years yielding stable production of 284 MMcfgd.

DISCOVERIES

Statoil, Exxon find natural gas in Tanzanian reservoir

Statoil, along with its partner ExxonMobil, confirmed that the Zafarai-1 well in Block 2 offshore Tanzania has encountered indications of natural gas in a good-quality reservoir. Statoil said that drilling operations are ongoing and that it is too early to give any indication of size and commerciality. The well was spudded in early January 2012, and drilling operations are expected to take up to three months to complete. The well is being drilled by the drillship Ocean Rig Poseidon, about 50 mi off mainland Tanzania. It is the first exploration well that has been drilled in the 2,120-sq-mi license.

OGX makes shallow-water, presalt oil discovery

Brazilian independent OGX has confirmed a shallow-water oil find in Brazil’s presalt region, following an initial discovery in January, when drilling tapped a 3,280-ft column of oil that had net pay of 360 ft. Drilling was halted after a high-pressure zone was encountered. While the OGX discovery is in the same Santos basin where a cluster of presalt finds was made in the mid-2000s, it lies much closer to shore and in waters that aren’t nearly as deep. The prospect, dubbed Fortaleza, was made in roughly 500 ft of water with a well drilled to a TD of 20,125 ft. OGX owns 100% of the BM-S-57 block where the Fortaleza find was made, about 63 mi off the coast of Rio de Janeiro state. OGX estimates that its Santos basin blocks, including BM-S-57, hold 1.8 Bboe.

Eni makes 7.5-Tcf gas find offshore Mozambique

Eni made a new giant natural gas discovery at the Mamba North 1 prospect, in Area 4 offshore Mozambique, encountering a potential of 7.5 Tcf of gas-in-place. This new find, in addition to the Mamba South discovery from October 2011, further increases the potential of the Mamba complex to 30 Tcf. During 2012, Eni plans to drill at least five other wells in nearby structures to assess the upside potential of the Mamba complex.

Petrobras makes onshore Amazon, offshore Franco discoveries

Brazil’s Petrobras has discovered a new accumulation of oil and natural gas in a remote region of the Amazon rainforest. The discovery was made in the Solimoes basin, about 25 km from Urucu field that has been producing for 25 years. Testing showed the well, dubbed Igarape Chibata East, was capable of producing 1,400 bpd of light oil and 1.59 MMcfgd. Petrobras holds a 100% stake in the block. Petrobras also reported that it had completed drilling its first well at the Franco area in the pre-salt area of the Santos basin. Results confirm the extension of oil reservoirs northwest of the discovery well, informally known as Franco NW, which is situated in a water depth of 6,100 ft, 117 mi offshore Rio de Janeiro.

ONGC hits two shallow-water gas discoveries

India’s Oil and Natural Gas Corp. (ONGC) has made two shallow-water gas discoveries offshore India. Exploratory well Alankari No. 1, in the KG basin, was drilled to a depth of 6,273 ft and is producing gas at a rate of 5.1 MMcfd. The second exploratory well, in the Saurastra basin, reached a depth of 16,033 ft and produced gas at a rate of 1.4 MMcfd. ONGC claims this discovery provides a significant lead to explore other sub-basalt Mesozoics in the area.

Potential unconventional gas play discovered in Poland

European shale gas firm San Leon Energy has uncovered a new potential unconventional gas play in Poland, following completion of drilling at its Siciny-2 well in the SW Carboniferous basin of Poland. The stratigraphic test well reached a TD of 11,545 ft after penetrating more than 3,280 ft of Carboniferous section. A previously unseen, fourth potential Carboniferous shale section, and a fractured tight gas sandstone, were also encountered below 10,500 ft. Tight rock analysis will be performed on the core to evaluate the potential for commercial shale gas and tight gas sand production.

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