Judy Maksoud • Houston
Americas
Things are looking up in Atlantic Canada. EnCana, which put the Deep Panuke gas development on hold in February of last year, resumed exploration activity late last year with two wells.
The Margaree and MarCoh wells have increased the company's confidence in the commercial potential of the Deep Panuke discovery, which lies 250 km southeast of Halifax, Nova Scotia.
"When we called a time-out on the Deep Panuke regulatory process and initiated a comprehensive project review in February 2003, our goal was to strengthen the risk-adjusted project economics," Randy Eresman, EnCana's COO, said. In his view, the company has made progress, but substantial work remains. Still, resumed activities are a positive sign.
EnCana owns 100% of Margaree and has a 24.5% interest in MarCoh.
While Deep Panuke gets into gear, Exx-onMobil has begun gas production from the Alma field, the first Tier 2 production from the Sable project, 125 mi offshore.
With the addition of Alma reserves, average daily production at Sable is 500 MMcf/d of gas and 20,000 b/d of associated condensate and natural gas liquids.
Alma is the first Tier 2 field. South Venture, the second Tier 2 field, is under development with production expected in late 2004.
Europe
ExxonMobil and Qatar Petroleum have acquired 90% interest in the Edison Gas North Adriatic LNG terminal project.
The North Adriatic LNG terminal will be located offshore Italy's northern coast and is expected to support the country's long-term energy demands. Gas for the project will come from Qatar's North field.
Ras Laffan LNG Co. Ltd. II (RasGas II) and Italy's Edison Gas S.p.A. have signed amended sale and purchase agreements to increase LNG supplies from the initially agreed upon level of 3.5 million tons annually (MTA) to 4.7 MTA, beginning in 2007. A front-end engineering and design contract for the terminal was expected to be finalized by early this month.
Asia Pacific
Business is booming in the Gulf of Thailand. Pogo Producing Co. had positive results from its Gulf of Thailand activities in 2003. The company drilled 10 wells in the Gulf, seven of which were development wells on the Benchamas D platform.
Early in 3Q 2003, government authorities approved the farm-in of the 20,000-acre block 9-A, east of and adjacent to Tantawan field. That approval allowed the immediate drilling of two exploratory wells. The Tantawan No. 23 well in the southern part of block 9-A logged 162 ft of net pay, mostly oil. The northerly block 9-A Tantawan No. 24 well logged 98 ft of net pay, mostly gas, and will justify ordering the construction of a prod-uction platform for that area. Four other exploration wells were scheduled to follow immediately.
The first of eight newly fabricated Thailand production platforms left the yard late last year for Tantawan H. The remaining seven platforms will be completed over the next six months.
Meanwhile, Unocal Corp. subsidiary Uno-cal Thailand Ltd. has signed a heads of agreement with Thailand's PTT Public Co. Ltd. (PTT) to amend and extend two gas sales contracts.
The agreement provides for a long-term extension of the Erawan and Unocal 2/3 contracts, which cover all of Unocal's natural gas and condensate production in the Gulf of Thailand, excluding the Pailin field.
"We are prepared to make the large investments in further exploration drilling, prod-uction facilities, wellhead platforms, and dev- elopment drilling that will be required to deliver the increased gas volumes," Randy Howard, president of Unocal Thailand, said.
Howard said Unocal plans to invest several billion dollars over the life of the contracts starting in 2004 to provide additional gas supplies to meet Thailand's energy needs.
The agreement increases contract volumes from 740 MMcf/d to 850 MMcf/d with the completion of PTT's third transmission pipeline in 2006. Volumes would increase to 1.24 bcf/d in subsequent years to meet the market demand.
Unocal also signed an amendment to the sales contracts covering natural gas prod-uction from the Pailin field offshore Thailand. That agreement increased the contract quantity by nearly 12% to 368 MMcf/d.
The company is seeking Thailand government approval for the second phase of its oil development in Thailand, which would increase gross oil production from the Yala and Plamuk fields to 40,000 b/d. The company said the resource potential has more than doubled since Phase 1 began and is approaching 100 MMbbl.
Phase 2 development will include facilities and wells to bring production to 40,000 b/d. Plans are to have the new facilities installed by mid-2005, with start-up soon after.
Middle East
Teikoku Oil Co. Ltd. has executed a farm-out agreement covering the Khaligue El Zeit and South East July blocks in the west portion of the Gulf of Suez offshore Egypt.
Teikoku will acquire a 30% participating interest in each block subject to the approval of Egyptian authorities. The governing contracts with Egypt's national oil company, EGPC, came into effect in June 2003.
Teikoku plans to establish two wholly owned subsidiaries, Teikoku Oil Suez KEZ Co. Ltd. and Teikoku Oil Suez SEJ Co. Ltd., to which Teikoku will transfer all of its interest.
The first exploratory drilling in the Khal-igue El Zeit block was to begin shortly after the agreement was finalized. Drilling in the South East July block is to begin this year.
Mediterranean
A new seismic agreement points to possible development in the eastern Mediterranean. Syrian Oil Co. reportedly signed a contract with Veritas DGC to gather seismic, geological, and geophysical data. Veritas will have the exclusive right to carry out seismic surveys for 10 years once the contract is in force.
Further west, Shell and its partners made a deepwater discovery offshore Egypt. The KG45-1 well, the first of three planned wells in the Northeast Mediterranean Deepwater Concession, was drilled to a planned depth of 3,613 m. The well, 150 km north of Alexandria, is the deepest to date in the Mediterranean.
Also off Egypt, RWE Dea AG, Hamburg, made a gas find with the Ruby 2 discovery well 60 km off the coast of Alexandria.
According to RWE Dea, Ruby 2 marks the preliminary final stage of the successful series of offshore drilling operations into the Pliocene gas reservoir of the Tertiary Age. The company's next step is to reach the deeper Late Paleocene and Cretaceous levels. Toward that end, RWE Dea continued its drilling campaign with the Raven 1X well on a neighboring concession.
Central Asia
The Caspian Sea is heating up this winter. Wintershall AG is stepping up exploration activities in the Russian segment of the Caspian. The Volga delta has been pegged as an area of considerable potential. Two promising geological structures have already been identified in the 8,000-sq-km area.
Data analysis is under way, and an exploration well is planned for 200-2005.
Caspian exploration has become possible through the acquisition of a 70% share in exploration company OOO Megatron NVK, which possesses the sole right to search for oil in the prospective Tyuleni exploration block. Winter-shall will be operator for all E&P activities.
In Turkmenistan's portion of the sea, Dragon Oil has spudded well LAM21/106, the first of four development wells to be drilled from the LAM21 platform in the Cheleken contract area. The last of five successful wells on LAM22 platform was drilled in January 2003.
Off Kazakhstan, ExxonMobil Corp. subsidiary ExxonMobil Kazakhstan Inc. participated in two discoveries in new prospects on the North Caspian production sharing agreement (PSA) contract area. The first exploration wells on the Aktote and Kash-agan Southwest prospects encountered hydrocarbon-bearing intervals. Additional evaluation will be required to determine if the hydrocarbon accumulations are commercially viable.
The North Caspian PSA covers almost 1.4 million gross acres. Eni is operator.
Africa
Angola has seen activity of every sort recently. Late last year, Sonangol and BP announced the Marte oil discovery in ultra-deepwater block 31. This is the fourth exploration well BP has drilled in block 31 and the third successful discovery following the Plutão and Saturno discoveries, which lie 20-25 km from Marte. BP planned to drill the Vénus-1 well in the area before year-end.
The Marte-1 well was drilled in 2,000 m water depth 175 km off the Angolan coast and reached a total depth of 4,193 m. It flowed at 5,200 b/d during testing.
The Total-operated Jasmim field in block 17 came onstream in early December. Jasmim is one of 15 discoveries in block 17 and the second to be brought onstream following Girassol in December 2001. The field lies in 1,400 m of water, 150 km offshore, and its development includes eight subsea wells tied back to the Girassol FPSO. Bringing this field onstream increases output from the Girassol FPSO to more than 230,000 b/d.
The Xikomba field also began production in early December 2003. ExxonMobil Corp. subsidiary Esso Exploration Angola (Block 15) Ltd. began the company's first production on block 15. Xikomba represents the first of several anticipated operated production facilities offshore Angola.
In the northwest corner of Angola block 15, Xikomba employs an early production system (EPS) consisting of nine subsea wells tied back to an FPSO. Xikomba is the third deployment of ExxonMobil's EPS technology offshore West Africa and the first EPS offshore Angola.
Not all of the recent wells have been successful, but the prospectivity of Angola's offshore will keep leaseholders busy.
Canadian Natural Resources subsidiary CNR Ranger (Angola) Ltd. drilled the first of several potential exploration targets on block 16.
Zenza-1, drilled in 1,300 m of water, reached a total depth of 3,998 m, encountering reservoir quality sands in four zones. Though the well was plugged and abandoned as a result of non-commercial hydrocarbon shows, the group plans a second exploratory well in the same block late this year or early next.
India begins deepwater drilling program
India's Oil and Natural Gas Corp. kicked off its deepwater drilling campaign, Sagar Samriddhi, late last November. The multi-billion-dollar program, which provides for 47 deepwater exploration wells, was launched last August.
The first phase of the drilling program includes work to be done by three drillships. The first of these, the Belford Dolphin, charted from Dolphin Drilling, arrived in India on Nov. 14 and spudded the first well of the program on Nov. 30. The well is on block GKDW-CA-1 in the Gulf of Kachchh off India's northwest coast in 1,862 m of water.
While the Belford Dolphin begins work in the Gulf of Kachchh, ONGC's Sagar Vijay is resuming operations in the Krishna-Godavari basin. And Transocean's Discoverer Seven Seas is scheduled to move to the Arabian Sea in February.
ONGC, now in the midst of its 10th five-year plan, has targeted deepwater production to achieve over 30 million metric tons of oil equivalent per year by the time the 11th five-year plan concludes. That amount equals current domestic onshore production.
Pertamina moves forward with a new strategy
Pertamina's new CEO has begun a series of steps intended to support the company's new limited liability company (LLC) status, granted in September 2003.
Arrifi Nawawi, the newly appointed CEO, said his priorities in the next few months will be to increase the pace of restructuring Pertamina.
"Pertamina has become an LLC, and by becoming an LLC, we must follow the rules of transparency and good governance," Arrifi said.
Efforts at changing Pertamina's image and structure are closely related to Arrifi's plans for an IPO in 2007. Arrifi believes it is essential to have a fully developed, transparent, and law abiding institution to position the company for a successful IPO.
According to its business plan, Pertamina will focus 70% of its resources on upstream operations and will increase production reserves. A holding company will be established that will include upstream subsidiaries such as North Sumatera, South Sumatera, Jambi, and West Java. Pertamina's subsidiaries, Elnusa, Pelita, and Patra Jasa, will be either sold or integrated. Petral, Pertamina's trading company will be further developed.
Pertamina expects progress in the coming year, with forecast profits of $1.3 billion. Cooperation between Pertamina and ExxonMobil to develop oil and gas reserves in the Cepu block offshore Java is well underway. Now, Pertamina is considering moving the Donggi gas development project in the Celebes forward and pursuing LPG development in South Sumatera.
Arrifi recently cancelled a $90-million bond issued to subsidize the purchase of 12 new tankers, saying the act would decrease profit margins. The project could move forward when the company finds a low-cost alternative. At present, the numbers don't support the move, Arrifi said.