Total and Elf spreading resources to meet production targets

Elf's Elgin and Franklin development [53895 bytes] in the central North Sea will be one of its most capital-intensive new offshore projects.

France's two oil majors are well placed in most of the established and virgin offshore provinces. Yet there is surprisingly little overlap of interests, apart from in the North Sea and Qatar. Both revealed their plans at the recent Third Millennium Petroleum Conference in London recently, co-hosted by Global Pacific & Partners (Africa) and Petroconsultants.

Daniel Velot, president of Total Exploration Production, claimed his company could no longer be labeled "a European marketer and refiner with a small E&P business". Last year, upstream business represented 38% of the company's activity, and the plan is to grow that percentage to 46% by 2000.

Velot said Total's global oil and gas reserves stood at 4.5 billion boe currently, with half of that centered in the company's core production area of the Arabian peninsula. Reserves outside this region were 2.2 billion boe, a 66% increase over the past five years. The aim now is to double production away from the Middle East by the end of the decade.

The ingredients are in place. Total's finding and development costs have come down to $3/bbl, which Velot described as "good compared with the competition". A swift hike in gas reserves is inevitable following recent events in three countries:

offshore Myanmar, further discoveries will boost production from Total's joint Yadana development with Unocal: Velot claimed a net yield to Total in 2000 of 5 bcm/yr
in the UK North Sea, a new gas and condensate accumulation was located late last year via exploration well N33 in a deep horizon below the Alwyn reservoir; this was drilled from the Alwyn North platform, and would be easy to develop from existing facilities
in the Norwegian North Sea, Total has 1.3% of the giant Troll gasfield (recently inaugurated), plus 7.6% of the Haltenbanken Aasgard oil and gas development, recently approved by the Norwegian authorities
offshore Tierra del Fuego, new gas discoveries, once developed, will put Total just behind YPF in Argentine gas production
at Thailand's Bongkot Field, production has been raised following a sales agreement with PTT; new LNG trains are also being added to Indonesia's Bontang LNG plant to raise output from several nearby contributing offshore gasfields.

In the core Middle East area, where Total claims to be second only to Shell in terms of oil production (200,000 b/d, mainly from Abu Dhabi and Dubai), Iran's offshore Sirri A and B fields will start producing in 1998 at 120,000 b/d, Velot said, yielding Total 40,000 b/d for five years. And Qatar's North Field should also enter service soon, netting the company 24,000 b/d of condensate.

"By 2005 we will definitely be producing 1MM bbl worldwide. Several other major projects [such as Russia's Shtockmanovskoye] may or may not fly: these could push our output to 1.25MM b/d."

Elf's technology thrust

Jean Alliot, vice president, exploration production planning and economics for Elf in Paris, explained how his company was gearing up for forthcoming challenges of global operations. Elf's technological thrust is directed primarily at large-scale projects such as deep offshore exploration and development.

Elf sees efficiency improvements coming from integrating different technologies, especially in geosciences, and it is developing tools to this end. It is also keen to further use of multi-drain, horizontal multilateral and slim hole wells to increase well productivity, while at the same time reducing the number of platforms, well dimensions and environmental impact.

Costwise, Elf has pegged back production outlay to $3.3/bbl and aims for a further reduction of 10%. Development costs of its new fields entering production in 1995-6 are down 20% on start-ups from 1993-4. Nkossa, Elf's biggest new development, came onstream earlier this year on time and within the budgeted price.

The company aims to sustain its global production level at 1 mboe/d. To this end it plans to spend $0.6 billion annually on exploration and $1.6 billion on development. Europe, which provides 49% of Elf's total production and 93% of its gas production, will be allocated a third of the company's exploration budget - even though high quality new exploration permits are getting harder to come by in the North Sea.

The fact is, though, that Elf's North Sea production continues to rise, despite gloomy predictions, and it is well positioned in the UK central North Sea as operator of the high pressure, high temperature Elgin and Franklin development. This is a $2.5 billion project, likely to start up in 2000, with a potential export outlet through the new UK-Belgium Interconnector pipeline.

Elsewhere in the North Sea, Elf has key interests in the Ekofisk redevelopment, and continues to make gas discoveries off The Netherlands, all of which help make it Europe's fourth ranked gas producer.

Elf's decision to take on deepwater acreage in the Gulf of Guinea some years ago continues to pay off, said Alliot, with two significant new discoveries: Moho in Congo and Girassol in Angola. But neither this area nor the North Sea can fuel the company's expansion plans.

In other areas, key offshore opportunities for Elf are Brunei, Azerbaijan (where it recently signed a permit for Shah Deniz), Qatar and the Gulf of Mexico, where it plans to develop its activities.