Majors more focused on near-field exploration

Major oil companies spent $169 billion on exploration during 2006-15, according to a new benchmarking report by Wood Mackenzie.

Nov 9th, 2016
Beckman
Jeremy Beckman • London

Major oil companies spent $169 billion on exploration during 2006-15, according to a new benchmarking report by Wood Mackenzie. However, returns over the period were generally weak, leading the industry to impose steep cuts in exploration spending and focus less on replacing production via conventional exploration. Early indications are that this action has paid off, the analyst claimed, with exploration becoming more incremental and reserves replacement steered more toward brownfield investments. There has also been a big shift toward gas, which accounts for around two-thirds of the majors’ more recent discoveries.

North America

Caelus Energy claims to have discovered 6 Bbbl of in-place oil at its shallow-water Smith Bay state leases offshore Alaska’s North Slope. This follows analysis of two wells drilled earlier this year and newly acquired 3D seismic. A favorable fluids composition could lead to 30-40% recovery rates, the company added. Caelus plans to drill an appraisal well and acquire more 3D data over outboard acreage, which could hold an extension of the Smith Bay fan complex.

Drilling at the shallow-water Smith Bay location. (Photo courtesy Caelus Energy)
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Shell’s first exploratory well on its deepwater Shelburne basin lease, 250 km (155 mi) offshore Halifax, Nova Scotia was unsuccessful, according to partner Suncor Energy. Drilling had to be suspended for three months when a riser fell from the drillshipStena IceMAX to the seafloor. The aim was to prove hydrocarbons in the southwest Scotian shelf.

South America

Total, as the new operator, has applied for an extension of the Guyane Maritime Permit offshore French Guiana, according to partner Hague and London Oil.

In neighboring Guyana, various individuals from Schlumberger and Welltec have raised funds to establish a new company, Totaltec Oilfield Services, to promote indigenous content and competence in support of ExxonMobil’s deepwater Liza oil field development.

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Petrobras has invited new bids for the Libra Pilot FPSO in the Santos basin offshore Brazil, after cancelling the previous bid process last year due to excessive prices. Local content commitments have been relaxed for the new process. The operator and its partners expect to sign a contract for an FPSO early next year, with oil production following during the second half of 2020.

As part of its 2015-16 Divestment Plan, Petrobras also has been negotiating the sale of stakes in two fields to Karoon Gas Australia. Pending regulatory approval, Karoon would acquire 50% of the deepwater Tartaruga field in the post-salt Campos basin, currently in the early development phase, with Petrobras remaining as operator. The other transaction involves a transfer of a 100% interest in the producing Baúna oil field in the post-salt Santos basin, which Petrobras brought online in early 2013.

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UK independent Borders & Southern (B&S) claims to have drawn up commercial scenarios for development of its deepwater Darwin gas/condensate discovery south of the Falkland Islands. These involve phased and full-field production from the Darwin East and West structures via subsea well completions tied back to a leased FPSO, which could be located several kilometers south of the field where water depths dip to a more manageable 1,100 m (3,609 ft). B&S favors a phased scheme, initially targeting 270 MMboe and delivering 56,000 b/d via four production wells and three gas injectors, with a breakeven price of $40/bbl.

West Africa

Foxtrot International has brought onstream two more gas fields in block CO-27 off Côte d’Ivoire as part of a four-year, $850-million development program. The Marlin and Manta structures are producing through seven wells connected to a four-leg platform, lifting gas output from the block to an average of 170 MMcf/d. This represents more than 75% of the country’s total gas production. The Foxtrot and Mahi fields were developed earlier via another platform.

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Canadian Overseas Petroleum subsidiary ShoreCan has agreed to acquire 80% of the share capital of Essar Exploration and Production (Nigeria), which has a 100% stake in the 1,530-sq km (591-sq mi) OPL 226 lease, 50 km (31 mi) offshore in the central Niger Delta area. Water depths vary from 40-180 m (131-590 ft). One of the five wells drilled to date encountered oil and gas - there is a commitment to spud one more well prior to the end of 2017.

Europe

CNOOC, Petoro, and Icelandic company Eykon Energy are looking to progress exploration on a license in the Dreki Area offshore northeast Iceland, where there are geological analogies to conditions off the Faroes and the Shetland area. CNOOC has proposed a 3D seismic survey, building on the results of 2D data acquired last fall, followed by a first well to be drilled during 2022-26.

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The governments of Russia and Turkey have agreed on a legal framework for the TurkStream project that would take supplies of Russian onshore gas across the Black Sea, initially exclusively to Turkey. This involves construction of two parallel pipelines and an onshore string for gas transit to Turkey’s border with neighboring countries, with a total length of 910 km (565 mi).

Middle East

BP has agreed on amendments with Egypt’s Petroleum Ministry for the Ras El Barr, Temsah and Nile Delta Offshore concessions. The latter contains the shallow-water Nooros gas field where BP anticipates production reaching 880 MMcf/d by early 2017. Eni recently upgraded resources at the Baltim South West field, 10 km (6.2 mi) from Nooros, to 1 tcf in place following results of a second appraisal well, lifting reserves in the Greater Nooros Area to 3 tcf.

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Noble Energy and its partners have committed to supply 1.6 tcf of gas over a 15-year period to Jordan’s National Electric Power Co. This will come from the deepwater Leviathan field, for which a final investment decision is imminent. The approved development plan calls initially for a subsea tieback to a shallow water platform, with a pipeline connection through to Jordan.

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Qatar Petroleum and Dolphin Energy have agreed on a new long-term gas sales and purchase deal that will increase supplies of Qatari gas to the UAE via the existing 48-in. subsea pipeline for the Dolphin Project. In anticipation, Dolphin installed three new export gas compressors last year at its processing plant in Ras Laffan.

Caspian Sea

Petronas and Socar have reportedly signed a memorandum of understanding to explore and develop hydrocarbons in the prospective Goshadash block in the Azeri offshore sector. The location is around the northwestern part of the Absheron archipelago in water depths of 10-50 m (33-164 ft).

East Africa

Tanzania and the Democratic Republic of the Congo have agreed on the principles for joint E&P operations in Lake Tanganyika, according to a Reuters report.

The lake overlaps the boundaries between the two countries and extends into Burundi and Zambia, and is thought to be the world’s second deepest.

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Eni and its partners in deepwater Area 4 offshore Mozambique will sell 100% of the LNG produced by the planned Coral South floating LNG facility to BP, pending a positive investment decision. Mozambique’s government has approved the transaction.

Indian sub-continent

ONGC has contracted SapuraKencana subsidiaries to perform offshore engineering works related to the B127 Cluster Pipeline RTR project offshore western India. The 20-month program involves engineering, procurement, construction, installation, and commissioning of 11 pipeline systems and modifications to existing platform topsides on B127 and other Mumbai High fields.

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Petrobangla reportedly expected to receive expressions of interests last month for three blocks in the Bay of Bengal off Bangladesh. Two are in deepwater and one in shallow water.

Asia/Pacific

Gazprom has discovered gas/condensate in the Yuzhno-Lunskaya prospect on the Kirinsky block in the Sakhalin II concession of the Sea of Okhotsk. Following analysis of data from the well, the company will submit a reserves estimate to Russia’s Federal Subsurface Use Agency.

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Wison Offshore & Marine has completed performance testing on a floating liquefaction vessel under construction for Exmar in Nantong, China. Wison claimed this was the first ever instance of LNG being produced onboard a floating facility, and the first gas trial for a floating liquefaction unit prior to sail-out.

Performance testing has been completed on a floating liquefaction vessel in China. (Photo courtesy Wison Offshore & Marine)

CNOOC has produced first oil from the Enping 18-1 field in the Pearl River Mouth basin area of the South China Sea. The development is connected to existing infrastructure at the Enping 24-2 oil field. Over the next year production should build to a peak of 11,800 b/d.

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The FPSOMaMPU 1 recently underwent a sailaway ceremony at MISC Berhad’s MMHE East Yard in Malaysia. It is purpose-designed for development of marginal fields, and will first serve at the Anjung Kecil oil field off Sarawak, operated by Vestigo Petroleum on behalf of Petronas. The vessel, a converted oil tanker, can produce 15,000 b/d of oil and handle 25 MMcf/d of gas. Topsides features include a compact low-pressure system that stabilizes incoming crude for safe storage and subsequent export, and a condensate recovery system applied to unwanted flaring gas.

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Santos and its partners are seeking approval from Indonesia’s government for the Sampang Sustainability Project offshore Java. This would involve converting the Oyong and Wortel fields from oil to more economic gas production.

The switch to gas-only operations would likely go forward next September, with the FPSOSeagood and FSO Surya Putra Java both decommissioned shortly afterwards. There are other gas prospects in the area such as Paus, which could be connected to the Oyong facilities if drilling is successful.

Australasia

BP has agreed to farm into up to two permits in the Carnarvon basin offshore Western Australia with strong gas potential. Subject to approvals, the company will operate the WA-409-P permit, which was recently renewed by a further five years, and may also take a 50% stale in adjoining permit WA-359-P. Current incumbent Cue Energy has identified a potential 15-tcf Mungaroo formation prospect named Ironbark which straddles both concessions. If drilling proves successful, there could be spare capacity at the nearby plants for a tieback.

In the same basin, Carnarvon Petroleum has been awarded the shallow-water WA-524-P permit on the flanks of the Dampier sub-basin. The location is on the Enderby Terrace, where Carnarvon has worked up a potential pre-Jurassic play and a secondary play in the shallower Cretaceous stratigraphy, which has delivered strong results at the nearby Stag and Wandoo oil fields.

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BP has opted out of a planned deepwater exploration drilling program in the Great Australian Bight offshore South Australia. Regulatory authority NOPSEMA had asked the company to re-submit its environmental impact assessment for the program, but BP says its decision was based on a review of its global frontier exploration priorities. The company and partner Statoil have four exploration licenses in the Ceduna area of the Bight.

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New Zealand’s Energy and Resources Minister Simon Bridges has initiated consultations with local authorities on the country’s Block Offer 2017. This includes four proposed offshore block areas in the Northland-Reinga, Taranaki, Pegasus, and East Coast North Island and Canterbury-Great South basins.

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