GLOBAL E&P

Total hit oil in the ultra-deep offshore block Mer Très Profonde Sud (MTPS), which lies approximately 170 km (106 mi) offshore Republic of the Congo in 2,000 m (6,562 ft) water depth.

Around the same time, Noble Energy Inc. met with success in the Belinda appraisal well on block O offshore Equatorial Guinea. The O-3 appraisal well, drilled in 1,740 ft (530 m) water depth, 4.2 mi (6.7 km) southwest of the original Belinda discovery, extended the discovery by establishing significant downdip resources. According to Noble, reservoir quality at the O-3 location was even better than that at the O-1 discovery.

Noble Energy is the technical operator of block O, holding 45% interest. Partners on the block include national oil company GEPetrol with 30% interest and Glencore Exploration Ltd. with 25% interest.

Offshore the Republic of Ghana, Tullow Oil Plc. hit oil with the Hyedua-1 well, drilled on the Deepwater Tano license. Initial well data indicates a link between the Hyedua-1 and the Mahogany-1 wells, which found oil nearby in late June.

Tullow believes there is a single continuous trap extending across the West Cape Three Points and Deepwater Tano blocks.

Planning is under way to appraise the accumulation.

Asia-Pacific

Increasing investment and the striking of new deals indicate the world’s growing interest in China’s offshore.

In August, CNOOC Ltd. solidified an old relationship and laid the groundwork for a new one in the signing of a number of production-sharing contracts (PSCs). CNOOC signed an agreement with Newfield Exploration Co. in mid-August for blocks 22/15 and 16/05.

Block 22/15, in the Beibu Gulf basin in the western South China Sea, covers 5,228 sq km (2,019 sq mi) in water depths of 10-60 m (33-197 ft). The second PSC is for the 2,064-sq km (797-sq mi) block 16/05, which lies in the Pearl River Mouth basin.

Under the terms of the contracts, all expenditures incurred during exploration period will be borne by Newfield. CNOOC Ltd. has the right to participate in up to 51% interest in the event of any commercial discovery in the blocks.

Earlier in the month, CNOOC signed its first PSC with Singapore Petroleum Co. Ltd. The PSC covers block 26/18 in the Pearl River Mouth basin. The 4,961-sq km (1,915-sq mi) block lies in 85-200 m (279-656 ft) water depth. SPC will be responsible for expenditures incurred during the exploration period.

While China is well into its offshore E&P program, the Philippines is just beginning to increase offshore activity.

In early August, Nido Petroleum Ltd. announced it expects first oil from the Galoc oil field in the Northwest Palawan basin by 1Q 2008. The field will initially produce 15,000 b/d of oil, with a production plateau of 17,500 b/d for 12-24 months, Nido reported in a filing with the Australian stock exchange.

The company has accelerated exploration in Philippine SC 54, 58, and 63. Eight leads have been identified from preliminary interpretation of the Abukay 3D seismic data in SC 54, confirming potential oil in place of 450 MMbbl in the Coron North area. Nido has planned 165 sq km (64 sq mi) of additional 2D seismic work in the contract area for 3Q 2007.

The company has identified more than 20 leads from preliminary interpretation of the Talusi 2D seismic survey and will begin shooting an additional 661-sq km (255-sq mi) 3D survey in late 3Q 2007 as well as a 1,928-km (1,198-mi) 2D survey in the same area.

Europe

In late August, TPAO announced that it expects to see first gas from the East Ayazli and Ayazli fields in the Turkish Black Sea in 3Q 2007.

East Ayazli was delayed by repairs to the spur line tying the field’s tripod into the trunkline from the Akkaya production complex to the shore. Following installation of the Ayazli tripod deck, both fields were to come onstream in September.

TPAO has performed conceptual studies for Phase 2 development of the deeper water Akcakoca discoveries. This likely will involve a separate facility at Akcacoca, with limited platform drilling capability, tied back to the Phase 1 production system.

A front-end engineering and design contract should be awarded this fall, with startup expected in mid-2009.

Offshore Rumania, national oil company Petrom reported in early September that the Delta 4 well in the Black Sea was its first successful offshore exploration in eight years. The well was a result of the 2005 3D seismic offshore campaign.

Delta 4 is expected to come onstream in 2009, contributing to a total Romania production target of 210,000 boe/d in by 2010.

Americas

The Hebron-Ben Nevis project offshore Newfoundland, which has been under discussion for several years, now is looking like a viable project.

At a press conference in St. John’s in late August, Newfoundland and Labrador Premier Danny Williams announced the province had signed a memorandum of understanding with industry partners to develop the field.

The province has been wrangling with operators ExxonMobil Canada, Chevron Canada, Petro-Canada, and Norsk Hydro Canada for some time over royalties distribution from this potential project. Apparently, the participants have come to terms, and plans are in the works to move forward with the project.

The Hebron-Ben Nevis field, discovered in 1981, lies 350 km (217 mi) offshore. The Canada-Newfoundland and Labrador Offshore Petroleum Board estimates recoverable reserves at 700 MMbbl of oil.

Hebron will be the fourth offshore oil development for the province. “The road to this day has not been an easy one; however, it has been well worth the wait,” Williams said.

Most of the big Latin America news in the last few weeks has come out of Brazil.

In mid-August, Petrobras publicized its business plan for 2008-2012, establishing production targets for oil and gas in Brazil. According to the plan, the company expects to produce 3,058,000 boe/d in 2012 and 3,455,000 boe/d in 2015.

One of Petrobras’ objectives is to maintain a balance between growth in production and Brazilian refinery capacity.

International targets also reflect the company’s integrated growth plan, with production estimates of 436,000 boe/d of oil and gas in 2012 with crude throughput in Petrobras refineries in other countries amounting to 348,000 b/d.

The highlights of domestic investments include 32% growth in E&P, an increase of 35% in downstream activities, and 30% in petrochemicals investment. The plan also emphasizes biofuels, which will receive an investment of $1.5 billion.

International E&P operations will focus largely on Latin America, West Africa, and the Gulf of Mexico, Petrobras says.

Domestically, Petrobras recorded a major “first” with a light oil discovery in the Santos basin. In early September, the company announced that exploratory well 1-BRSA-491-SPS (1-SPS-50) in block BM-S-9 had hit 27° API crude. The well was drilled in 2,140 m (7,021 ft) water depth 273 km (170 mi) offshore.

The formation test performed in the vertical well suggests production could reach 2,900 b/d of oil and 57,000 cm/d (2 MMcf/d) of gas, with flow limited by the test’s operating facility and safety restrictions. Formation test assessments and new geological studies are being undertaken to prove whether or not the reservoirs have good productivity characteristics and economically viable volumes, Petrobras says.

New investments will be made, including drilling new wells and developing new technologies that will lead to progress in the deepwater of the Santos basin, the company says.

Petrobras operates the field with 45% interest. Partners include British Gas with 30% interest and Repsol YPF with 25% interest.

In other drilling news, Norse Energy Corp. received an environmental license to drill the Gengibre prospect in block BCAM-40 in Brazil’s Camamu-Almada basin in mid-August.

In partnership with Petrobras and Queiroz Galvão, Norse Energy plans to drill 4 km (2.5 mi) northeast of Manati No. 3 in 52 m (171 ft) of water.

Mediterranean

Spain’s Enagas is planning to build a subsea gas pipeline across the Mediterranean Sea that will link the Balearic Islands with mainland Spain.

The line will comprise two sections: the first, from Denia to Punta de Cala Gració on Ibiza, will be 123 km (76.4 mi) long, with a maximum installed water depth of 997 m (3,271 ft). The second section will head from San Antonio de Portmany on Ibiza to Mallorca’s San Juan de Dios thermal power station, and will be 145 km (90.1 mi) long, with a maximum water depth of 718 m (2,355 ft).

Middle East

In early 3Q 2007, ONGC Videsh Ltd. spudded its first appraisal well, NN-3, in the Najwat Najem structure in the Arabian Gulf about 100 km (62 mi) northeast of Doha, Qatar.

This is OVL’s first overseas project in which the company has 100% ownership.

Eqypt’s Gemsa Petroleum Co. and partners awarded Aker Kværner a contract to operate, manage, and maintain theAl Zaafarana FPSO operating in the Red Sea beginning on Sept. 1, 2007. “The award of this contract gives Aker Kværner Operations a foothold in North Africa and in the growing market segment of FPSO production,” says John McKeown, managing director.

Who owns the arctic?

When the world believed that 25% of the planet’s undiscovered oil and gas was inaccessible, nobody cared much about the arctic. Now, with promising technology inching closer to opening a passage through the ice, the fight for ownership has begun. Though it isn’t much more than a war of words to date, sometime soon a decision will have to be made about who gets access to these enormous reserves.

The Russians were first off the mark to stake a claim with a UN campaign in 2001 that made a case for Russian ownership of the Arctic Circle. When that claim failed to secure the world’s approval, another approach was in order. The next step was the dramatic planting of a subsea flag in a titanium capsule at the end of July 2007.

The truth is that the US, Canada, Norway, and Denmark all have borders along the Arctic Circle. The Russians have staked the first “claim,” such as it is, but none of the other four contenders is going to sit idly by while Russia garners all of the spoils.

Canada’s Prime Minister Stephen Harper set off for the Arctic days after the planting of the Russian flag to stake Canada’s claim on the Arctic. A few weeks later, Denmark launched an expedition to prove the arctic’s subsea geography is actually part of Greenland, which would give the Dane’s an edge when it comes time to make a decision about ownership. And the US was not far behind, outfitting an expedition of its own and launching a vessel to the northern reaches of the globe.

Norway, meanwhile, has pointed out the folly of all of the “claims” with a statement that dismisses them all. In Norway’s view, ownership will be decided at the negotiating table, so the flurry of “exploration” activity is pointless.

Only time will tell what path will be followed to determine the distribution of the arctic and its resources.

It will be interesting in the meantime, though, to watch the race.