FRONTIERS National energy demands, desire to export, maturing plays push frontier exploration

Dev George Managing Editor - International There has always been an adventurous side to the oil industry, a drive to venture out into virgin territory and drill a few holes just to see if anything is there. These days, that daring and enterprise still pervade the industry, but they are tempered somewhat by today's technology, the high cost of exploring frontier zones, and the inherent risks.

Majors and independents expanding exploration efforts into remote and deepwater frontier areas

Dev George
Managing Editor - International

There has always been an adventurous side to the oil industry, a drive to venture out into virgin territory and drill a few holes just to see if anything is there. These days, that daring and enterprise still pervade the industry, but they are tempered somewhat by today's technology, the high cost of exploring frontier zones, and the inherent risks.

For those reasons, most major and independent operators prefer to play it safe in proven provinces or allocate only a small segment of their exploration budgets to frontier activities - often only after someone else has established the presence of hydrocarbons in the area.

But more and more, the pressures to find new sources of oil and gas are compelling operators to take a chance on a new prospect. Aside from the allure of discovering a new hydrocarbon play in a previously undrilled area, this renewed attraction to frontier exploration is being precipitated by the maturation of the traditional petroleum producing areas of the world such as the North Sea, US Gulf of Mexico, and Arabian/Persian Gulf, by the economic growth and industrialization of numerous Third World countries and the consequent demand for new petroleum sources, and by national desires for energy independence and/or means of earning sorely needed foreign exchange.

Different definitions

Where, then, do the frontiers lie? Almost everyone agrees that, for the most part, they are in what are generally considered remote regions of the earth, far from most markets and established infrastructure, and in harsh climates or difficult-to-work-in environments, including water depths in excess of 200 meters. They are areas in which little, if any, drilling has occurred, perhaps even where seismic acquisition has been sparce or not at all.

Some may describe frontier zones as simply regions of high risk, for one reason or another, but usually geological or political, while still others maintain that any area is a frontier if it doesn't have active major oil companies. For the purposes of this review, however, we are limiting the list to geographically remote areas where little drilling has been done.

The Arctic

Sporadic exploratory drilling and considerable seismic acquisition have been carried out throughout the arctic regions of Europe and America for more than 30 years, and considerable hydrocarbons have been encountered, but the region remains a frontier zone because the cost of drilling, development, and delivering the oil to market far exceeds the potential return at today's price of oil. Canada's Panarctic Oil, for example, has proven holdings that stretch from offshore the Canadian High Arctic island of Axel Heiberg to Banks Island in the Beaufort Sea that await better prices. Canada continues to offer concessions in its Beaufort Sea aquatory, but finds few takers.

The Alaskan Beaufort Sea continues to attract some interest, however. BP, for example, is building an ice island off the eastern North Slope from which to drill delineation wells on its Badami Field, which is said to hold 100 million bbl oil. A pipeline will carry production to shore.

Greenland may fair better than most in finding explorers for its frontier Baffin Bay, Davis Strait area off its west coast. A giant, 100-tcf gasfield has been detected, according to the Greenland Geological Survey, just off the southwest coast, that may indicate an important trend. The remoteness of the area, however, bodes against it for the time being.

The US and Russia recently signed a memorandum of understanding for the simultaneous exploration and development of their Chukchi Sea aquatories in the Arctic Ocean northwest of Alaska. Blocks are to be leased in 1997 following joint efforts at assessing the region's prospectivity.

Russia's own arctic frontier region ranges westward from the Chukchi, and includes the East Siberian, Laptev, Kara, and Barents Seas - all proported to be highly prospective, but having witnessed very little exploration, despite numerous feasibility studies and tentative projects. In particular, the Barents Sea, with such known structures as the Schtockmanovskoye, Arkticheskaya, and Dudlovskoya Fields, and neighboring Kara Sea, with its Rusanovskaya, Leningradskaya, and Zapadno-Sharapovskaya Fields may become the world's leading petroleum province in the 21st century, but are today embroiled in bureaucratic oneupmanship and go essentially unexplored and undeveloped.


Two of Europe's three other major frontier regions lie northwest of the UK in the areas known as West of Shetlands and the Faeroe Islands. The third, Ireland's Western Troughs and Porcupine prospects are situated off the west southwest coast in the North Atlantic.

With its North Sea fields maturing rapidly, the UK is encouraging the considerable interest that has been shown in its West of Shetlands aquatory, with some success, even though there is a total lack of infrastructure and huge sea swells sweep the area. Said to hold approximately 5 billion bbl oil and little gas, the region is predicted to become the UK's next major province. Accordingly, some 40% of the UK's 16th licensing round lies in the area, and several significant discoveries have already occurred there, particularly BP and Amerada Hess's Foinaven and Schiehallion Fields, where production is set to begin next year to an FPS, and Amerada's Strathmore and Solan. The 17th round is to include an area even farther west, fronting on the Faeroe Islands' aquatory.

The Danish Faeroes present a virtually unexplored frontier [See accompanying article.] A remote, deepwater region with a harsh environment, it has seen little exploration save a few exploratory wells and the current 12,000 line km survey being carried out by Western Geophysical over most of the prospective Faroese waters.

The Faeroese need the revenue petroleum production would earn, but they have little to finance exploration. A border dispute with the UK also complicates matters, but it is expected to be settled in time for the expected 1997 licensing. Already, a BP discovery near the Faero frontier is sparking interest in the area, and a consortium of Enterprise Oil, Mobil, and Denmark's Statoil is preparing to enter the area.

South of the Faeroes, Ireland has entered the frontiers competition with its Slyne, Erris, and Rockall Troughs and, farther southwest, its Porcupine Basin. The Troughs were the first Irish offering in the country's western offshore region, and Porcupine was its second. Both lie in deepwater zones ranging from 300 to 2000 meters depth. Little is known of their geology, although one Porcupine field, Connemara, with estimated 200 million bbl oil, is known but considered uncommercial. Aran, Monument, Texaco, Repsol, Statoil, Murphy, Santa Fe, and Enterprise hold leases and are just beginning to explore with tentative drillings and seismic.


Frontier regions all but characterize much of the Asian petroleum sector. Despite there being many long established, traditional oil and gas E&P venues throughout the region, many other areas, more remote or in difficult locations, are opening up as frontier zones and attracting both major and minor explorers and producers.

Foremost among these are, of course, the isolated prospects off Indonesia's outer islands. From the southeastern shores of Kalimantan's Makassar Straits to the Molucca and Ceram Seas between Sulawesi and Irian Barat, the Arafura Sea and Timur Gap, Indonesia is promoting prospects to foreign operators either in joint venture with Pertamina or alone, sweetening the deal to compensate for the lack of infrastructure and the often deep water of the area. Total, Unocal, Phillips, BHP, Arco, and others have begun exploratory seismic and drilling.

Taking Indonesia's lead, Malaysia is also offering tempting terms to operators who will explore and develop its remote, deepwater (200 meters or more depth) prospects off Sabah and Sarawak. Mobil was the first to be awarded tracts here, Blocks SK-A, SK-B, SK-C, and SK-D, ranging in depth from 1,000 to 1,800 meters, has been acquiring seismic over the blocks, and has spudded one well, Mulu-1, in 1,185 meters of water in Block SK-A. Shell, in a PS contract with Petronas, was granted the first deepwater tract off Sabah, Block G.

The archetype of frontier itself, is Papua New Guinea's Gulf of Papua. Although considerable drilling and development have been done onshore Papua New Guinea, little exploration or development has been seen in the Gulf. The one field that has precipitated outside interest is Pandora, discovered by IPC in PPL82 in 1988. Since, it has been proven with stepouts, delivering a gas flowrate of 43 million cf/d, and has been taken over by Mobil. Over the last year, Mobil has been acquiring some 2,000 km of 2D and 12,000 sq km of 3D seismic data via Geco Prakla's vessel Resolution over this and PPL152. Two new wells were drilled at the end of 1994.

For political and economic reasons, in addition to its remoteness and the hostility of its Okhotsk Sea aquatory, Sakhalin Island qualifies as the epitome of a petroleum industry frontier. Despite years of negotiation and agreements, contracts and decrees, nothing has come of any of the much touted projects to explore and develop the considerable reserves of the region.

Other Asian frontiers garnering attention are the aquatories of Cambodia and Myanmar, where notable discoveries have been made recently; the Sulu Sea region of the Philippines, where new seismic is being acquired with leasing in mind; China's East China Sea, which has seen some exploratory drilling for more than 25 years, but no development and little sophisticated geophysical examination until recently. And, lastly, India's Andaman Islands, which have been put on offer in the last licensing round.


Like Asia, Africa harbors numerous frontier provinces, but none have seen more than passing appraisal via a few 2D acquisitions and sporadic exploratory wells. West Africa, the continent's most active petroleum province, includes some of the world's major producing regions and considerable development, thus the new move to deepwater exploration and development in the aquatories of Nigeria, Gabon, Angola, and Namibia are excluded from frontier characterization. Other West African nations are, however, attempting to attract attention to their offshore petroleum possibilities: Liberia, hoping the trend offshore neighboring Côte d'Ivoire continues into its own aquatory; Senegal, where some seismic and exploratory drilling has occurred without commercial finds to date; and Morocco, where seismic has been collected and is being marketed to operators as indicative of prospectivity.

There has been little interest in East Africa other than occasional 2D seismic shoots and a few unsuccessful exploratory wells over the years, but Mozambique, Tanzania, and Kenya are now vying for frontier explorers of their respective aquatories. Mozambique has seen more exploration of its shelf and slope area than the others. Beginning in the early 1980s, there has been interest in the shallow water area, with CGG, Geco, Western, and Horizon each making major 2D seismic studies. Several wildcats were drilled, by BP and others, but no commercial reservoirs have been found to date. Gas appears to predominate, but several thick structures have been interpreted as possible oil.

In the Indian Ocean 400 km off the east coast of Africa, Madagascar and the Seychelle Islands are both frontiers in hopes of exploration and discovery. Madagascar, in fact, is the site of two giant onshore heavy oil fields, Bemolanga and Tsimiroro, but, despite wildcats on its shelf by Agip in the Majunga Basin, and seismic by Conoco, Chevron, Tenneco, and Amoco, no further drilling has occurred. The Seychelles, on the other hand, are now garnering considerable attention due to Enterprise Oil's current exploratory program there. The independent plans a drilling program to begin later this year with a wildcat some 200 km southeast of the main island of Mahe on the Constant Bank. This as a result of the company having acquired almost 6,000 km of seismic/gravity/magnetics data recently.

South America

Finally, the frontiers of South America lie mainly onshore, but two offshore provinces have drawn sizable outside interest, Brazil's NE coast, and the Malvinas/Falklands off Argentina. Both are beyond the present petroleum infrastructure of the countries, but are being explored for the large reservoirs of oil each is anticipated to hold. Petrobras is just beginning to explore its northeast coast, having conducted major seismic studies of the area over the past few years. In particular, it believes major reserves are to be found on the Brazilian shelf from Baia de Sao Marcos southeast to the easternmost point of the country at Rio Grande do Norte. First wells are scheduled for this year.

And then there are the Malvinas/Falklands, long ignored and now prized by both the UK and Argentina, since it is believed the shelf surrounding the islands and to their north contains large deposits of hydrocarbons. Seismic acquisition has been underway for more than a year, and it is thought the UK will be issuing licenses for exploration soon. There is, of course, one sticking problem: Argentina also claims the islands and has gone to war over them in the past. The two powers are talking, perhaps of ways of cooperating in the development of the islands' reserves, but it is mostly a moot question, since today's price of oil makes production there prohibitively costly for all but the Argentine market.

Copyright 1995 Offshore. All Rights Reserved.

More in Regional Reports