DRILLING & PRODUCTION

Jim Redden • Houston

While many in the industry are justifiably gushing over Anadarko's recent deepwater gas discovery off Mozambique, others are wondering why it took so long.

You can count among the questioners Bruce Bullock, director of the Maguire Energy Institute at the Cox School of Business at Southern Methodist University (SMU) in Dallas, Texas. Bullock, who has studied the potential of East Africa, is quick, however, to forgive operators for being late to the party. If anyone has been tardy, he says, it's the countries along the East African coastline.

"We've long known there is potential in Mozambique, especially with the onshore work that has been done there," Bullock says. "The problem is the institutions, the infrastructure, and the legal mechanisms in East Africa did not catch up to those in West Africa until around 2000. That was when Mozambique decided to reform its laws quite a bit and offered some incentives. They really looked at what West Africa had done and said we can do that too."

And, those incentives appear to be paying dividends. In what is being called the first significant deepwater discovery off the east coast, Anadarko says it found more than 550 net ft (168 m) of natural gas pay in its Windjammer exploration well. The well was drilled to 16,930 ft TD (5,160 m) in 4,800 ft (1,463 m) of water in the previously unexplored Rovuma basin. Anadarko says it will drill Windjammer another 4,100 ft (1250 m) before moving theBelford Dolphin drillship to another prospect 50 mi (80 km) south.

Bullock is among those who agree the Anadarko discovery has the potential to open the floodgates all along the eastern coast, but says the optimism has to come with a couple of caveats.

"We'll have to see how it plays out. I think the big questions are not so much the size of the reserves, but how extensive they are up and down the coast. Also, in that part of the world you have to consider what the market's going to be if it's primarily gas they find and if the global market for LNG develops as fast as anticipated."

Nevertheless, The Woodlands, Texas-based operator is going full steam ahead off East Africa with plans to drill as many as four wells in the Rovuma basin over the coming year. Anadarko controls 2.6 million acres in the frontier basin, which, surprisingly, is more than the total leases it holds in its Gulf of Mexico back yard. Anadarko says it has identified more than 50 additional "leads and prospects" off East Africa.

Bullock says its proximity to one of the world's biggest markets also is one of the reasons East Africa is so tempting to international operators.

"On that side of the world, you are closer to the Asian market, which we all know is fast, fast growing. So, there are some built-in advantages, but it will depend on the global growth in natural gas and how much condensate is down there."

When compared to its neighbor on the other side of the continent, there's also the matter of a more stable political structure, he says.

"What's always been somewhat puzzling is that when you look at Kenya and some of the other countries up and down the coast they traditionally have always been a little more stable. But, you go where you find the oil, which essentially is what happened in West Africa."

It appears to be business as usual for Apache Corp. offshore Australia, where it recently added another 40,000 b/d to its production portfolio Down Under.

Historically one of the most active operators in Australia, Apache saw its production swell in early 2010 when its high-profile Van Gogh development came onstream, followed late in the second quarter with a share of the BHP Billiton-operated Pyrenees, both in the Exmouth basin. On Pyrenees, BHP is initiating phased production from the Crosby, Ravensworth, and Stickle wells, which is being processed through an FPSO with production capacity of approximately 96,000 b/d. Apache owns a 28.57% interest in Pyrenees and operates Van Gogh with a 52.5% stake.