GLOBAL E&P BRIEFS

Marshall DeLuca
Houston

Texaco, ARCO, and CNOOC's QHD 32-6, China's second largest offshore oil field [8,339 bytes].

Africa

Elf has made its fourth discovery on Block 17 in the deep Angolan play. The Lirio discovery well in 1,365 meters of water yielded 11,000 b/d of "high quality" oil. Lirio follows behind the monster Girassol (1 billion bbl) and Dalia (1.4 billion bbl) fields. Elf operates the field with a 35% interest along with partners Exxon (20%), BP (16.67%), Statoil (13.3%), Norsk Hydro (10%), and Petrofina (5%).

Nuevo Energy has plugged and abandoned the first well in the East Cape Three Pointes prospect off Ghana. Well NECTP-1X encountered non-commercial hydrocarbon shows after drilling to a total depth of 8,350 ft. The dry hole is estimated to cost the company about $7 million net. Nuevo plans to continue exploration on the prospect with seismic planned for the first half of 1999.

Saipem reportedly is negotiating with a US company for a possible four-well contract off Ghana with the Scarabeo 4 semisubmersible. Elf is expected to release the rig this month following a program off Nigeria. Drilling would begin following the conclusion of the Elf program and continue until mid-1999 in up to 400 meters water depth.

Canadian Occidental has begun pro duction from the Ejulebe Fieldoff the Nigerian coast in 45 ft water depth. Production is being carried out through CanOxy's production facilities, which are connected to the Ukpokiti Storage and Tanker Loading Terminal. Four high production wells and one water injection well have been drilled on the field. Production rates of 10,000 b/d of oil are expected.

Soekor has announced the second successful appraisal well drilled in the E-BD oil field in Block 9 in the Bredasdorp basin off South Africa. The well, EBD-4, encountered an oil-bearing interval of about 32 meters at a depth of 2,600 meters. Production tested at 4,530 b/d of oil and 3.1 MMcf/d of gas. The field is undergoing appraisal to determine development viability.

PanCanadian Petroleum has gained an interest in several exploration blocks off Cote d'Ivoire and South Africa. The company acquired a 15% interest in deepwater blocks CI-101 and CI-103 from Gentry Resources covering about 5,600 sq km off the coast of Cote d'Ivoire in water depths up to 2,000 meters. In South Africa, the company has joined Ranger Oil in a one-year technical study of blocks 12B and 11B, located in the Outeniqua Basin. The blocks cover about 6,500 sq km.

Texaco and Sonangol have entered into a production sharing agreement for Block 9 with Texaco serving as operator. Block 9 covers 1.2 million acres in water depths up to 2,000 ft. The company has already conducted a seismic program on the block, but will shoot additional data in 1999 with drilling planned for 2000.

Americas

Brazil's newly-created Agencia Nacional do Petroleo (ANP) will make available the data packages and the new licenses on offer for Brazil's first open licensing round on December 31. The call for bids will be followed by a pre-qualification process in mid-January and a deadline for submitting final bids in April. The licenses will be for an exploratory period with a minimum of six years, double the time allotted for Petrobras and its partners. ANP has contracted with US-based Gaffney, Cline & Associates to provide comprehensive support and advisory services for the round.

Yet another dry hole has been encountered in the Falklands. Lundin Oil has its hand at a well in Tranche F of the region. The well was drilled to a total depth of 9,642 ft, but encountered no oil or gas. The Borgny Dolphin semi is being used for all of the Falkland drilling and is now on its way to drill a second well for Amerada Hess in Tranche A. The rig will then go to Shell for a second well in Tranche B. Lundin is currently considering the possibility of a second well on another prospect in Tranche F pending evaluation of data from this well and other wells in the region.

Anadarko has hit its third commercial subsalt discovery in the Gulf of Mexico on its Hickory prospect. The well was drilled with the Global Baltic 1 rig to 21,600 ft and encountered 300 ft of hydrocarbon pay in multiple sands. Production is expected to begin in 2000. Hickory is located in Grand Isle 116 in 320 ft of water. Anadarko holds a 50% stake in the prospect with partners Shell and Ocean Energy.

Production has commenced from the SeaStar mono-hull TLP on British Borneo's Morpeth Field in the Gulf of Mexico. The field in located in Ewing Bank Block 965 in 1,700 ft of water. The first well is producing 15,000 b/d of oil while the remaining wells are being completed. Peak productino is expected to be 35,000 b/d of oil and 36 MMcf/d of gas. The Morpeth TLP will also serve as a hub for several satellite fields such as the nearby Black Widow field. Oil and gas will then be exported from Morpeth via the Amberjack and Discovery pipeline systems.

Murphy Oil announced that its Boomslang prospect in Ewing Bank 994 in the Gulf of Mexico has encountered 185 net ft of oil pay in three separate zones at measured depths of 7,133-7,204 ft, 8,580-8,825 ft, and 12,473-12,596 ft. Boomslang is located in 850 ft water depths. Murphy is the operator with a 45% working interest and a 42.5% working interest in five adjacent blocks in Ewing Bank.

On another note, the first Petrobras joint venture has been signed. A consortium headed by YPF, a former Argentine state oil company turned private, has contracted for the exploration of a 907 sq km offshore block, located some 100 km off the city of Vitoria, capital of the state of Espirito Santo, just north of the Campos Basin. The contract calls for a $20 million investment, a minimum of 1,800 sq km of 2D seismic, 288 sq km of 3D seismic, and the drilling of two to three wells.

The YPF consortium consists of American companies Santa Fe, Wiser, and NorBay, along with Brazil's Sotep and Petroserv. The consortium holds a 65% interest in the block and the liability for all funds in exchange for the concession right from Petrobras who holds the remaining 35%. Thirty-one other joint-venture projects currently are at the letter-of-intent stage, awaiting the final agreement for signing the contract.

Texaco has called for a competitive change in Brazil's newly deregulated oil exploration and production terms. The company plans to invest $2 billion over five years in the country, if the government resolves several issues, including Brazil's import taxes and a three-year deadline for developing new oil fields. The investment would be for contracts for three projects currently under negotiation on the upstream sector. Texaco does expect that favorable competitive terms will be worked out.

Petrobras of Brazil announced that daily oil output, including production from its foreign unit, Braspetro, increased 1.74% to 1.63 million bbl. Domestic oil production rose 1.91%, to 1.22 million b/d from 1.20 million b/d. The Campos Basin continues to be the Petrobras' biggest producer, with 73% of total daily volume. Natural gas, however, fell 2.13%, from 29.5 MMcf/d to 28.8 MMcf/d.

Also, Petrobras has finalized a $2.3 billion partnership with Itochu and Mitsubishi of Japan to finance expansion of the Barracuda oil field, in which the two Japanese companies will own the field's production system. Financing has begun with the signing of a $300 million bridge loan. This partnership is one of dozens Petrobras has established to increase domestic production and competition.

Mobil has been awarded six new oil and gas exploration licenses on the Grand Banks off Newfoundland, Canada. The Canadian-Newfoundland Offshore Petroleum Board awarded Mobil, in conjunction with three other companies (Chevron, Petro-Canada, Norsk Hydro) as a result of making a $100 million exploration expenditure commitment over the next five years. The licenses total more than one million acres and include two parcels in a new exploration area known as the Flemish Pass basin and four in the Jeanne d'Arc basin.

Tatham Offshore has received an exploration license off Newfoundland from the Canadian-Newfoundland Offshore Petroleum Board. The license will cover 71,251 hectares, and will be for a term of nine years with an initial period of five years. Issuance of the license will take place in January.

The US Department of the Interior's Minerals Management Service (MMS) has signed an agreement with the energy department of Australia to share scientific and technical information related to offshore oil and gas drilling. The two government agencies will exchange information on oil and gas resource assessment, environmental protection, energy leasing, and installations and pipelines.

Asia-Pacific

Texaco and Arco have entered into a petroleum contract with Chinese National Offshore Oil Company for the development of the Qinhuangdao (QHD) 32-6 field in the Bohai Bay. The QHD 32-6 field is China's second largest offshore oil field and is located in 65 ft of water 250 km southeast of Beijing. Formal development plans are expected by year-end with startup expected in mid-year 2001. Reserves are estimated at one billion bbl and production is expected to reach a sustainable rate of 60,000 b/d in 2002. Texaco and ARCO each hold 24.5%. CNOOC holds the remaining 51% and will act as operator.

The Chinese government has approved XCL's production sharing agreement with China National Oil and Gas Exploration and Development to develop the Zhang Dong Block in the Bohai Bay. The agreement, effective October 1, allows XCL to review seismic data and evaluate nine existing wells and drilling facilities in addition to making initial preparation for drilling operations. XCL will act as operator of the block and cover costs of appraisal drilling, additional seismic data studies, and upgrading production facilities on the block, after which the company will assume 49% of production and development costs with China National Oil and Gas.

Canadian Occidental and BHP (the operator) have decided to proceed with development of the Buffalo oil field in Western Australian block WA-260-P. The field contains about 22 million bbl of proved and estimated reserves. Peak production is expected at 40,000 b/d through an unmanned subsea wellhead platform linked to a leased FPSO. The field was discovered in 1996 and exploration is ongoing in other fields on the 855,000-acre prospect.

Pogo has encountered success on the Jarmjuree prospect in the Gulf of Thailand. The Jarmjuree 1 well was drilled on Block B8/32 and found 85 ft of net oil and gas sands. The company plans as many as three additional exploration wells on the prospect. Jarmjuree is owned 46.3% by Pogo and is located adjacent to the company's Tantawan and Benchamas Fields.

Europe

For the first time, groups of companies are being allowed to nominate and apply for offshore blocks in the Norwegian North Sea as part on an upcoming Norwegian offshore licensing round. Twenty three companies have nominated 58 full of part blocks for possible allocation in the round expected to be announced later this year. Amoco, BP, Conoco, Elf, PGS Exploration, and Total are some of the companies involved in the round. Applications are due in the first quarter of 1999.

Enterprise, Saga, and Statoil have successfully appraised the Corrib gas discovery in Block 18/20 in the Slyne Trough off the west coast of Ireland. The well is located in 350 meters of water and was drilled to a total vertical depth of 3,692 meters. Well tests showed a rate of 63 MMcf/d of gas, but was limited by the testing equipment. The discovery was originally made in October 1996 but not tested due to mechanical problems.

Statoil and Saga have signed an agreement in principle for production on Norwegian sector blocks 037 and 089. Statoil will assume responsibility for developing and operating the Sygna Field, which extends across the dividing line between the two production licenses. The field is scheduled to be tied back via a subsea production solution to Statoil's nearby Statfjord C platform. Development work will begin in February. Production is set for August 2000, if approved on schedule.

Ranger has successfully tested appraisal well 29/12c-12Z on the Kyle Field in the UK North Sea Block 29/2c. The tested production rate was 9,750 b/d of oil, with a calculated maximum flow in excess of 20,000 b/d. Production, pending approval, will begin in March via a subsea tieback to the Ramform Banff FPSO.

Middle East

Elf Aquitaine has entered the deepwater Mediterranean Sea with the award of Egypt's Block B. Block B lies next to British Gas' West Delta Deep concession, which earlier this year was the site of two gas discoveries - Scarab-1 and Saffron-1. Amoco also holds an interest in the concession. Elsewhere, Shell was recently awarded Block C off Egypt.

Pennzoil and Novus have been approved by Qatari General Petroleumfor modification and a second exploration period for their Block 8 concession. The modification includes the addition of an adjacent structure, Najwat Najem, which has a potentially commercial oil discovery. The additional exploration period follows encouraging results of the previous program which included extensive seismic evaluation and the drilling of four wells.