Exploration and production companies continue to set their capital budgets for 2006, and beyond. Some of the most recent announcements include:
• Thailand’s state-owned PTT Exploration & Production (PTTEP) plans to spend $5.8 billion over 5 years to expand drilling and exploration in Thailand as well as in Indonesia, Malaysia, Myanmar, and Vietnam, the company said.
• Amerada Hess Corp. plans a $4 billion capital and exploratory expenditure program for 2006, which includes $413 million to acquire Egyptian assets from Apache Corp. and $366 million to reenter the Waha license in Libya.
• Compton Petroleum Corp., Calgary, has budgeted $575 million (Can.) for 2006 capital spending, focusing on an accelerated drilling program of 480 gross wells.
• Lundin Petroleum AB, Stockholm, has allocated $310 million for exploration and development spending in 2006. Of that amount, more than $200 million is earmarked for development, concentrating on projects in Norway and Tunisia.
• Toreador Resources Corp. announced an $80 million budget for exploration and development capital spending during 2006, about a 13% increase over the estimated 2005 budget.
In other recent company news:
• CNOOC Ltd. agreed to acquire a 45% interest in oil mining license (OML) 130 off Nigeria for $2.268 billion from South Atlantic Petroleum Ltd. (Sapetro) of Lagos.
• Brazil’s state-held Petroleo Brasileiro SA (Petrobras) has agreed to buy oil products businesses in Colombia, Paraguay, and Uruguay from Royal Dutch Shell PLC for about $140 million.
• Total E&P Norge has signed an agreement with ExxonMobil Exploration & Production Norway to acquire ExxonMobil’s 30% interest in the PL211 area 200 km offshore in 400 m of water in the Norwegian Sea.
• Tullow Oil PLC has completed a farmout agreement with Devon Energy Corp. subsidiary Ocean Angola Corp. to take a 15% interest in Block 24 in the Southern Kwanza basin off Angola.
PTTEP’s 5-year plan
PTTEP Pres. Maroot Mrigadat said the company aims to boost production from 179,000 boe/d in 2006 to 238,400 boe/d by the end of the decade.
Maroot said PTTEP would use part of the investment to further develop its natural gas field in a Malaysia-Thailand joint development area known as MTJDA in the Gulf of Thailand.
Maroot said the current plan for the MTJDA is to start up gas production in second-half 2008, with expected initial production of 270 MMcfd of gas.
PTTEP has two gas fields in Myanmar. It plans to expand three other projects currently under exploration. In Vietnam, it seeks two more projects in addition to existing exploration in two fields.
In Indonesia, PTTEP plans to increase its oil reserves with the Merangin project in South Sumatra (OGJ Online, July 21, 2005). PT Medco E&P Merangin, with 61%, is operator of the project, and PTTEP Offshore Ltd. holds the remaining 39%.
Amerada Hess’s budget
Excluding acquisitions, $3.1 billion of Amerada Hess’s budget is targeted for exploration and production during 2006, while $125 million is targeted for marketing and refining. The 2005 budget included about $2.4 billion for E&P and $100 million for M&R.
Amerada Hess is a partner in Libya with ConocoPhillips, which reported an agreement with the country’s National Oil Corp. under which it and its partners will return to their former production operations (OGJ Online, Dec. 29, 2005). Marathon Oil Co. also is a partner.
The companies suspended operations in Libya in 1986.
Compton’s spending plan
In southern Alberta, Compton plans to drill 245 wells to target Plains Belly River gas and Edmonton Horseshoe Canyon coalbed methane. It also has more than 70 existing Belly River wells scheduled for coalbed methane recompletion in the Edmonton formation.
The remainder of the southern Alberta drilling will primarily target the Basal Quartz formation at Hooker and the Belly River foothills play at Callum.
The company budgeted $73 million (Can.) for 60 gross wells in central Alberta, $120 million (Can.) for 105 wells in the Peach River Arch, and $21 million (Can.) for 10 wells in other areas.
The budget includes $71 million (Can.) for land acquisition and seismic surveys in Compton’s major operating areas.
The company expects production to reach 40,000 boe/d by December 2006.
Lundin’s 2006 budget
Off Norway, Lundin is scheduled to begin development drilling this year in Alvheim area oil fields, which are expected to come on stream in early 2007 at a forecast production rate of 85,000 boe/d (OGJ, Aug. 22, 2005, p. 36). Modifications to the Alvheim floating production and offloading vessel in Singapore are nearly complete, Lundin said.
Lundin’s 50%-held Oudna oil field off Tunisia is forecast to begin production in late 2006 at a rate of 20,000 b/d of 41° gravity oil from two intervals in the Miocene Lower Birsa sandstone (OGJ Online, July 3, 2003). The Oudna project involves the relocation and modification of the Ikdam floating production, storage, and offloading vessel, which is currently in the late-life Isis oil field (see map, OGJ, July 18, 2005, p. 32). Development drilling on Oudna will start in the first quarter.
The development funds covers the completion of reactivation of the drilling rig on the Heather oil field platform in the UK North Sea in the first half followed by a drilling and workover program. Also supported is a four-well infill drilling program in Villeperdue oil field in the Paris basin.
Lundin expects to produce 36,000 boe/d in 2006, compared to an estimated 33,000 boe/d in 2005. The company believes production will reach more than 50,000 boe/d in 2007 when the Norwegian and Tunisian new field developments come on stream.
Lundin will increase its 2006 exploration spending to more than $100 million, up more than $50 million over 2005. A total of 15 exploration wells are planned in 2006 targeting an unrisked reserve potential of more than 750 million bbl, five times greater than the company’s current reserves. The company plans multiwell drilling programs in Norway, Sudan, and Indonesia with further exploration drilling planned in France, the Netherlands, and Ireland.
Toreador sets budget
Toreador has yet to release final 2005 figures. Its production during 2006 is expected to total more than 1 million boe, and 2007 production is expected to total 2.5 million boe, the Dallas independent said.
Toreador is working in Turkey, Romania, Hungary, and France.
CNOOC in Nigeria
CNOOC’s transaction, expected to close during the first half, is subject to approval from Nigerian National Petroleum Corp. and also from the Chinese government, which is CNOOC’s majority owner.
A production-sharing agreement and a production-sharing contract (PSC) each governs a 50% interest in OML 130. Sapetro holds 100% interest in the PSC, of which CNOOC plans to acquire 90% interest, providing it with a 45% interest in OML 130.
CNOOC Chairman and Chief Executive Fu Chengyu said the transaction fits CNOOC’s long-term strategies of growth through exploration and development and of achieving assets having geographic diversification.
India’s Oil & Natural Gas Corp. submitted a $2 billion bid for the license last month. But the Indian government blocked that transaction, contending it was commercially unviable.
This is the first investment offer that CNOOC has made since its unsuccessful bid for Unocal Corp. last year (OGJ, Aug. 8, 2005, p. 29).
The license contains Akpo gas and condensate field, discovered by Total SA in 2000. OML 130 covers 500 sq miles in 1,100-1,800 m of water, 200 km off Port Harcourt, Nigeria (OGJ, May 9, 2005, Newsletter). OML 130 also contains the Egina, Egina South, and Preowei discoveries.
Akpo’s development plan includes 22 producing wells, 20 water injection wells, and 2 gas injection wells, all of which will be tied back to a 2-million-bbl floating production, storage, and offloading vessel.
Scheduled on stream in late 2008, Akpo is expected to reach a quick production peak of 225,000 boe/d, 80% condensate. Plans call for the condensate to be exported via a buoy 2 km from the FPSO. The gas will be piped 150 km to the Amenam/Kpono platforms and then transported to the Bonny liquefaction plant.
Petrobras acquisition
Petrobras said the final cost of its retail outlet deal would be tallied later this year, when the properties are expected to change hands.
Petrobras will acquire 38 retail outlets in Bogota, a commercial fuels business, a lubricants processing facility in Puente Aranda, and an oil depot in Santa Marta.
In Paraguay, Petrobras is buying 134 retail outlets as well as an LPG business and aviation fuel operations at the Asuncion and Ciudad del Este airports.
Petrobras is acquiring 89 retail outlets in Uruguay, aviation fuel facilities at the Montevideo airport, and an asphalt business. Petrobras’s acquisition falls in line with its plan to create an integrated energy company with a strong presence in Latin America.
Last week, Brazil and Venezuela broke ground on a refinery that will be jointly operated by the countries’ state-owned oil firms. The 200,000 b/d Gen. Jose Ignacio Abreu e Lima refinery, in port city Suape, about 40 km from Recife in northeastern Brazil, is a joint venture of Petrobras and Petroleos de Venezuela SA.
Brazil and Venezuela are each putting up $2.5 billion for the project, which is to begin operations in 2011.
Total in Norway
Total’s acquisition, subject to approval of Norwegian authorities, will raise the company’s participation to 50% in the Victoria discovery, which lies in the PL211 area.
Total plans to propose that it become operator of the license. Partners are Statoil, 30%, and Eni Norge, 20%.
As part of the deal, Total will transfer 5% of its interest in Tyrihans oil and gas field in the Norwegian Sea to ExxonMobil Corp.
The Norwegian Ministry of Petroleum and Energy recent approved development of the field (OGJ Online, Dec. 5, 2005). The transfer drops Total’s stake in Tyrihans to 21.51% from 26.51%.
Tullow’s farmout
The 4,763 sq km block, operated by Devon, is covered by good quality 3D seismic data.
It lies in 750-1,600 m of water west of the adjacent Block 10, in which Tullow recently participated in two wells, having acquired a 15% interest in a farmout from Sonangol P&P.
In the northeastern area of Block 24, the Kabetula-1 well, drilled to test a Lower Miocene objective, reached 1,818 m TD on Dec. 30, 2005, but did not discover hydrocarbons. It is being plugged and abandoned. ✦