SPECIAL REPORT: Exploration spreads into numerous remote and nonproducing basins

March 26, 2007
Remote and nonproducing basins and areas are pulling in a small but important share of exploration expenditures worldwide.

Remote and nonproducing basins and areas are pulling in a small but important share of exploration expenditures worldwide.

Almost every continent has examples of seismic surveys, exploratory drilling, or other exploration methods being used in risky attempts at establishing the presence of commercial volumes of hydrocarbons.

The 2007 activity follows the announcement of several important oil and gas discoveries made in remote areas in 2006.

This article contains examples of the activity and various operators’ plans for 2007 and beyond.

Africa’s status

Exploration in several of East Africa’s remote basins almost rivals the excitement that surrounds the burgeoning oil production off West Africa.

Uganda’s Albert graben seems primed for eventual commercial production after 2005-06’s discoveries near Lake Albert, and explorers have taken up acreage on the Congo (former Zaire) side of the lake.

Heritage Oil Corp., London, said its Kingfisher discovery could reveal the Albert graben to be a world class petroleum basin.

Tony Buckingham, Heritage CEO, said, “All five wells drilled in the Albert basin in the last 15 months have been oil discoveries, which we consider exceptional for a virgin onshore hydrocarbon basin, and Kingfisher is the second well that has produced over 12,000 b/d of oil under test.”

The other is Tullow Oil PLC’s Waraga-1 well on Block 2. The other discoveries are Mputa-1, Mputa-2, and Nzizi-1 (not tested).

Heritage was seeking a larger rig in early March 2007 to explore deeper formations beneath its Kingfisher discovery. Kingfisher-1A on Block 3A flowed at combined rates of 13,893 b/d of 30-32° gravity oil from a total of 54 m of perforations 1,783-2,344 m (Table 1).

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The Kingfisher reservoirs are sandstones of Tertiary age with permeabilities up to 2,300 md (OGJ, June 10, 2002, p. 42, and June 17, 2002, p. 36).

The well did not reach the deepest objectives and investigated only part of Kingfisher, which Heritage described as “a very large structural high that is expressed at surface on the bed of Lake Albert. Seismic data indicate an areal extent of up to 70 sq km for the Kingfisher prospect.”

Heritage let contracts for a 325 sq km 3D seismic survey over the Kingfisher and Pelican structures on Block 3A and 500 line-km of 2D seismic on Block 1 (see map, OGJ, Sept. 4, 2006, p. 56).

Heritage and partner Tullow Oil hold more than 12,000 sq km in the two Uganda blocks and Tullow-operated Congo blocks 1 and 2.

Uganda’s remoteness will challenge the operating groups in declaring commerciality and establishing long-term production.

Farther north in Upper Egypt, a subsidiary of TransGlobe Energy Corp., Calgary, planned to spud on Mar. 24 at a second exploration prospect in the Nuqra/Kom Ombo rift basin near Aswan (Fig. 1).

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The Narmer-1 was to take 40 days to drill. It is 30 km east of Set-1, the first of the two-well program. Set-1 well, which targeted as much as 30 million bbl of oil, was drilled to 4,500 ft measured depth and encountered no hydrocarbons in Cretaceous or Jurassic sands.

TransGlobe holds 50% working interest and is operator of the 5.5 million acre Nuqra Block 1, which has eight seismically defined leads identified from more than 4,000 line-km of 2D seismic surveys.

The Kom Ombo rift basin is analogous to the Gulf of Suez basin in Egypt, the Marib basin in Yemen, and the Muglad basin in Sudan, TransGlobe said. All except Kom Ombo contain major reserves. Seismic and well data have confirmed the existence of Jurassic and Cretaceous sediments and the presence of a petroleum system, the company said.

In nonproducing Ethiopia, Lundin Petroleum AB signed a production sharing contract in November 2006 that covers blocks 2 and 6 in the Ogaden basin.

The PSC covers more than 24,200 sq km just west of the undeveloped Calub and Hilala oil and gas discoveries.

Lundin Petroleum then held a 100% interest with the government holding an option to participate with up to 10% interest in case of a commercial discovery.

Neither block has been drilled, but the company said indications of light oil, gas, and condensate have been documented in well tests and surface seeps south and east of the blocks.

Australian independent Range Resources Ltd., Perth, completed a farmout to Canmex Minerals Corp., Vancouver, BC, in the Nogal and Darin basins in the Puntland area of nonproducing Somalia. Canmex will be operator and is obligated to spend $45 million for an 80% participating interest and drill at least two wells in each area.

Origin Energy Ltd., Sydney, acquired 3,759 line-km of seismic surveys on blocks L-8 and L-9 in the Indian Ocean off Kenya. Origin is operator with 75% interest.

Seismic over some leads in Origin’s permits appear to be associated with direct hydrocarbon indicators (DHIs), the company said. After a minimum of four months’ processing time, a decision must be made in the third quarter of 2007 whether to enter the second additional period, which carries drilling commitments.

Rob Willink, Origin’s executive general manager exploration, said, “With interests being secured in new permits and new seismic becoming available for interpretation, we are entering a particularly exciting phase in the exploration of our more frontier assets.

“The potential for very large oil and gas discoveries has been identified, but as always, we remain conscious of the geological risk and high cost associated with exploration, particularly in our deeper water areas. To this end, we have commenced a process of attracting experienced partners to participate in forward activities in these areas.”

Elsewhere in the Lamu basin, a group led by Woodside Petroleum Ltd.’s Kenyan subsidiary plugged the Pomboo-1 wildcat in 2,193 m of water on Block L-5 in January 2007 and deferred drilling a planned wildcat on Block L-7 until it could conduct a geologic study that incorporates the Pomboo well results.

Meanwhile, in West Africa, Roc Oil Co. Ltd., Sydney, plans to drill three to six wells on the frontier, 1,073 sq km Cabinda South Block in Angola with a rig that was to have arrived this month. A second rig is to arrive on the block at the end of May 2007.

The block, in the Lower Congo basin, is unexplored since the 1970s. Roc Oil operates the block with 60% interest.

Roc Oil acquired 722 line-km of 2D seismic surveys in 2005 and 416 sq km of 3D seismic surveys in 2005 and 2006, respectively, and a high-resolution aeromagnetic survey covering the entire block in March 2006.

Chevron produces 1.3 million b/d of oil from Block O in the same basin just offshore from the Cabinda South block.

Roc Oil lists the primary presalt reservoirs as the Lucula sandstone of Jurassic to Early Cretaceous age, sealed by Bucomazi shales, and the Chela sandstone of Aptian age sealed by the Loeme salt.

Lucula is equivalent to the main reservoir at M’Boundi field in Congo (Brazzaville), and Chela forms the gas reservoir encountered at the 123-5 well drilled by Gulf Oil (Cabinda) in 1968.

Main reservoir in postsalt plays is the Vermelha sandstone, which accounts for a large part of the offshore production. Secondary reservoirs include Iabe sandstone and Pinda limestones, both of which produce offshore, and sandstones in the Lago and Mesa formations

Asian exploration

Papua New Guinea, Indonesia, and Vietnam had important exploration in Southeast Asia.

InterOil Corp., Toronto, is to reach proposed TD of 10,000 ft in April or May 2007 at an appraisal well near its 2006 Elk gas-condensate discovery in the Papuan fold belt in Papua New Guinea.

Elk-2, budgeted at $12.5 million, is 2.9 miles northwest of the Elk-1 discovery on PPL 238. The gas-condensate targets are in the Miocene Puri and Eocene Mendi limestones (Fig. 2).

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The appraisal well is programmed to test the entire 2,000-ft limestone section and intersect a postulated oil-water contact below the gas accumulation. The top of the gas target is at about 6,000 ft.

Meanwhile, TGS-NOPEC Geophysical Co. ASA launched 18 months of nonexclusive geoscience surveys of Indonesia’s underexplored frontier basins in early 2007 (Fig. 3). First data were to be available in the second quarter of the year.

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The project was to cover 1 million sq km in 16 sedimentary basins with 33,000 line-km of new 2D seismic surveys, 419,000 sq km of multibeam seaseep, gravity, and magnetic surveys, 1,500 sediment cores, 4,500 geochemical analyses, and 250 heat flow probes.

A team of geoscientists with extensive knowledge of Indonesian basins and a proven exploration success record in the region is to interpret the data.

Blocks are already in force in some of the basins. For example, Premier Oil PLC, London, was awarded a 3,396 sq km onshore block on the southeastern side of Buton Island, off southeastern Sulawesi, in December 2006.

Five exploration leads have been identified, and the work program calls for shooting 265 line-km of 2D seismic surveys. Premier has a 30% nonoperated interest.

Australian explorers are taking a greater interest in several nonproducing basins, including the Amadeus, Georgina, and Beetaloo basins.

Most of Vietnam’s oil production comes from the Cuu Long basin with a small amount coming from the Nam Con Son basin, both off the southeastern part of the country (Fig. 4).

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A large 2006 discovery was VRJ’s 09-3-DM-1X in the Cuu Long basin, which flowed 3,500 b/d of oil and was initially thought to have identified as much as 500 million bbl of recoverable oil.

OGJ estimated Vietnam’s production at 340,000 b/d of oil and 15 bcf/month of gas as of November 2006.

Pogo Producing Co., Houston, acquired 850 sq km of 3D seismic surveys over the shelf portion of 1.48 million acre Block 124 in the Phu Khanh basin and plans to drill two exploratory wells in 2008.

Only one small onshore gas field produces in the Song Hong (Red River) basin in the northern part of the country, but Petrovietnam Investment & Development Co. made a gas discovery on Song Hong offshore Block 107 in 2006. The well gauged 25 MMcfd of gas.

OMV (Vietnam) Exploration GmbH and Edison International SpA completed a noncommercial gas discovery on Block 111 in the offshore Song Hong basin in 2002 on Vietnam’s continental shelf generally west of China’s Hainan Island.

In the Krishna-Godavari basin off India, Reliance Industries Ltd., Mumbai, and Niko Resources Ltd., Calgary, have completed about 20 discoveries in the past several years on Block D6 in the Bay of Bengal. Almost all are in formations of Tertiary age.

In mid-March 2007 the companies revealed the Q1 and P2 discoveries on D6. Q1, 6 km west of P1, found pay in the distal part of the earlier established channel levee systems on D6. P2 found two gas-bearing zones in channel fan complexes.

A mid-2006 discovery, the MA-1 (Dhirubhai 26) exploration well in 1,800 m of water, is the block’s first Cretaceous find. An appraisal well, MA-2, found a 194-m gross gas-condensate and oil column, the thickest discovered on D6. MA field is declared commercial.

A May 2006 discovery involved a large onshore gas find in northwestern India. SGL-1 is in the Middle Indus basin 25 km from the border with Pakistan. The western Rajasthan discovery in the Shahgarh area of the Jaisalmer district flowed 15 MMcfd of gas from Cretaceous sandstones at 3,100 m, said Focus Energy Ltd., New Delhi (OGJ Online, May 31, 2006). Deeper formations might also be productive, the company said.

Europe’s outlook

Greenland’s Davis Strait will get perhaps its closest exploratory examination ever, and gas is still being discovered in the Celtic Sea off Ireland.

Greenland government authorities announced in December 2006 that ExxonMobil, Chevron Corp., Husky Oil Ltd., and DONG Energy of Denmark, had applied for exploration and exploitation licenses off West Greenland.

The four companies submitted a total of six bids for the eight blocks offered, and licenses were to be awarded at press time in March 2007 (Fig. 5).

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A second phase of the Disko West licensing round is planned from Aug. 1, 2007, to Feb. 1, 2008.

Meanwhile, predevelopment drilling is to start in the second quarter of 2007 at the first new gas discovery in the Celtic Sea for 16 years.

Island Oil & Gas PLC, Dublin, made the 49/23-1 discovery in late 2006 about 25 km east of Kinsale gas field facilities. Island Oil is operator with 100% interest.

The well, on the Old Head of Kinsale prospect, encountered a gross 100-ft gas column in a Lower Cretaceous reservoir sequence. Gas in place is under independent review but was initially estimated at 90-120 bcf over as much as 22 sq km. The discovery occupies parts of blocks 49/17, 49/22, and 49/23.

Norway’s Hydro established the presence of oil and gas in the Realgrunnen Group and the Kobbe formation at the Nucula prospect in the Barents Sea 110 km northeast of the Goliat oil discovery and said well testing and more exploration are needed (OGJ Online, Mar. 2, 2007). The well established the presence of a new, functioning petroleum system.

Latin America

Basins in Nicaragua, Chile, and Venezuela are among the remote areas under exploration.

Nicaragua could have its first commercial hydrocarbon discovery near Managua in the Sandino basin.

Norwood Resources Ltd., Vancouver, BC, was drilling a second structure in March 2007 after its first wildcat discovered hydrocarbons below 6,000 ft in Paleocene Brito formation turbidite sands (cover photo, this issue).

Logs from the first well, San Bartolo Rodriquez Cano-1, showed a combined 532 ft of pay, including 232 ft of conventional pay and another 300 ft of naturally fractured low permeability sands in eight zones. Porosities were 17-21% and permeabilities 3 to 30 md.

It is the country’s first exploration well in more than 35 years.

The discovery is 300 miles south-southeast of nearest oil production, in Guatemala.

Honduras, desirous of attracting oil and gas exploration, held a geological seminar in Houston in mid-March 2007 to show progress in the aggregation of existing data.

The country would first need to construct an oil law, outline license blocks, and possibly reach agreement on a Caribbean marine border with Nicaragua. JGI Inc., Tokyo, said that source rock geochemical studies indicate promise in deeper-water parts of the Tela basin and in the Mosquitia platform and basin off the country’s east coast.

In a remote corner of northernmost Chile, March Resources Corp., Calgary, received Chilean government decrees at the end of January 2007 to explore the Pica North and Pica South blocks that cover 2.5 million acres in the Tamarugal basin.

The company hoped for the first well to spud shortly after signing Special Operations Contracts that define work to be done on the blocks, which are valid for 35 years.

Two objective sandstone horizons at 4,300 ft and 7,000 ft are anticipated. A repeat of the deeper sandstone could be encountered at an estimated 8,470 ft. More sandstone reservoirs are anticipated to a depth of 12,800 ft.

The basin is similar to the Neuquen basin in Argentina and is believed to contain more than 16,000 ft of Jurassic black marine shales.

March Resources signed a letter of understanding in mid-2006 with California Oil & Gas Corp., Calgary, to drill two wells to earn an interest in the blocks.

The blocks, inland of Arica and Iquique, are in the Atacama Desert 400 miles west of production in Bolivia and 550 miles southeast of Camisea, Peru. The blocks are more than 100 miles north of gas pipelines from Argentina to Chile.

Venezuela awarded five exploration blocks in the nonproducing Gulf of Venezuela west of the Paraguana Peninsula.

The blocks are in shallow water east of Colombia’s Guajira Peninsula and lie between Lake Maracaibo and the Caribbean Sea. Successful bidders were Chevron, OAO Gazprom (two blocks), Vinccler Oil & Gas CA, a combine of Repsol YPF and Eni, and a combine of Petrobras and Teikoku Oil Co.

Gas, if discovered, could supply the large, two-refinery complex on the peninsula.

Piercing another sort of frontier, Russia’s OAO Lukoil, meanwhile, participated in what the company called “the first discovery made by Russian petroleum experts in the Western Hemisphere.”

Lukoil and Colombia’s Ecopetrol discovered 100 million bbl of oil in the Medina structure on the 3,089 sq km Condor block in the western Llanos basin. Condor-1, ground elevation 1,128 m, went to 4,500 m and is being “prepared for commercial operations,” Lukoil said.

North America

E&D frontiers in the deepwater and eastern Gulf of Mexico and several onshore areas are heating up.

US legislators discussed relaxing a ban on exploration in the eastern Gulf of Mexico (OGJ Online, Dec. 11, 2006).

At the southeastern extremity of the area, one dry hole has been drilled in Cuban waters and more drilling is likely.

The western gulf Lower Tertiary deepwater play is in a period of appraisal in 2007 after the stunning extended drillstem test at the Jack-2 appraisal well in 2006.

Jack-2, 270 miles southwest of New Orleans in Walker Ridge Block 758, sustained more than 6,000 b/d of oil from 40% of the total measured net pay of more than 350 ft (see maps, OGJ, Sept. 25, 2006, p. 36).

In the Central Utah thrust belt, one industry source indicates that four to five dozen prospects may await drilling between the Strawberry Reservoir in Wasatch County and the Arizona state line.

Covenant field remains the province’s only discovery to date with 10 producing wells that were making a combined 5,700 b/d of oil and 1,700 b/d of water from Jurassic Navajo at 6,200 ft in late 2006. Salt Lake City refinery utilization is at capacity.

Since the Covenant discovery in 2004, operators have drilled seven dry holes exploring for the Navajo. Petro-Hunt Corp., Dallas, was drilling in mid-March 2007 at a wildcat just west of Ephraim, Utah.

Various independents have indicated plans to drill about 12 wells in 2007 and possibly reenter several others.

One explorer said the play’s structural complexities are beyond resolving on 2D seismic data, but so far no 3D seismic data has been shot along the Hingeline. One well was inadvertently drilled into an igneous intrusive (OGJ Online, Mar. 2, 2007).

Russia-CIS-China

Many opportunities exist for all sizes of companies and budgets in Russia, which granted 184 oil and gas exploration and development licenses in 2006, said Wood Mackenzie Consultants, Edinburgh.

The year’s top bid was Lukoil Komi’s $220 million purchase of the Oshski Block in the Timan-Pechora basin, but the number of blocks that went for less than $1 million more than doubled from 2005.

TengizChevroil completed an apparently large discovery at Ansagan-1X in Kazakhstan west of supergiant Tengiz and Korolev fields in late 2006 but has not announced details.

China will benefit from Husky Energy Inc.’s rank Liwan 3-1-1 discovery on Block 29/26 in the South China Sea 250 km south of Hong Kong. In 1,300 m of water, it is the deepest water well drilled off China and confirmed the existence of a new hydrocarbon province, Husky said.

Drilled on 2D seismic, the structure has 60 sq km of closure. The well cut 56 m of net gas pay averaging 20% porosity in two zones. Husky and China National Offshore Oil Corp. have identified a number of similar structures.

Middle East

Saudi Arabia plans to fast-track the $10 billion nonassociated gas development beneath Karan oil field in the Persian Gulf (OGJ Online, Mar. 6, 2007).

The Permian Khuff reservoir at 10,888 ft, discovered in early 2006, is to be producing 1 bcfd in 2011. Saudi Aramco is drilling 11 other deep gas prospects in the Persian Gulf in 5-6 years.

Kuwait reported Umm Niqa-1, a large oil and gas discovery onshore in the Dibdibah subbasin.

National Iranian Oil Co. reported 36 tcf of gas recoverable from its Kish multipay gas discovery in 2006.

DNO ASA made Iraq’s first substantial oil discovery since the early 1990s at Tawke-1 in Kurdistan, far northwestern Iraq.