ARCO SETS SIGHTS ON 9% GAIN IN OIL EQUIVALENT OUTPUT BY 1996

Sept. 26, 1994
ARCO has detailed upstream projects covered by 1994-98 capital budgets designed to boost its oil and gas production to 970,000 bbl of oil equivalent per day (boed) in 1996 from 890,000 boed in 1993. In a talk to security analysts in New York, ARCO Pres. and Chief Executive Officer Mike Bowlin elaborated on ARCO's previously disclosed $9.2 billion, 5 year base capital spending plan (OGJ, Aug. 15, p. 46). He also cited additional potential projects that may be developed, especially outside

ARCO has detailed upstream projects covered by 1994-98 capital budgets designed to boost its oil and gas production to 970,000 bbl of oil equivalent per day (boed) in 1996 from 890,000 boed in 1993.

In a talk to security analysts in New York, ARCO Pres. and Chief Executive Officer Mike Bowlin elaborated on ARCO's previously disclosed $9.2 billion, 5 year base capital spending plan (OGJ, Aug. 15, p. 46).

He also cited additional potential projects that may be developed, especially outside the U.S. (OGJ, Sept. 19, p. 30).

NON-U.S. POTENTIAL

Bowlin noted that during 1988-93, ARCO replaced 260% of non-U. S. production.

In 1994, non-U. S. production is projected to increase by more than 25% from last year's level. And when ARCO's Yacheng 13-1 gas field off China starts up in 1996, non-U.S. production will be almost 220,000 boed, up 65% from 1993.

"We estimate we have over 500 million bbl of additional potential reserves in the U.K. North Sea and Indonesia that will move to proved reserves over the next 4 years," Bowlin said. The two areas accounted for 92% of ARCO's non-U.S. production last year.

Among other development prospects, ARCO expects to book about 70 million bbl of oil reserves in Ecuador upon government approval and declaration of commerciality of its 1992 Villano oil field discovery (OGJ, Nov. 8, 1993, p. 23). It expects Villano to start production in 1997.

In Algeria, ARCO could book another 70 million bbl of crude in its first year of an agreement with state owned Sonatrach to develop more reserves in existing fields.

"We would have close to a 50% interest in existing as well as future production and would expect to invest more than $1 billion over the life of the project," Bowlin said.

ARCO signed a draft heads of agreement with Sonatrach on the project and hopes to have the agreement in final form in first half 1995. If the project goes forward, ARCO expects after tax earnings of $100-150 million/year from it by the end of the decade.

In addition, ARCO will continue to press efforts to boost production and reserves in its Alaskan fields, although that area is getting a reduced emphasis for exploration. Once a tertiary enhanced recovery project is approved for supergiant Kuparuk River oil field, ARCO expects to book another 100 million bbl of net reserves. It is looking for final approval before yearend, with incremental oil beginning in 1996.

EXPLORATION SUCCESSES

ARCO also cites recent exploration successes as underpinning further growth in reserves and productive capacity.

Near one of its biggest non-U.S. projects, Yacheng 13-1 gas field development off China's Hainan Island, ARCO discovered a large gas field on its Yacheng 35-1 block. The tract is near the route for a pipeline being laid to deliver Yacheng 13-1 gas to the Chinese market. Plans call for an appraisal well to be drilled on the structure next year.

ARCO also drilled a successful step-out to its U.K. North Sea Tyne discovery, slated to start production in 1996 (OGJ, Sept. 13, 1993, p. 42).

In addition, the company is stepping up drilling on its Kangean block off Bali, Indonesia, where it drilled the 300 bcf Sirasun gas discovery. Plans call for drilling three appraisal wells on the Kangean block, where ARCO started production from Pagerungan gas field in January.

Among other key wildcats on ARCO's 1994 non-U.S. exploration program are wells in the U.K.'s West of Shetlands play, three frontier concessions in eastern Indonesia, Northwest Java Sea, Trinidad, and Viet Nam.

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