Forest-Anschutz work to turn good geology, connections into South African business

Nov. 27, 2000
Operations off western South Africa took a positive turn at mid-November with good results from an exploratory test in the Orange River basin.
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Operations off western South Africa took a positive turn at mid-November with good results from an exploratory test in the Orange River basin.

Overseas affiliates of Forest Oil Corp. and Anschutz Corp. tested a strong flow of gas and condensate from the first of four planned exploratory wells on the Ibhubezi (Zulu word for lion) prospect on Block 2.

Forest's tentative timetable doesn't call for a declaration of commerciality, if warranted by drilling all four wells in the present program, until the fall of 2001, but if successful the project could have far-reaching benefits for South Africa and the companies.

Forest, operator, and Anschutz cemented the relationship in September with signing of an agreement with Mvelaphanda Holdings (MVP) with respect to Blocks 1 and 2.

The agreement, intended to comply with the government directive for black participation in South Africa's upstream sector, gave MVP the right to acquire an initial 10% interest in both concessions.Timing of that acquisition is at MVP's election

The blocks cover a combined 13 million acres. Present interests are Forest 70%, Anschutz 30%.

Meanwhile, Global Energy Holdings LLC, Denver, with Scott Pickford and Nigel Press Associates are in the third month of a technical cooperation agreement that covers 7.16 million acre Block 3B/4B, south of the western two thirds of Block 2.

Block 2 exploration

Preliminary evaluation by Forest, announced last March, attributed 200 bcf of potential recoverable gas to the AK-1 discovery well plus as much as 2.5 tcf from the reservoir updip of the discovery well (OGJ, Apr. 17, 2000, p. 21).

The volumes included no proved reserves. They were based on the 1986 discovery well drilled by the South African national oil and gas company and 310 sq km 3D seismic survey Forest acquired in March 1999. The discovery well cut 207 ft of pay in Lower Cretaceous sandstones at 10,627-11,091 ft and flowed 52.8 MMcfd of gas and 324 b/d of condensate from three separate zones.

In mid-November Forest-Anschutz said the AK-2 exploratory well flowed at the rate of more than 30 MMcfd of gas with undisclosed condensate volumes on a ? in. choke with 2,200 psi tubing pressure on a 12 hr test. A second zone is to be tested. Drilled to 3,430 m, the well has casing set to TD.

The two wells are about 2 miles apart 48 miles offshore in about 800 ft of water.

Pride-Foramer, which holds the multiwell drilling contract, will soon move the rig about 7 km to the second of the four locations. Total cost of the program is $30 million.

The initial interpretation also indicated as much as 15 tcf of additional gas potential in the area of the 3D survey.

Where it could lead

Forest has been studying the feasibility of a development program that could ultimately see Block 2 gas shipped as far as the vicinity of the Mossgas plant near George on the southern cape, said Robert Boswell, Forest chairman and chief executive officer. Part of the study involves a 2 well subsea development scheme aimed at shortening cycle time and generating early cash flow. It would entail supply of 40-50 MMcfd of gas to a 200 MW onshore power plant.

"Once we have determined the field is commercial, we plan to evaluate pipeline options and the development of markets for the gas in Saldhana Bay and Cape Town" and on to near Mossgas," Boswell said. "In addition to gas for generating electricity across the western and southern regions of South Africa, we plan to explore opportunities to expand the use of gas-to-liquids technologies for which South Africa is already a world leader."

Tokyo Sexwale, MVP chairman, said he sees "real benefits in terms of job creation, skills and technology transfer and this agreement demonstrates black economic empowerment in an important sector of the international energy business. MVP concentrates its activities primarily in the resources sector including diamonds, minerals, platinum and the energy sector."

Boswell said Forest has set up a South African subsidiary that will be staffed by South African nationals and is strongly committed to the principles of black empowerment, including the transfer of skills, multinational university training, internships and enterprise management.

Other work

Forest-Anschutz have been busy since signing the contract on Block 1 with South Africa on Nov. 16, 1999.

The work commitment there called for reprocessing 1,000 km of seismic and gather 750 km of 2D seismic data at the same time as gathering 700 km of 2D data on Block 2. This was accomplished in December 1999.

Block 1 contains one Lower Cretaceous gas lead with gas shows and several undrilled leads and prospects. A first well might be drilled on Block 1 in summer 2002.

The 5 million acre Block 1 contains one discovery well, the AF-1, which tested at 32.4 MMcfd of gas before Forest-Anschutz involvement.

If commerciality were declared on Block 2 in fall 2001, gas production could begin in winter 2004.

Global project

Effective date of Global Energy's contract on deepwater Block 3B/4B was Sept. 15, 2000.

The acreage lies in 300 to 2,000 m of water. Global Energy said that none of the 30 wells that have been drilled off western South Africa has specifically targeted Late Cretaceous. Therefore the Late Cretaceous on the block represents a new, high potential oil play that has not been tested south of Angola.

Global Energy is to interpret and reprocess 1,000 km of existing seismic data and compile a full geological and geophysical technical report of the area.

The rest of the work program calls for the conduct of a proprietary satellite oil seep detection survey and generation of source rock and basin model reports.

If the studies prove successful, Global Energy has the exclusive option to convert the TCA into a prospecting agreement with prenegotiated terms of the PA contained in the TCA. The PA requires the acquisition of new proprietary seismic data and optional additional seismic and drilling of a well or wells during a primary period and three optional periods that cover a combined 71/2 years.

Correction

An error appeared in the article, "Gulf of Mexico deepwater future looks bright as new plays result in major discoveries" (OGJ, Nov. 6, 2000, p. 74). The dashed green line on Fig. 1 referred to in the text on p. 74 is actually a solid double blue line on Fig. 1 on p. 75.