Karen Broyles
OGJ Online
Noble Affiliates Inc. plans to venture into the power generating business by developing a 200-Mw combined-cycle, natural gas-fired power plant at Machala, Ecuador, that would utilize gas from its exploration and production operations in that country, said Noble Chairman, Pres., CEO, and Director Robert Kelley in Houston. Noble Affiliates also said its methanol plant in Equatorial Guinea is 90% complete.
The Ardmore, Okla.-based company expects to bring the power plant, which is estimated to cost $140 million, and the Equatorial Guinea methanol plant on line during 2002, Kelley told analysts attending the Dain Rauscher Wessels conference last week.
It also intends to build a 40-mile pipeline to transport gas from the Amistad field in the Gulf of Guayaquil to the power generation facility. Kelley said Noble expects the power plant to bring in $32 million of annual cash flow and $534 million project net cash flow over the plant's life.
Noble's Equatorial Guinea methanol plant is expected to produce 20,000 b/d of methanol when operations begin the second quarter of 2001. Previously, the plant was expected to come on line at the end of this year (OGJ, Feb. 23, 1998, p. 36). The plant will be fired by about half of the 250 MMcfd of gas Noble expects to produce from two parallel prospects in the Alba gas field. Noble holds licenses for about 285,000 acres in the country. The remainder of the gas can be reinjected.
The company spent 3 years developing the project. Kelley said the current pricing of methanol in Equatorial Guinea, pegged at around 40�/gal, is attractive compared to the US, where high natural gas prices make producing methanol less appealing.
E&P activity
Noble also announced the results of its first well in Ecuador. That well, drilled from a platform in 130 ft of water off Ecuador in the Gulf of Guayaquil, encountered 341 ft of gas pay after being drilled to 10,900 ft. Noble will drill three additional wells from the same platform. Noble's wholly owned indirect subsidiary EDC Ecuador Ltd. holds 100% of the working interest in the 864,000-acre license. Noble will drill four development wells at Amistad at a cost of $78 million.
While Ecuador hasn't been the most stable country politically or economically, the situation there has improved from a year ago and the dollarization of its currency has proven successful, said Kelley.
In Israel, Noble recently tested two wells at the Noa field and two at the Mari-B field. Mari-B's two wells tested at a combined rate of 33 MMcfd and logged on average more than 586 ft of net pay. Mari-B could hold net reserves of 350 bcf.
Meanwhile, the Noa field wells tested at more than 30 MMcfd and logged on average more than 91 ft of net pay, and are expected to yield 52.6 bcf net of gas reserves. Noble also plans to test the Andromeda prospect, which lies at a water depth of 3,200 ft and is believed to hold as much as 2 tcf of gas reserves.
While Israel lacks storage for large quantities of gas, Kelley said gas could be produced quickly from the Noa and Mari-B reservoirs. Noble plans to bring all four wells on line sometime in 2003.
The company's also been negotiating for an Israel-based electric generating company to purchase gas these prospects.
Gas demand has grown considerably in Israel, displacing demand for the diesel and bunker used in Israel for power generation. Kelley expects gas demand in Israel to start at 200-250 MMcfd and rise to 550 MMcfd by 2005.
Noble also remains active in the Gulf of Mexico, where it's developing five separate prospects for drilling. But Kelley said he expects a longer life and more stable production of its acreage in Israel and Equatorial Guinea.
For the first time, Noble expects its reserve replacement to exceed its production ratio. Kelley also expects to see "significant upward booking" for its Ecuador production during 2001.
Noble estimates that its discretionary cash flow has climbed 19% during 2000 to $424.4 million, or $7.62/share, and expects cash flow to rise 32% during 2001 to $558.9 million, or $10.03/share. Kelley said that growth will slow during 2002, when cash flow's expected to inch up 1% to $562.6 million, but cash flow is forecasted to rise 28% in 2003 to $717.3 million, or $12.88/share.
Noble Affiliates' oil production is expected to climb 36% during 2001 while gas production will increase 16%. Oil and gas production will climb 20% and 8% respectively in 2002 and 15% and 30% each in 2003.