David Young
OGJ Online
LONDON, Nov. 19 -- The merger of Conoco Inc. and Phillips Petroleum Co. would unite two companies who were first to develop gas fields in the southern sector of the North Sea and who led technical innovations when developing large oil fields in the more hostile waters of the Northern sector.
Conoco was the first company to use the tension-leg platform concept on its now defunct Hutton field, and when Phillips developed Maureen field it was the first company to use a platform designed to be reused. However, both platforms have yet to find new applications and Maureen will be scrapped.
Phillips is also the operator of the Ekofisk complex of fields, which straddles the Norwegian and UK sectors of the North Sea and which since 1971 has been producing 350,000 b/d, a production rate maintained by Phillips' constant use of new technologies. The company has 35% of the project.
In the southern sector they were among the first companies to see the potential of developing small accumulations through a joint production system, and the Conoco Vanguard, Victor, and Viking fields have provided the model for most developments that have come since in the area.
Conoco is still active in the area and is seeking UK government consent for the fast-track development of its recent gas discovery on Block 49/16, 80 miles east of the Lincolnshire coast.
The discovery, in what is known as the Vanguard Extensions (VE) prospect, is another success for Conoco's policy of "snuggle exploration" and development, the pursuit of gas and oil prospects close to existing processing and transportation facilities, making them commercially attractive and capable of rapid development.
The VE discovery is Conoco's seventh successful "snuggle" exploration and appraisal well in the UK since the beginning of 1998. Conoco anticipates first gas production in the third or fourth quarter of 2002.
Conoco and Phillips are also focused on the larger oil and gas accumulations further north. With Conoco's acquisition of Saga UK Ltd. in 2000, it became the 51% owner of the Britannia gas-condensate field, the largest producing gas field in the UK North Sea. That deal also led to it acquiring 23% of the producing Alba field to become the largest shareholder.
Conoco and TexacoChevron UK Ltd. broke with industry tradition and established the first joint operating company in the UK North Sea, Britannia Operator Ltd. The partners also established innovative alliances with contractors and suppliers, setting out shared goals for everything from safety and environmental protection to costs and field performance. The coventurers in Britannia are Conoco 51.42%, TexacoChevron 30.20%, BP PLC 9.42%, and Phillips 6.78%.
Conoco is also expanding its European oil and gas production with discoveries in the North Sea, off the UK, and the Netherlands. The company will also participate in development of Clair field in the North Atlantic.
Clyde Petroleum Exploratie BV, a wholly owned subsidiary of Conoco, has a significant gas discovery in the Dutch sector of the North Sea. The Q4-10 discovery represents the seventh commercial discovery that the company has drilled off the Netherlands within the last 3 years. The well is 6 miles from the Clyde-operated pipeline and production facilities. The company is reviewing development options.
Conoco acquired Clyde Petroleum as a result of its acquisition of Gulf Canada Resources Ltd.
These developments will enhance the portfolio Conoco and Phillips hold in the producing fields in the Norwegian sector of the North Sea. Ekofisk is Phillips' most profitable asset and Conoco has 23.3% of Huldra, 18.2% of Heidrun, 12% of Stratfjord North, 10.3% of Stratfjord, 7.7% of Osberg, 9% of Visund, 6.5% of Sygna, 6.4% of Gran, 6% of Stratfjord East, 3.7% of Jotun, 2% of Murchison, and 1.6% of Troll.
Downstream, Conoco is a major player in Europe through its Jet brand, which is usually a price leader. The company is also a major supplier to the supermarket brands.
Conoco owns the 186,000-b/d Humber refinery in Humberside, England, and minority interests in German and Czech Republic refining complexes. Phillips, on the other hand, has withdrawn from the UK downstream market.
