Total signs agreement on Libyan blocks

Total SA will convert its petroleum agreements with Libya’s National Oil Corp. (NOC) to exploration and production sharing agreements (EPSA) for Blocks C17 and C137 in Libya.

The parties signed a memorandum of understanding underscoring the move to the EPSA IV (exploration and production-sharing agreement) format.

The acreage is respectively located in the Sirte basin and the offshore Sabratha basin 100 km from the Libyan coast.

Mabruk Oil Operations, a subsidiary of Total, operates the blocks.

The shareholders in Block C17 are NOC with 50%, Total with 25%, and StatoilHydro with 25%. Partners in Block C137 are NOC with 50%, Total with 25%, and Wintershall with 25%.

In addition to production from the offshore Al Jurf field on Block C137 and from the Mabruk field on Block C17 in the Sirte basin, Total operates other exploration licenses in Libya.

Last year, Total’s equity production, which also includes its interests in nonoperated blocks, averaged around 75,000 b/d in Libya.

TerraWest Energy Corp., Vancouver, BC, is analyzing results from coalbed methane wells drilled to 800 m and 1,500 m on the 255 sq mile Liuhuanggou area bordering the city of Urumqi in northwest China’s Xinjiang Province.

Both wells penetrated Jurassic J2X coals, and the deeper well intersected other targeted formations with multiple coal seams, all of which were sampled.

Interests are TWE 47% and China United Coalbed Methane Corp. 53%. The PSC is on a PetroChina Co. Ltd. oil and gas lease.

Urumqi has built gas mains for residential use and has the capacity to take more gas. China’s second west-east gas pipeline under construction runs through the PSC, and the Chinese government gives CBM producers preferential pipeline access over conventional gas, a price subsidy, tax rate reduction and rebate, and corporate tax exemption, TerraWest noted.

Petromin Resources Ltd. is a major shareholder in TWE.

Venoco Inc., Denver, plans to drill 70 wells and rework 100 others in 2009 in northern California’s Sacramento basin.

The basin’s Cretaceous Forbes gas wells generate a 25% rate of return at $4/Mcf for gas, not counting hedges, the company said. Venoco hopes to cut well costs 10% from $850,000 recently and $1.1 million in 2008. It has hiked production to 60 MMcfd from 8 MMcfd in 2004.

Venoco plans to try horizontal drilling and staged fracs in the Guinda formation, just below the Forbes. The company, which has 20 vertical Guinda penetrations, fract out of the formation in the last quarter of 2008. Guinda flows 20-50 Mcfd of gas unstimulated.

Royale Energy Inc., San Diego, said its Lonestar East well flowed at the rate of 1.45 MMcfd of gas and no water from the lower 10 ft of Cretaceous Forbes. It is on line at 600 Mcfd.

The vertical Colusa County well, which tested a 3D seismic amplitude anomaly at 6,100 ft in Forbes, cut 24 ft of potential pay in that formation. The anomaly is almost 1,400 ft deeper than wells in Lonestar field to the west. TD is 6,400 ft.

Royale also identified shallower zones at 4,700 ft, 5,160 ft, and 5,820 ft that may have future gas potential. The 4,700-ft interval correlates with a shallow zone that has gas in the Parks 9-2 well, whereas the 5,820-ft zone correlates with a good gas show encountered in the nearby Gobel 21-1 well.

Concho Resources Inc., Midland, Tex., has deferred drilling in the Permian Lower Abo horizontal oil play due to lower commodity prices but continues to lease and now holds 22,079 net acres.

Various operators have staked 175 locations, including 33 by Concho Resources, in Eddy, Chaves, and Lea counties. The play has 30 producing wells.

Concho Resources, which began drilling in 2007, has participated in 14 Lower Abo horizontal wells, eight of them operated, of which 12 are producing and two await completion.

Concho Resources operated with 43.75% working interest the Comet 22 Federal Com No. 4 well, completed in December, which averaged 1,294 b/d of oil equivalent in its first 21 days on production.

Cimarex Energy Co., Denver, booked 58 bcfe of proved reserves at the end of 2008 in the Anadarko basin Woodford shale play in western Oklahoma.

Yet to be classified as proved are 400-500 potential 160-acre drilling locations associated with Cimarex’s 88,000 net acre position in the play. The estimated net risked potential of these locations is 2-3 tcfe. The position includes 38,000 net acres acquired in the last quarter of 2008 for $180 million.

Cimarex has drilled or participated in a total of 22 gross, 10 net, wells last year (OGJ, Nov. 17, 2008, p. 38). Yearend 2008 production was more than 50 MMcfed gross.

Initial 30-day production rates on recent operated wells include Golden 1-3H 6.5 MMcfd, Holman Farms 2-32H 6.1 MMcfd, and Hebert 1-14H 4.3 MMcfd.

Energy Libraries Online Inc., Oklahoma City, is attempting to raise funds to digitize Midcontinent well logs, strip logs, scout tickets, and other documents that are in danger of loss and deterioration. The nonprofit, charitable organization plans to establish a digital online library for permanent access by members, said Tim O. Brown, executive director.

Initial goal is to create a website and then scan and index 750,000 of the more than 6 million hard-copy documents archived in the Oklahoma City Geological Society Well Log Library, the Oklahoma Well Log Library, the Ardmore Cut & Sample Library, and the Oklahoma Geological Survey.

Gulf Coast

Evolution Petroleum Corp., Houston, completed two Giddings field reentries at initial gross rates more than double the initial rate averaged on the first seven wells placed on production in fiscal 2009.

The Hilton-Yegua-1RE in Burleson County averaged 3 MMcfd of gas and 146 b/d of oil and condensate in its first 8 days on line. It has a 3,000-ft leg in Austin chalk and a new vertical section from 3,000 ft to 10,500 ft.

The Pearson-1RE, in Grimes County near six development locations under lease, maintained 1.25 MMcfd and 48 b/d in its first 8 days on production. It has a 3,500-ft leg in Georgetown.

Evolution has 100% working interest and 78-80% net revenue interest in the wells.

North

Parallel Petroleum Corp,. Midland, farmed out its approximate 35% interest in its Fort Worth basin Barnett shale interests to Chesapeake Energy Corp., Oklahoma City.

Parallel estimated that its Barnett Shale leasehold operated by Chesapeake and subject to the farmout is 25,600 gross (9,300 net) acres. Parallel anticipates that 61 gross (10 net) wells will have been drilled from Nov. 1, 2008, through Dec. 31, 2009.

Parallel will assign its interest to Chesapeake as each well is spudded, and Chesapeake will fund all of Parallel’s drilling, completing, and operating costs until Chesapeake recovers 150% of its costs. At 150% payout per project, 50% of the assigned interest will revert to Parallel.

For all wells drilled after Jan. 1, 2017, Parallel will pay all costs and receive all revenue attributable to its 50% reversionary interest.

As a result of the farmout and decreases in planned activity in its other basins, Parallel cut its 2008 capital budget 76% to $29.1 million.