HOUSTON, Oct. 10 -- Phillips Petroleum Co. of Bartlesville, Okla., is exploring the deepwater "golden triangle" off Brazil and West Africa and in the Gulf of Mexico for the potential large discoveries that it needs to maintain its current reserve base of 5 billion boe and production close to 1 million boe/d, a company executive said Wednesday.
All three areas share the same sort of geological formations that have spelled success in deepwater drilling for oil, said William R. Trojan, Phillips' vice-president of deepwater exploration, at a Houston seminar focusing on energy operations in Brazil.
Brazil has some of the world's largest deepwater fields. However, Trojan said, it must compete for exploration dollars with the "good hunting grounds" off West Africa, where the deepwater exploration success rates run as high as 80% in some areas, and with the Gulf of Mexico, where discoveries are smaller but more frequent.
There are other factors that attracted Phillips to Brazil, where it obtained two blocks in the third licensing round for exploration and production concessions earlier this year.
Phillips Petroleum submitted the highest single bid in that round, 117.7 million reals ($48.7 million) for BM-ES-11 in the Espirito Santo basin (OGJ Online, June 20, 2001).
However, Trojan said, the acreage of that concession equals about 93 federal lease blocks in the Gulf of Mexico. Whereas a gulf block might cover only a segment of a new field, he said, there's room for multiple fields in a Brazilian concession.
Moreover, the upfront bid bonus paid for a Brazilian concession runs less than $100/acre compared to top prices of $250-$350/acre in the gulf and off Nigeria and Angola, said Trojan.
Amounts being paid for concessions off Brazil are going down, said P. Sean Murphy with the energy law firm of Thompson & Knight LLP. Thompson & Knight, along with Brazilian energy law firm Tauil & Chequer, sponsored the Houston seminar.
The high bonus of $74.5 million was paid in Round 1, but that fell to $64.6 million in Round 2 and $48.7 million in Round 3. Overall bonuses averaged $15.75 million in Round 1, $11.14 million in Round 2, and $6.13 million in Round 3 as the value of the real vs. the US dollar deteriorated, he said.
Brazil's Campos and Santos basins are viewed as hot prospects by many producers who are willing to pay top dollar to participate in that exploration and production. However, concessions in the less explored Para-Maranhao basin are still relatively inexpensive, said Murphy.
"Espirito Santo is hot for some companies. You're going head-to-head with Exxon there," he said.
Contact Sam Fletcher at [email protected]