France's E&P spending expected to drop 30% from 2008

Exploration spending in France is expected to drop 30% this year from outlays of €35 million in 2008, despite sustained requests for exploration permits.

Doris Leblond
OGJ Correspondent

PARIS, May 19 -- Exploration spending in France is expected to drop 30% this year from outlays of €35 million in 2008, despite sustained requests for exploration permits.

Charles Lamiraux, senior geologist and head of exploration at the Environment and Energy Ministry, told OGJ, "Companies are preparing for the future as they expect oil prices to rise." Until then, they're watching their budgets and postponing the more expensive work "such as horizontal wells," he said.

The rush for shale gas permits by a number of small independents as well as Total E&P France also targets future developments. Stiff competition among companies will likely slow the process, which never has been speedy.

The drop in exploration spending includes a reduction in the Aquitaine Basin where a costly but dry well was drilled in 2007 in the Bay of Biscay. As many as six wells are expected to be drilled in the Paris basin this year.

Production and development spending, on the other hand, is expected to increase to €85.4 million from €67 million in 2008 as some dozen wells are scheduled to be drilled.

E&P acreage
Exploration permit acreage increased by 9,373 sq km to 28,882 sq km in 2008 because 13 research permits were awarded; one permit was extended; and only one permit came to the end of its lease.

Eleven of the permits are in the usual Paris and Aquitaine basins, while the other two were in the Jura and Alsace regions in eastern France.

There were 18 requests for permits—9 in the Paris basin; 3 in the Aquitaine basin; and 6 in southeastern France in areas that have received little attention over the past years: Languedoc Roussillon-Cevennes in the southeast and northern Savoie near the Swiss border. That's up from 14 in 2007.

Onshore exploration remained about the same as the previous year with five wells completed. In the Paris basin, European Gas Ltd. failed to find gas in Bleue Lorraine. Lundin Petroleum AB's well in the Dogger showed oil traces that need confirmation through tests. Another Lundin well in the carboniferous showed good gas indications that need to be assessed.

In Aquitaine, two wells drilled by Egdon Resources PLC in an old heavy-oil field failed to find a reservoir, while another by Total E&P northeast of Pecorade showed oil but needs to be tested.

Offshore permit acreage increased from 74,959 sq km to 136,959 sq km due to attribution of two offshore permits in the Mozambique Canal off Juan de Nova Island. Juan Nova East was awarded to a consortium of three companies—Nighthawk Energy PLC, Jupiter Petroleum Inc., and Osceo Hydrocarbon Ltd.—and Juan Nova Maritime Profond permit to Rockoil and Marex. They are starting general studies to prepare for seismic work.

In the Mediterranean, seismic surveys were carried out by Melrose.

Six development wells were drilled in the Paris basin. Four are producing wells; one an injection well; and the sixth is awaiting workover. Four are horizontal wells. They account for a total of 7,008 m drilled compared to 25,377 drilled in 2007.

In 2008, 976,000 tonnes of oil were produced (1% of national consumption) compared to 974,000 tonnes in 2007. This is a 0.2% increase compared to a 7.7% decline between 2006 and 2007. The increase is attributed to enhanced production from mature fields and to resolution of an earlier storage problem in Western Aquitaine fields.

Natural gas production fell from 1.72 trillion cu m in 2007 to 1.6 trillion cu m due to field depletion. Gas production accounts for 2% of national consumption.

France's three main producers—Vermilion REP SAS, Total E&P France, and Lundin International—operate 88% of France's crude production, which comes mainly from the Paris basin (58%) and the Aquitaine basin (41%). Natural gas production is operated 95.4% by Total E&P France and is 95.8% produced from the Aquitaine basin.

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