RAINS DELAY SUDAN OIL DEVELOPMENT

A. D. Koen
Senior Editor-News

Monsoons in southern Sudan have delayed plans by Arakis Energy Corp., Vancouver, B.C., to revive development halted a decade ago by Chevron Corp.

When Sudan's rainy season ends about mid-September, Arakis through subsidiary State Petroleum Corp. (SPC) intends to pick up where it left off last May: reentering and testing the last 29 of 34 Chevron wells in Heglig and Unity fields.

Also by late third quarter or early fourth quarter 1994, Arakis will begin drilling wells in adjacent Kaikang field and start laving a 20 in. oil export pipeline to run 900 miles from Heglig field to Port Sudan on the Red Sea.

Plans calls for oil reaching Port Sudan to be loaded aboard a single point moored captive tanker for periodic offloading into shuttle tankers.

Arakis, within 1/2 years after restarting field work, expects to begin producing oil from Heglig and Unity at a combined rate of about 65,000 b/d. Boosted by production from Kaikang discoveries, the oil flow from Arakis acreage in Sudan by 1996 likely will rise to 85,000 b/d, maximum capacity of the proposed export pipeline.

Further production increases - to as much as 250,000-300,000 b/d in 3-5 years-are possible but would have to be meshed with proposed infrastructure expansions.

PSA TERMS, ACREAGE

Arakis is carrying out its Sudan development on a 48,600 sq km area encompassing Heglig, Unity, and Kaikang fields and held by a production sharing agreement (PSA) signed in August 1993 by the Sudanese government and SPC.

Arakis acquired SPC late last year and became operator of acreage included in the PSA, essentially Chevron's former Muglad and Melut blocks. The two tracts cover 42 million acres that was released in 1992 for possible third party development under an accord signed by Chevron and Sudan (OGJ, Mar. 16, 1992, Newsletter).

Arakis estimates recoverable reserves of Unity and Heglig fields, on the former Muglad block, at 153 million bbl and 107 million bbl, respectively. The fields' main productive zone is upper Cretaceous Bentiu sandstone at 6,500-8,300 ft in Unity and 5,500-7,000 ft in Heglig. Several other zones are productive under the acre-age.

Terms of the PSA between Sudan and Arakis allow the latter to retain 70% of net revenue through payout and 40% after payout.

In addition, the PSA gives Arakis until next month to exercise an option on another 30 million acres, including the 40 million bbl Adar/Yale field on the former Melut tract. Including Heglig and Unity field, exploration prospects in Kaikang field, and option acreage, Arakis could tie up recoverable reserves in Sudan amounting to 3.5 billion bbl, the company said.

Arakis expects to spend about $230 million during a 3-4 year period developing prospects under its PSA, including $88 million to reenter Heglig and Unity wells and construct fie..d infrastructure. The Kaikang exploration program is expected to cost another $60 million and the export pipeline $300 million, for a total project cost of about $600 million.

STATUS OF FIELD WORK

When Arakis suspended field operations early last June, it had achieved test flows amounting to a combined 15,000 b/d from five of Chevron's 34 Heglig and Unity wells.

Before it withdrew from Sudan, Chevron cased, completed, and conducted long drillstem tests on most of the 34 wells Arakis plans to produce.

In addition to reentering and testing the old Chevron wells, Arakis designed a development program that includes collecting oil samples to generate fluid property data for use in design of surface production and gathering facilities, as well as the export pipeline.

Samples collected so far have consisted of low sulfur, low metals crude with gravities ranging from 29 to 43.

The first well Arakis reentered, 4 Heglig, flowed 1,700 b/d of 29.6 gravity oil through a 1 1/4 in. choke with 55 psi flowing tubing pressure from a Bentiu zone at 5,390-5,410 ft. In later well tests:

2 Unity flowed 2,400 b/d of 33 gravity oil from 35 ft of perforations at 6,240 ft in the Ghazal D formation, one of six zones previously productive in the well.
1 Talih flow was restricted to 4,800 b/d of 42.3' gravity oil from 91 ft of net pay at 7,532-8,889 ft in Bentiu, Aradeiba, and Zarqa C zones that have produced 7,500 b/d.
9 Unity flowed 1,900 b/d of 35.1 gravity oil from 43 ft of Zarqa C perforations at 7,225 ft.
2 Talih flowed 4,800 b/d of 43.4 gravity oil from 24 ft of Aradeiba A perforations at 8,220 ft.
The 1 Talih and 2 Talih wells had 600 psi wellhead pressures.

WORKING WHILE WAITING

While operating in Sudan, Chevron collected 6.4,000 fine km of 2D seismic data and 2,000 sq km of 3D, including 135 sq km of 3D data in Unity field. By the time the company left, it had drilled 90 wells, including the 34 wells Arakis wants to reenter, high graded more than 30 prospects on acreage now designated the Unity and Heglig blocks, and seismically identified another 100 leads on contiguous acreage.

While awaiting the end of the rainy season, Arakis is reworking and interpreting the data to select the best sites for its first Kaikang wildcats. The company plans to start drilling the wells late this year and expects to complete six Kaikang wildcats by yearend.

"Some of the structures Chevron detailed are bigger than the structures where it had proven production," said John McLeod, Arakis Sudan project director.

Added Peter Holstein, president of Arakis Energy International: "There is no shortage of possible drilling locations on these blocks."

To speed exploratory drilling, Arakis plans to use a service rig to complete and test Kaikang wells, as well as to reenter Chevron's development wells.

PLANS FOR INFRASTRUCTURE

Also as it waits out Sudan's seasonal Monsoon, Arakis is proceeding with plans to lay its export pipeline. It has incorporated State Petroleum Pipelines Ltd. (SPPL) for that purpose.

SPPL holds the exclusive right to lay, own, and operate export oil pipelines in Sudan. In addition, the government has granted SPPL a right-of-way for the first proposed line.

Design for the Central Sudan-Port Sudan line is in final stages, and talks are under way on financing. Strand Partners, London, is negotiating the financing package.

Arakis expects in third quarter to let pipeline construction contracts and to begin moving pipeline materials and construction equipment into Sudan.

Because terrain along the pipeline route is quite flat, Arakis plans to speed construction of the link by simultaneously using five pipeline spreads. Arakis also intends to improve roads along the route enough after the rainy season to allow work to proceed through rainy season 1995.

If all goes as planned, the 85,000 b/d oil pipeline will be ready to begin moving about 65,000 b/d of Unity and Heglig crude to Port Sudan by yearend 1995. Arakis through SPC will be majority owner of the export line, with local Sudanese companies to own the balance.

Sudan's road, rail, and pipeline system is not adequate to reliably transport refined products to local markets. So the government has scrapped a plan to build a 60,000 b/d refinery at Kosti (OGJ, May 3, 1993, p. 48). Current tentative plans call for several smaller plants at towns along the export pipeline route.

If an agreement can be wrapped up, Arakis through SPC would build trunk line stations to divert crude off the pipeline at designated sites to supply the small refineries, each presumably serving regional markets.