David Knott
International Editor
G. Alan Petzet
Exploration Editor
Twenty years after gas was discovered with the only exploration well off Namibia, the country's oil and -as exploration program is about to take off.
The first well arising from Namibia's first exploration licensing round two years ago will be spudded in october. Three more wells will follow in the next 12 months, according to Wood Mackenzie Consultants Ltd., Edinburgh.
National Petroleum Corp. of Namibia (Namcor) said exploration investment in Namibia was a record $108 million during 1992-93. The country issued five licenses covering about 44,000 sq km with considerable seismic and well commitments.
Meanwhile, Namibia plans to trim the size of blocks in its unlicensed offshore and will hold a licensing round in 1994 covering the offshore between 22 30 S. Lat. and the Angolan border (OGJ, Apr. 8, 1991, p. 85).
EXPLORATORY DRILLING
Norsk Hydro AS will drill the first licensing round well, with other drilling in 1994 to be carried out by operators Chevron Corp., Ranger Oil Ltd., and Sasol Ltd., Johannesburg.
Shell International Petroleum Co. Ltd. signed a contract to appraise the Kudu gas prospect, which Chevron discovered in 1974 on Block 2814A.
Shortly after the find, a United Nations mandate banned foreign operations in South West Africa, as Namibia was then called, due to South Africa's illegal annexation. This continued until Namibia became independent in 1990.
Now Shell is committed to 2D and 3D seismic surveys of the Kudu prospect, reported Wood Mackenzie, and must carry out a preliminary study into potential markets for the gas. Depending on surveys, two appraisal wells must be drilled by 1997.
COMMITMENTS
Block 1911 was the first to be awarded in the licensing round, in April 1992. Partners are Norwegian companies: operator Hydro holds 40%, Saga Petroleum AS has 30%, and Den norske stats oljeselskap AS (Statoil) has 30%.
The block lies in the Walvis basin off northern Namibia. The partners are committed to acquire 8,000 line km of seismic data and drill three wildcats in the initial 4 year license period.
Wood Mackenzie reported some 7,000 km of data had been acquired to date. The first well will be spudded in October using the Scarabeo IV semisubmersible.
Block 2012 was licensed wholly to Sasol in September 192 and lies immediately southeast of Hydro's acreage. The concession carries an obligation to acquire 4,000 line km of seismic data and drill one well.
Some 3,700 km of seismic data was reported to have been taken, with interpretation now almost complete. The obligation well is to be spudded in late 1994.
Ranger is to spud the first well of a two well commitment on Block 2213 in early 1994. Ranger signed for the block in July 1992 as leader of a partnership involving Hardy Oil & Gas plc, London, 30%, and Amerada Hess Corp. 30%. The block lies in the southern area of the Walvis basin off the South African enclave of Walvis Bay.
Work commitments on the block include collection of 2,000 line km of seismic data, which Wood Mackenzie said has been acquired.
Chevron has acquired some 2,600 line km of seismic data on Block 2815 and hopes to spud the first well in mid-1994.
Block 2815 acreage, granted in October 1992, lies east of Kudu. Engen Ltd., Cape Town, is 40% partner on the block, while Shell is said to be negotiating to farm in on the license.
The block is not thought to contain an extension of Kudu field, according to Wood Mackenzie. It is believed to contain a series of oil prospects. A total 3,000 line km of seismic data and two wells are required.
KUDU PROSPECT
Chevron was said to have spudded the Kudu 9A-1 wildcat in December 1973, which encountered high pressure gas in Barremian age sandstones. The well was not tested due to the pressure and poor hole condition.
South African companies completed further seismic surveys of Kudu and drilled two appraisal wells in 1987 and 1988, with resulting data being offered in the licensing round.
Wood Mackenzie said other gas fields may lie in the area, promising a significant reserve base. Shell has estimated that the three existing wells indicate reserves of 2 tcf on Block 2814A.
Shell took over operator ship of the block in May in partnership with 25% shareholder Engen. Shell is starting a 200 sq. km 3D survey and 1,500 line km 2D survey of the prospect. The two well commitment must be completed by May 1997.
"An important aspect of the Kudu appraisal process is the identification of a suitable market for the abundant gas reserves that undoubtedly exist in the field," said Wood Mackenzie. "The exploitation of the field may be feasible from a technical point of view, but a commercial market for the gas must be found.
"Local Namibian demand for gas is currently negligible and unlikely to expand substantially in the foreseeable future. Neighboring South Africa is likely to provide the most promising outlet for Kudu gas."
Namcor and Shell have discussed sales via pipeline to South African electricity generator Eskom. Other alternatives were an aluminum smelter or an LNG export scheme, the analyst said.
ONSHORE NAMIBIA
Land exploration began in Namibia in 1959 with the award of a 30 year concession to Etosha Petroleum Co., a subsidiary of U.S. company Brilund Mining Ltd., Atlanta.
Etosha carried out sporadic drilling, until the license expired in 1989. The company took out an optional extension to the permit. The Oponono-1 farm in well was spudded in August 1991 but abandoned at 700 m of a target 4,600 m depth after mechanical problems.
Now Etosha has extended the deadline for completion of the obligation well and is said to be negotiating a farm in with Occidental Petroleum Corp. The block remains Namibia's only licensed onshore acreage.
SECOND ROUND
Namcor said areas to be offered in the second licensing round will include tracts smaller than the existing 1 by 1 blocks in order to attract companies of all sizes.
Wood Mackenzie said other terms were thought likely to be similar to those for the first round: 12.5% production royalty paid in cash; 42% petroleum income tay with allowance for full recovery of exploration costs-, and an additional profits tax of up to 25%
Namcor, working with GECO-Prakla and Nopec AS, Naersnes, Norway, has during 1992-93 conducted 11,160 km of seismic, gravity, and magnetic surveys covering the northern half of the unlicensed offshore, generally north of Swakopmund.
The new data, available from Nopec, form a semi-regional grid shot as an infill to the previous non-exclusive seismic survey of ECL-IN-tera-HGS. The old data are available from Intera.
Namcor believes the new data are of excellent quality, have resulted in a much sharper definition of prospects and leads, and have enabled identification of new prospects and leads in the Walvis and Namibe basins and adjacent waters.
The second offshore licensing round will last 6 months in late 1994. Companies interested in onshore exploration licenses may submit proposals at any time to the Ministry of Mines & Energy in Windhoek.
Norsk Hydro and Ranger are thought likely to have completed wells in the Walvis basin by the time the second round is launched.
Namcor also acquired 27,000 sq. km of aeromagnetic data over the northern half of the Nama basin onshore south of Windhoek in preparation for the round, said the analyst.
DISPUTED AREA
A political decision was made to include in the first licensing round some offshore blocks including Walvis Bay in an area disputed with South Africa, but Namibia declines to grant licenses in disputed areas.
The ministry said it would prefer to acquire more seismic data on the area between Swakopmund and the Orange River before the area is opened for licensing.
If after settlement of the Walvis Bay issue the industry shows interest, the ministry would consider including the areas in the second round.
Copyright 1993 Oil & Gas Journal. All Rights Reserved.
