EXPLORATION OPPORTUNITIES POP UP AROUND THE WORLD

G. Alan Petzet
Exploration Editor

The traditional exploration cycle is in progress around the world, and many more exploration opportunities are becoming available than are being foreclosed.

Yemen, for instance, is one of the few countries in the Middle East open to exploration by outside operators. Reserves were estimated at 4 billion bbl of oil on Jan. 1, 1993, and the potential is widely believed to be much greater.

The operations comfort level in Yemen appears to have declined during the past few months, casting a shadow over the exploration fervor enkindled by Hunt Oil Co. and the Canadian Occidental Petroleum Ltd. group's string of significant discoveries there since the mid-1980s.

A border dispute with Saudi Arabia and internal unrest have signaled a time of caution for international operators.

It has been less than 3 years since North and South Yemen merged, but in spite of the unrest and national elections planned this week operators say Yemen's oil ministry is irrevocably committed to fostering exploration.

Elsewhere in the world many other exploration opportunities are becoming available. This article outlines the situation in Yemen and summarizes areas off Australia, Newfoundland, and the Falkland Islands where interesting exploration opportunities are being offered.

Australia is opening 2 million acres offshore in the Vulcan sub-basin this month along with small parcels in the Bonaparte Gulf and more southerly basins.

The parcels, in the Timor Sea off Western Australia, are southwest of the Australia-Indonesia Zone of Cooperation. Five operating groups are expected to drill seven wells in the third or fourth quarter of 1993, and 26 wells have been committed between 1995 and 1997 (see map, OGJ, Jan. 4, p. 26).

Several tracts have become available off Newfoundland, including two in proximity to giant Hibernia oil field scheduled for development this decade.

Recent announcement of the first oil company licensing round in the Falkland Islands offshore has stimulated interest in that area. The round, which will probably close in 1995, will allow companies and groups to bid for the award of exclusive areas of acreage for further seismic exploration, including drilling with a view to proceeding to development.

OPERATE WITH CAUTION

Uneasiness has crept over operations in Yemen even though operators say more discoveries have been made that are to be announced this year.

The size of discoveries made by Hunt/Exxon Exploration Co., CanOxy, and others has had positive and negative results for field operations. Operators have signed agreements to explore 29 blocks, or about two thirds of Yemen's delineated land and offshore blocks (Fig. 1).

Among those subscribed are two in the Red Sea and two that include offshore acreage in the Gulf of Aden. One of those is British Gas's 17,500 sq km Block 38 around Socotra and adjoining islands.

But operators say fiscal terms of the most recent awards are much less attractive than those of blocks awarded in the late 1980s, with signature bonuses now in the tens of millions of dollars.

The Yemenis recently ended talks with Red Eagle Oil Co., Oklahoma City, regarding Block 13 and are said to have awarded the block to an entity known as Rankin Oil plc of the U.K. And an Omani company is said to have been awarded Block 15 along the southern coast.

Kidnappings and hijackings have been reported, and the oil minister warned earlier this year that he could not guarantee the safety of personnel working in Yemen.

Civil unrest has been linked to national elections planned this week. Diplomatic efforts are under way regarding a border dispute with Saudi Arabia that the Saudis say involves several of Yemen's northern and northeastern blocks in the Hadramaut area.

EXPLORATION UNFLAGGING

Exploration still seems to be on the upswing in Yemen.

About 10 seismic crews were operating in recent months. Baker Hughes Inc., which counts rigs as active only when they are making hole, showed rig activity of seven rigs/month in January 1993 and six/month in February. There were no lower figures than those for any month in 1992, when the count rose as high as 10 rigs/month in March and April.

About 11 rigs are believed based in the country. All eight of Nabors Drilling International Ltd.'s rigs stationed in Yemen are under contract, said Siegfried Meissner, president.

Most drilling is to 3,000-3,500 m, and drilling costs probably average $800,000/well. Rugged terrain lengthens many rig moves.

CanOxy has drilled fewer than four dozen wells on the Masila block since 1987.

It has intensively explored only a small part of the 6.8 million acre block and has various densities of seismic coverage over a considerable portion of the remaining area, said Keith Peterson, senior vice-president international.

More than 10% of the block is inaccessible due to rugged terrain, and the group is using remote sensing techniques extensively. Data calibration is trouble free because many ground control points exist, Peterson said.

The exploration portion of the license expires in March 1995. CanOxy plans to drill five exploratory wells this year away from the area being readied for production. These include stepouts 50-100 km from the existing fields.

The group plans to start production and exports of about 120,000 b/d by September 1993. It has declared nine oil fields commercial, and reserves are estimated at 285 million bbl proved plus 175 million bbl probable. Ultimate gross exploration, development, and facilities costs are expected to be nearly $1 billion, CanOxy said.

VULCAN SUB-BASIN

Australia will make the Vulcan subbasin acreage available in two parcels (Fig. 2). One will be about 300,000 acres, the equivalent of about six North Sea blocks.

The other is a huge tract, covering 1.7 million acres and taking in most of the northeastern salient of the basin. This is the size of 30 North Sea blocks or two entire North Sea quadrants.

The offering allows an entry into the basin, which many authors have described as geologically analogous to the North Sea. In terms of its maturity as an exploration theater, the area probably equates to the North Sea of the early 1970s, says Mike J. Martin, a Perth geologist.

One difference between the two provinces is that with 100 or so wells drilled for a density of less than one well per 50,000 acres, no operator has found a Brent sized field.

With a handful of operators working the basin in very large permit areas, Gulf of Mexico and North Sea style competition is absent from the Vulcan. Therefore it may be some time before anyone turns up a find larger than Jabiru field (200 million bbl in place), discovered in 1983.

Other discoveries have been made at Challis/Cassini and Skua fields, which are now on production, but the Montara, Bilyara, Oliver, Talbot, Swan, Maple, and Tahbilk finds have not been developed.

After-tax rates of return of 20% can still be obtained with recoverable reserves as small as 26 million bbl, Martin said, so many of these fields will be developed as the oil price climbs above $20/bbl and Australia's self-sufficiency in crude declines to 70%.

Exploration to date has shown that geologists that worked off Europe in the 1970s and early 1980s were right in their first impressions of the similarities in the North Sea and Vulcan subbasin between the Jurassic source rocks, reservoir sandstones, and structures.

"Recent drilling has revealed that there is not only a Brent formation equivalent underneath an Oxfordian and Kimmeridgian source rock sequence that may reach 1.5 km in thickness, but that within the source rock sequence there are numerous thick sandstones that bear comparison with the famous Brae, Fulmar, and Piper sands of the North Sea," Martin said.

He noted that seismic recognition of structures and stratigraphy has been a thorn in the side of exploration groups for many years because of the deleterious effect of a thick sequence of Tertiary carbonates that blankets Australia's Northwest Shelf.

However, recent advances in seismic acquisition and processing and a much fuller understanding of stratigraphy and structural style are beginning to open up the possibility of finding a field such as Brent.

It is likely that there will be another acreage offering late this year or in 1994.

TRACTS OFF NEWFOUNDLAND

Bids have been invited on three tracts east and south of Newfoundland in the Atlantic Ocean on the Grand Banks (Fig. 3).

The Canada-Newfoundland Offshore Petroleum Board says the parcels constitute its fifth offering, all of which have taken place since 1987. The three tracts cover a combined 447,436 hectares. Bids are sought by Sept. 10, 1993.

Some 113 wells have been drilled in rift basins on the Grand Banks, resulting in 15 hydrocarbon discoveries in and around the Jeanne d'Arc basin. The discoveries include giant Hibernia oil field, advancing toward first production in 1997, and three major oil fields, Terra Nova, Hebron, and Whiterose, awaiting development plans.

A large proportion of the 460,000 km of seismic data shot over the area is available for the cost of reproduction.

A parcel covering about 77,000 hectares lies 20-40 km north of Hibernia field and crosses the prominent Flying Foam ridge. Prospective targets include the Ben Nevis and older Cretaceous and Jurassic sandstones in a large elongate dome and a Lower Tertiary South Mara "fan" at the mouth of a feeder canyon penetrated by the West Flying Foam L-23 well.

These stacked prospects are on the downthrown eastern side of the Flying Foam ridge and are adjacent to a prolific oil prone kitchen in the center of the Jeanne d'Arc basin.

A second parcel is about 50 km east of Hibernia field on the eastern flank of the Jeanne d'Arc basin and just south of the Whiterose E-09 well. That well encountered a 67 m gas cap over a 138 m oil column.

A proprietary 3D seismic survey was shot in 1990 by Esso Resources Canada Ltd. over the northern part of a prominent graben on the parcel. Synrift Ben Nevis sandstones provide a potential structural and stratigraphic trap to collect migrated oil at the southern limit of that north plunging graben.

A similar combination of trapping mechanisms accounts for the major reserves held in Upper Jurassic Jeanne d'Arc sandstones of nearby Terra Nova oil field.

The third parcel covers nearly 292,000 hectares on the southern Grand Banks at the approximate intersection of the Scotian and South Whale basins.

This area shares many of the sedimentologic and structural characteristics that led to the accumulation of gas in Upper Jurassic to Lower Cretaceous sandstones in South Venture field in the Scotian basin and "biodegraded" oil tested by the Heron H-73 well in the South Whale basin.

FALKLANDS ISLANDS

Exploration may occur off the Falkland Islands east of southern Argentina in a few years.

The British and Falkland Islands governments say that the licensing provisions and tax regime will recognize and be sensitive to the factors that determine the profitability of oil and gas exploration in the region.

The British Geological Survey is the technical advisor to the Falklands Islands government for all oil and gas exploration matters.

From an interpretation of existing data the BGS has recognized that about half of the 420,000 sq km of Falkland Islands waters contains sedimentary basins with thick Mesozoic and Cenozoic infills. These basins, with an area larger than the U.K.'s North Sea basins, probably contain abundant reservoir rocks and oil prone source rocks.

Four major and a number of minor offshore basins exist in the area, says Dr. Philip C. Richards with the BGS petroleum geology group in Edinburgh. The Falkland Plateau basin lies east of the Islands but is generally in more than 500 m of water.

The shallower water Malvinas basin lies to the west of the islands in 200500 m of water and extends westward into the Argentine area, where there has already been some exploratory success.

These two basins are connected, to the south of the islands, by the South Falkland basin, a significant half graben feature bounded to the south by the shallow water Burdwood bank.

The major basin to the north of the Falklands is the San Julian basin, a northeast-southwest trending basin covering some 41,000 sq km. This basin is a rotated, structurally offset depocenter connected to the Argentine part of the San Julian basin, which has an east-west trend west of the Falkland Islands Designated Area.

The southern part of this basin is in less than 200 m of water. Other smaller basins lie north of the islands, and the southernmost of these is in less than 200 m of water.

The close of the first licensing round will be scheduled to allow oil and gas companies optimum time to interpret and make decisions based on the 17,000 km of new seismic surveys being acquired by GECO-Prakla Geophysical Ltd. and Spectrum Energy & Information Technology Ltd., both of Woking, U.K. These surveys, which are under way, are providing data of excellent quality and should significantly improve understanding of the huge petroleum potential of this area, Richards said.

The BGS has published a technical report on the geology and petroleum potential of the area that is available from the survey in Edinburgh.

The Falklands area is northeast of Hidra oil field off Argentinian Tierra del Fuego in the Magellan basin. Combined reserves estimates for Hidra and satellite fields are nearly 100 million bbl of oil, and substantial gas reserves are believed to exist in the area.

Copyright 1993 Oil & Gas Journal. All Rights Reserved.