PLANS FOR FIRST OIL PRODUCTION REVIVED IN TWO SUDANESE FIELDS

A Vancouver, B.C., independent and its Sudanese partner have filed a development plan with the government of Sudan to produce an initial 40,000 b/d from Heglig and Unity oil fields in Sudan.

Arakis Energy Corp. and the private Sudanese company State Petroleum Corp. (SPC) want to begin the first commercial hydrocarbon production in the destitute, war torn country.

They are picking up where Chevron Corp. left off after years of grappling with an ambitious, costly-and ultimately futile-effort to export crude oil from Sudan.

After finding almost 300 million bbl of oil in Sudan during the early 1980s, Chevron scuttled a $2 billion project to export 50,000 b/d of Sudanese crude in 1986. It drilled 90 wells and sank more than $1 billion into the project.

But it dropped the plan, citing the 1986 collapse of oil prices and concerns over security after repeated guerrilla attacks delayed work.

Chevron and Sudan signed a memorandum of understanding last year allowing third parties to develop the fields it found in southern Sudan (OGJ, Mar. 16, 1992, Newsletter). Private Sudanese interests later acquired Chevron's interests in the two concessions that cover 42 million acres and include the discoveries (OGJ, Dec. 7, 1992, p. 36).

Arakis and SPC earlier this year began acquiring development rights to the two blocks (OGJ, Feb. 15, p. 46).

Arakis is negotiating a production sharing agreement through SPC with the government that it expects to take final form by the end of this month. Arakis will then take over SPC through a stock issue of 5 million shares.

WHAT'S INVOLVED

The Arakis-SPC plan calls for a first phase to produce 40,000 b/d from Unity and Heglig oil fields on the Muglad block by mid-1995.

The oil is to be shipped by pipeline to a proposed 60,000 b/d refinery at Kosti for local use. An undisclosed Japanese group has proposed building the refinery at Kosti and extending the proposed pipeline to Port Sudan on the Red Sea.

Under a second phase, Sudanese oil production could ultimately ramp up to 300,000 b/d, thus supporting a crude export project. Sudan imports about 60,000 b/d of crude oil and refined products at present.

Arakis-SPC is involved only in the first phase, upstream portion of the project.

The company also is negotiating funding options for the project and is likely to pursue loans from the World Bank, International Monetary Fund, and other international banks. That may pose a problem for Sudan, which is in arrears with IMF, Arakis said.

The company also said the government is committed to pay world prices for crude from the two blocks.

Plans call for setting up 20 person operating camps at each production site, with field operations expected to begin in January 1994. Oil could be produced as early as January 1994, with production trucked to an existing 1,200 b/d topping plant at Muglad.

PROJECT DETAILS

Arakis estimates a cost of $140 million for wellhead equipment, an oil gathering system, and surface equipment to produce the initial 40,000 b/d of oil.

Proved producible oil reserves are pegged at 280 million bbl, or about 20% of the 1.4 billion bbl original oil in place (OOIP) identified to date on the two blocks.

Of that reserves total, 240 million bbl are attributed to Unity and Heglig fields on the Muglad block and 40 million to Adar/Yale fields on the Melut block.

Lifting costs are estimated at $3/bbl, with finding and field development costs placed at 60cts/bbl.

Under a tentative agreement, Arakis as operator will earn a 70% net revenue interest until payout, with the government getting a 30% royalty. After payout, the split will be 50-50.

The revival of development plans for the Sudanese fields is justified, Arakis contends, by improved oil prices compared with the $8/bbl medium gravity African crudes were getting in 1986 and a significant lessening of rebel activity in Sudan.

UNITY HELD

An initial 25,000 b/d will be produced from 19 completed wells in Unity field.

These wells produce from multiple fault-separated oil zones. The main producing area in Unity field is productive from 10 of 11 identified sands.

Individual flow rates of more than 2,000 b/d/zone have been gauged from six of the 11 pay zones during drill stem testing of appraisal wells, which were drilled to 6,500 ft.

A test produced 3,000 b/d of oil for 30 days from just one of seven pay zones in the 5 Unity well.

Other pay zones will be tested and placed on production later. The rest of the wells in the field will produce 1,200-2,000 b/d initially from one zone, with several pay zones in each well yet to be drill stem tested and placed on production.

HEGLIG FIELD

Heglig field has 17 wells that will contribute 15,000 b/d to initial production. Drill stem tests have indicated an average production of 2,400 b/d of 29-36 gravity crude from either the Bentiu Unit 1 or 3 zones.

Heglig area OOIP has been estimated at 555 million bbl, of which 90 million bbl is classed as proved. Porosity of the pay zones runs about 25 30%.

The initial production facility design to serve both fields will be capable of processing 50,000 b/d of oil.

The crude, which has a high bubble point, will be handled by conventional oil field technology. A hot oil pump sized to the pipeline gathering system will facilitate pigging the entire gathering system, which will hook up to a field gate serviced by a 20 in. pipeline linked to the refinery.

Arakis has in hand $5 million of the $30 million it needs for its commitment to the project for detailed engineering and drill stem testing this year. It will try to raise the remainder on equity markets.