Union Texas, Oman Oil form exploration, development joint venture in Kazakhstan

• Union Texas/Oman oil joint venture [37020 bytes]

Union Texas Petroleum Holdings Inc. (UTPH) and Oman Oil Ltd. have formed a joint venture to explore for, develop, and produce oil and natural gas onshore Kazakhstan and offshore in the Kazakhstan sector of the Caspian Sea (OGJ, May 12, 1997, Newsletter).

"Central Asia offers unparalleled opportunities to add world-class production and reserves," said UTPH Chairman and CEO John Whitmire.

"This opportunity gives us access to one of the early Kazakhstan production-sharing contracts with attractive fiscal terms."

UTPH, with a 75% interest, will operate the JV. Oman Oil, Oman's state-owned development company, has a 25% interest. Terms of the agreements were not disclosed.

Onshore

The venture will conduct exploration activities on two onshore blocks in the Atyrau region.

The blocks, known as Blocks A and E, are located north of Tengiz oil field in northwestern Kazakhstan. The tracts cover about 4 million acres (16,000 sq km). Block E borders the Caspian Sea.

The Caspian Pipeline Consortium (CPC) plans a 900-mile pipeline to move Tengiz oil to the Black Sea (OGJ, Mar. 17, 1997, p. 44).

ARCO and Russia's Luk- oil recently formed the Lukarco BV joint venture to invest in the CPC pipeline project and other opportunities (OGJ, Feb. 24, 1997, p. 44).

The UTPH-Oman Oil JV expects to acquire about 1,245 miles (2,000 km) of seismic data over Blocks A and E during 1997 and 1998. It plans to drill two exploration wells in 1999.

The JV has budgeted about $11 million (gross) for seismic and other exploration activities during 1997.

Offshore plans

The JV has preferential rights to select two blocks in the unexplored Kazakhstan sector of the Caspian Sea.

The Republic of Kazakh- stan plans to divide the offshore sector into about 200 blocks, encompassing a total of 103,000 sq km. The JV has the right to make the 15th and 16th offshore block selections, respectively, following the Kazakhstancaspishelf Consortium members' selections of the first 14 blocks.

The JV will have the same terms for the offshore blocks as the members of the group.

Offshore block selections are expected to take place during third quarter 1997. The Kazakh Republic is then anticipated to offer the remaining acreage via an international bid tender.

New Mexico

Texaco Inc. and Devon Energy Corp., Oklahoma City, expect to begin sales in late 1997 from a Devonian discovery in Eddy County, pending construction of gathering systems and possibly a processing plant.

The 76 Cotton Draw Unit, in 1-25s-31e, flowed 9.8 MMcfd of gas on a 15/64 in. choke with 5,000 psi FTP. TD is 16,300 ft. Three shallower zones show evidence of production potential, Devon said.

The companies began exploring the 20,000 acre Cotton Draw Unit in Lea and Eddy counties in 1995 with a 3D seismic survey of 90 sq miles, one of the largest in the U.S. that year. They spudded two more wells on the unit several miles from the No. 76 well that will test two new zones and some of the shallower formations found in the No. 76. Devon holds a 50% interest in 17,000 acres.

Texas

The 1 State Tract 331, in Galveston County, hit gas and condensate under 9,600 psi pressure at 15,400 ft in Oligocene Vicksburg and used 17.3 ppg mud to control.

The well, in less than 30 ft of water, is a test of a 1,150 acre Vicksburg structure TransTexas said is geologically similar to nearby Chocolate Bayou oil and gas field. The well also indicated potential Frio pay at shallower intervals. Copyright 1997 Oil & Gas Journal. All Rights Reserved.