Woodside decides to exit Tanzania PSA with Beach
Woodside Petroleum Ltd. has decided not to take up its option to proceed to Phase 2 of the Lake Tanganyika South production-sharing agreement (PSA) in Tanzania with Beach Petroleum Ltd.
Woodside farmed into Beach’s permit last year (OGJ Online, July 14, 2014). The terms remain confidential, but in general Woodside agreed to refund Beach’s past costs, including its early seismic survey program, and then fund another seismic program that was carried out during 2014-15.
Beach serves as operator with 30% interest while Woodside held the remaining interest.
Phase 2 included Woodside providing a capped carry for Beach through the cost of the first exploration well. Woodside would have also taken the operatorship.
Now, however, with Woodside’s exit, Beach has resumed 100% interest in the PSA. The company says it has preserved its rights to go ahead with the drilling phase, but has yet to decide whether to bring in another farm-in company or sell out of the block.
Beach secured the onshore-offshore block that encompasses the southern end of 600-km Lake Tanganyika in 2008, keen to explore the potential of the Albertine Rift, the western branch of the East African Rift play that has been successfully explored to the north in Lake Albert in Uganda.
The Beach block included natural oil seeps that indicate a working petroleum system beneath the lake. Early work suggested a potential for traps containing 200 million bbl of oil or more.
The practical problem though is that exploration drilling requires transport inland, followed by assembly of an offshore drilling rig to work in the deepest part of the lake. There has been some thought given to first drilling a land-based deviated well under the lake to check for a valid petroleum system before commitment to the offshore drilling.
Woodside has decided that the low oil-price environment does not satisfy the risk-reward equation.