ORYX PLANS E&D PROGRAMS ON TWO KAZAKH BLOCKS

Oryx Energy Co., Dallas, is preparing exploration and development programs for two onshore and offshore tracts covered by recent agreements with Kazakhstan.

Preliminary plans are being laid to develop Arman field and to explore the Mertvyi Kultuk block, both along the Caspian Sea's northeast shore (OGJ, July 25, p. 38). Most activity already in the works is to occur within 3 years.

Oryx is operator with a 50% interest in a joint venture with two Kazakh partners preparing to develop Arman, on the northern edge of Buzachi Peninsula. Preliminary plans include reworking a few of the 13 existing wells, with completions expected by fall. The first batch of 20-30 Arman development wells is to spud next year, following workovers and confirmation of Kazakh field data.

Oryx in a production sharing contract (PSC) with Kazakhstan agreed to spend $10 million in the next 4 years exploring the Mertvyi Kultuk block, a 3 million acre, lightly drilled tract east of Arman covering the Komsomolets Gulf and surrounding wetlands and transition zones. Oryx expects to spend the next 12-18 months studying available Mertvyi Kultuk geophysical and well data before starting exploratory drilling early in 1996.

Arman and the Mertvyi Kultuk exploration block mainly are Ust Yurt basin oil prospects, with Jurassic shows reported in some wells in the region. Deeper Paleozoic pay is possible on the tracts but considered speculative until better data are available.

Meantime, Oryx is setting up offices in Aktau, Kazakhstan, and appointing representatives to managing groups being formed to administer activity on the two tracts.

ARMAN DEVELOPMENT

Oryx said Arman's development plan could be considered a pilot for other joint oil and gas developments in Kazakhstan.

Partners are working to verify the accuracy of existing Kazkah data on the field. A phased development plan is to be based on results of the study.

Kazakhstan's Ministry of Geology discovered Arman in the early 1980s and drilled 13 wells in the field, all essentially disposable wellbores penetrating Jurassic sandstone intervals at 1,100-1,300 ft. The deepest of the wells reached depths above 1,500 m. Officials did not proceed with field development because of technological limitations and lack of money.

To market Arman crude oil, Oryx and partners will lay a pipeline from the field to a tie in with the Transneft pipeline system in Kalamakas field, a 300-700 million bbl Kazakh oil discovery just to the east.

Arman partners by late 1994-early 1995 expect to begin reentering and completing two to four existing wells.

Joint development/delineation drilling is to begin in first half 1995 and ramp up through the year and into early 1996. Partners plan to drill directionally from shore to bottomhole locations under the Caspian. Oryx also will collect 3D seismic data in Arman field.

Commercial production from Arman is expected to begin within 24 months of the start of joint venture development drilling.

Oryx said preliminary data show Arman's geology is straightforward, without complexities associated with the pre-Caspian basin to the north.

"There's no salt, no overpressure, and no hydrogen sulfide," said Kurt Reisser, an Oryx senior geologist. "There are none of the ugly things you get into in the pre-Caspian."

Joint venture personnel in Aktau have called for bids for preliminary work such as site preparation and seismic surveying. Before field work can begin in earnest, the joint venture's board of directors must be seated so it can act on proposed major work contracts and supplies and materials purchases.

Meantime, Oryx is confirming well site conditions and investigating the availability and costs of equipment and materials.

EXPLORATION TRACT

Oryx operates Mertvyi Kultuk with a 100% interest in the block.

The Mertvyi Kultuk PSC starts with a 4 year exploration phase and two optional exploration phases totaling another 5 years. During the initial 4 year period, Oryx expects to spend about $10 million buying, digitizing, processing, and reinterpreting about 8,800 line km of 2D seismic data and drilling its first few wildcats on the tract.

Oryx is buying the seismic from KazGeoInform, part of the Kazakh geology ministry. Although available seismic data by some estimates cover as much as 80% of the Mertvyi Kultuk tract, more seismic data are to be collected beginning next year on selected parts of the block.

Oryx said the chief allure of the Mertvyi Kultuk block involves reported oil discoveries and shows despite the dearth of drilling on the tract because of rugged surface conditions.

Much of the tract's surface area consists of low lying salt marshes that defy conventional means of transportation. Yet Kazakh and Russian organizations found strong evidence of commercial oil reserves in three areas of the block, all excluded from Oryx's PSC.

The largest exclusion area, Komsomolskaya field, an early 1980s Jurassic discovery at about 3,000 m, was delineated but not developed. With reserves estimated at 50 million bbl of oil equivalent, the field likely was too far from existing pipeline infrastructure to be considered economic.

Oryx estimates about 36 wells have been drilled on the Mertvyi Kultuk tract outside the excluded areas, including about a dozen that could have been considered wildcats by western standards.

Past Kazakh-Russian exploration in the area focused on Jurassic intervals. Oryx said some deeper Paleozoic potential could exist below 4,500 m. However, such a possibility is speculative because no well has penetrated to such depths, and the Paleozoic is not visible on existing seismic data.

Oryx isn't counting on discovering Paleozoic pays on Mertvyi Kultuk. But with several Paleozoic discoveries north of the tract, the company is keeping an open mind about such possibilities as it reviews Kazakh-Russian data.

"It is our goal and hope that in 1996 we will be drilling a portfolio of prospects established through existing and new data," Reisser said of Oryx's Mertvyi Kultuk exploration program. "Beyond that, everything starts getting pretty speculative."