Upstream News

Aug. 1, 2012

ERHC Energy signs PSC on oil block in Northwest Kenya

Houston-based ERHC Energy Inc., a publicly traded company with oil and gas assets in Sub-Saharan Africa, signed a production sharing contract (PSC) with the Government of the Republic of Kenya on Block 11A in northwestern Kenya.

Block 11A encompasses 11,950.06 square kilometers or 2.95 million acres. The Block is situated on Kenya's border with South Sudan to the north, Block 11B and Lake Turkana to the east and near Kenya's border with Uganda to the west. The Block is ERHC's first exploration acreage in East Africa and further diversifies the company's portfolio of oil and gas assets, which also includes deepwater interests in the Gulf of Guinea and onshore Blocks in Chad. East Africa has emerged in recent years as an exciting, new oil province with the discovery of over 1 billion barrels of recoverable oil in Uganda's Block 1 (EA1), the Ngamia-1 oil discovery in Kenya, which is estimated to be bigger than the Ugandan discovery, and large gas discoveries, including the recent Zafarani find, offshore Tanzania.

The regional geology and structural evolution of Block 11A is dominated by the Cretaceous Central Africa Rift System (CARS) and the Tertiary East Africa Rift System (EARS) with the associated basin depositional trends. The main surface feature of Block 11A is the Lotikipi plain. This broad depression measures approximately 110 km from east to west.

The proximity and in-trend relationship between the Lotikipi plain and the Abu Gabra Rift basins of southern Sudan suggest high oil and gas prospectivity. The southern Sudan basins are established petroleum provinces. Surface exposures of the sedimentary units with potential source and reservoir value, represented by the Cretaceous/Paleogene Lapur Formation of the Turkana Grits, give an indication of the sediments that might be encountered beneath the Lotikipi plain.

Gravity data, acquired earlier in the area, enabled the delineation of a sedimentary basin within the Block 11A area below the Lotikipi plain. The basin-fill is believed to be in excess of 5,000 meters, well above the threshold for sufficiently buried and mature organic matter for oil generation.

"Of major implication to the petroleum system in the Block 11A area, the Loperot well recovered light paraffinic oil sourced from an excellent type 1 oil-prone lacustrine shale," said ERHC's Geoscientist and Technical Adviser, Dr. Peter Kinyua Thuo, who has worked extensively in Kenya. "Even more important have been the significant oil columns encountered by the Ngamia-1 well."

ATP completes Telemark well workover in Gulf of Mexico

International offshore oil and gas development and production company ATP Oil & Gas Corp. has completed the workover at its Mississippi Canyon (MC) Block 941 A-2 well located in the Mirage Field at the Telemark Hub in the deepwater Gulf of Mexico.

The well was completed with 3 ½ inch tubing at a measured depth of 17,140 to 17,401 feet to add the Miocene B Sand completion to the wellbore for field development optimization. Initial test flow rates are at 4,000 barrels equivalent per day (boe/d) of which 90% is oil. The A-2 well will be tied back to the facility immediately and is expected to produce at a rate of 4,000 to 5,000 boe/d.

The MC 941 A-2 well produces through the ATP Titan floating drilling and production platform. ATP operates the ATP Titan and Telemark Hub which is in approximately 4,000 feet of water with a 100% working interest and holds a 100% ownership in ATP Titan LLC which owns the ATP Titan and associated pipelines and infrastructure.

Far East Energy releases report indicating high potential in Shouyang CBM Block

Far East Energy Corp. recently released an independent engineering report prepared by Resource Investment Strategy Consultants (RISC) with respect to its coalbed methane (CBM) contingent resources located in its Shouyang block in Shanxi Province, China as of December 31, 2011. The contingent resource estimates in the RISC report were prepared to the standards recognized by the Society of Petroleum Engineers (SPE) in the Petroleum Resources Management System (PRMS).

The RISC report estimates the net contingent resources at the 2C (Best Estimate) level of confidence for the Shouyang block under PRMS standards to be approximately 1.1 trillion cubic feet (tcf), with estimated future net revenue, on an NPV10 basis, of approximately US$2.6 billion. The report estimates net contingent resources at the 3C (High Estimate) level to be approximately 1.3 tcf, with an estimated NPV10 of US$3.78 billion; and, the 1C (Low Estimate) is 736.1 billion cubic feet, with an estimated NPV10 of US$1.19 billion.

Commenting on the RISC report, CEO Michael McElwrath said "As expected, these are excellent numbers that indicate the high potential of the Shouyang Block. These additions to contingent resources reinforce the potential and the significance of both the high permeability and the high gas content of the Block. As a result, we believe that we, and our partners at China United Coal Bed Methane, have stewardship of a CBM block in China with textbook geological characteristics capable of being converted into strong value for our shareholders."

Petrobras discovers oil accumulation in Espírito Santo Basin

Petrobras has discovered a new oil accumulation (15° API) in the post-salt layer of the Espírito Santo Basin. It lies within the BM-ES-24 concession (Block ES-M-661), 58 km off the coast of Vitória, capital of Espírito Santo state.

The discovery was made during the drilling of the Grana Padano well, 64 km from the Golfinho Field, at a water depth of 1208 meters. The discovery was confirmed by the gas detector response and profiling data for reservoirs at a depth of 2,008 meters.

Petrobras operates the consortium for exploring the concession (40%) in partnership with IBV Brasil (30%) and Anadarko (30%).

The consortium will continue exploring the block and intends to submit a proposed Assessment Plan to the National Petroleum Agency (ANP) with the aim of delimiting the accumulation discovered and estimating reservoir volumes and productivity.

Dana Petroleun enters engineering design phase of Western Isles project

Dana Petroleum plc has entered the detailed engineering design phase on the $1.5 billion Western Isles development project in the UK North Sea.

The Western Isles project will develop two discovered oil fields called Harris and Barra in the Northern North Sea, 99 miles east of the Shetlands and 7 miles west of the Tern field. The nine-well development is expected to add more than 26,000 barrels of oil equivalent to Dana's daily production.

"Western Isles is a very important project for Dana and a key part of our strategy to double daily production to more than 100,000 barrels of oil equivalent by 2016. Work on the detailed engineering design will begin immediately and the project is expected to receive full approval from the UK Government towards the end of 2012, with first oil production expected in 2015," Dana's UK Managing Director Paul Griffin said.

Americas Petrogas cases Vaca Muerta Shale exploration well

Canadian-based Americas Petrogas said July 16 that the La Hoya.x-1 (LHo.x-1) well, which is the first Vaca Muerta Shale vertical exploration well drilled in the Totoral block, has been cased and cemented. A full suite of logs and both conventional cores as well as sidewall cores have been acquired. Production casing has been successfully set to a total depth of approximately 6,463 feet. The well penetrated 666 feet of the primary target Vaca Muerta Formation with oil and gas shows through the whole shale column. Hydrocarbon shows were also encountered and data acquired in the Mulichinco (299 feet thick), Quintuco (2,172 feet thick), and Quebrada del Sapo (190 feet thick) formations.

The company has begun detailed analysis of the cores and cuttings at international service company laboratories in Argentina. This is expected to reduce the time required to identify fracing and testing options for shale oil or shale gas reservoirs, as well as other identified targets.

The Totoral block, of which Americas Petrogas is the operator and holds a 90% working interest, is approximately 264,240 net acres (1,069 square kilometers or 413 sections net) and is adjacent to two other Americas Petrogas Operated blocks, Yerba Buena (311,310 acres or 1,259 square kilometers or 486 sections net) and Bajada Colorada (438,390 acres or 1,774 square kilometers or 685 sections net), which are also held 90% by the company. All three blocks are located in the southern region of the Neuquen Basin of Argentina. Gas y Petroleo del Neuquen holds the remaining 10% interest in the three blocks.

Barclay Hambrook, president and CEO of Americas Petrogas said, "We are very excited about the oil and gas shows on this new play in the southern region of the Neuquen Basin. This well represents a major step towards de-risking a large area and adds significant value to our shale block portfolio."