Exploration cools

Thursday, 27 August 2009 07:52

Active interest remains in onshore and offshore East Africa

ANGOLA

Sociedade Nacional de Combustíveis de Angola (Sonangol) and BP Exploration (Angola) Limited have announced the ‘Oberon’ oil discovery in ultra-deepwater Block 31, offshore Angola.

This is the 18th discovery made by BP in Block 31 and is located in the southern portion of Block 31, about 335 kilometres northwest of Luanda and 4.3km to the north-east of the Dione discovery.

Oberon-1 was drilled in a water depth of 1 624 metres and reached a total depth of 3 622m TVD below sea level. The well test results confirmed the capacity of the reservoir to flow in excess of 5 000 barrels/day under production conditions. Sonangol is the concessionaire of Block 31.

BP Exploration (Angola) Limited as operator holds 26.67%. The other interest owners in Block 31 are Esso Exploration and Production Angola (Block 31) Limited (25%), Sonangol P&P (20%), Statoil Angola AS (a subsidiary of StatoilHydro ASA) (13.33%), Marathon International Petroleum Angola Block 31 Limited (10%) and TEPA (BLOCK 31) Limited, a subsidiary of the Total Group (5%).
BP’s involvement with Angola goes back to the mid-1970s. Today, BP has interests in four blocks with operated interests in two and has a 13.6% interest in the Angola LNG project.

Operatorship of Block 31 was awarded to BP Exploration (Angola) Limited in May 1999. The Block covers an area of 5 349km2 and lies in water depths of between 1 500m and 2 500m. It also has operated interests (BP 50.00% equity) in Block 18 where the Greater Plutonio Project started production on 1 October 2007.

BP has non-operated interests in Block 15, operated by Esso Exploration Angola (Block 15) Limited (BP 26.67%), in Block 17 operated by Total (BP 16.67%) and the ALNG (13%).

GABON

Addax Petroleum Corporation has agreed to fund an exploration well in the Ogueyi licence area, onshore Gabon, with the potential to earn a 50% interest in the licence area.

Perenco, as operator of the Ogueyi licence area, has recently spudded the exploration well targeting the Azango prospect.

The Ogueyi licence area is an exploration block with a gross area of 1 339km2 (330 900 acres) on the eastern edge of the Port Gentil basin, onshore Gabon.

The Port Gentil basin is a well-established hydrocarbon province, producing mainly offshore from post salt formations of late Cretaceous age.

The operator of the Ogueyi licence area has identified several prospects and leads on the block which is covered by a suite of approximately 2 551km of 2D seismic data.

The Azango prospect in the Ogueyi licence area was spudded in early May 2009 and is expected to reach a total depth of 1 685m in June 2009.

Operations for the Ogueyi licence area are conducted under a production sharing contract with fiscal terms similar to the other licence areas that Addax Petroleum holds in Gabon.

The production sharing contract is in its second exploration phase, due to expire in July 2009, however, a two-year extension has already been negotiated by the operator. The commitments under the second exploration phase will be fulfilled with the drilling of the Azango prospect.

Under the terms of the farm-in with Perenco, Addax Petroleum has agreed to fund the Azango exploration well up to a maximum cost of $8 million. In addition, Addax Petroleum has the option to make additional staged payments to Perenco based on future exploration results in order to obtain a 50% interest in the licence area.

The ultimate assignment of the 50% interest by Perenco to Addax Petroleum would be subject to the approval of the Government of Gabon. The Government of Gabon also retains a 10% back-in right in the event of a commercial development.

Maurel & Prom has provided an operational update on its ongoing exploration programme in Gabon and Tanzania.

Drilled about 9km south of the ONAL production centre, the OMOC-1 exploration well was stopped at a depth of 1 020m in the base after reaching its objectives in the Kissenda Sandstone (producers at OMKO) and the Base Sandstone (producers at ONAL).

The impregnated heights are respectively 40m in the Kissenda Sandstone and 14m in the Base Sandstone. The first test, conducted at an 11m interval in the Base Sandstone, produced a flow of 1 000 barrels per day (bpd) of anhydrous oil on a 1/2” bean.

The second test, conducted at a 6m interval in the lower stratum of the Kissenda formation yielded no results. The third test, conducted at a 24m interval in the upper part of the Kissenda formation, produced a pumped discharge of 130 bpd of anhydrous oil, suggesting reservoir depletion during the drilling.

The quality of the discovered oil is intermediate between that of ONAL and OMKO.

Subsequent to these results, studies were undertaken to evaluate this discovery and devise a long-term test on the well.

OMKO-104: This well, drilled 2.5km west of the OMKO-101 well, is intended to explore an independent structure in the OMKO field.

The well has reached the Kissenda Sandstone and Base Sandstone. Tests have only yielded formation water.

This well has nevertheless demonstrated the extension of the Kissenda Sandstone deposits and the good quality of the Base Sandstone. The presence of indications of oil in the top of the reservoir leaves hope for a potential on the upstream part of the structure. This well will be used for water production or as a re-injection well for the OMKO field, the extent of which will be delineated by the OMKO-102 and OMKO-103 wells.

The Group will now direct its exploration efforts on the prospects of OMTI and OMSN, located at the north of the Omoueyi exploration permit.

ETHIOPIA/KENYA

Black Marlin Energy (BMEL) announced the execution of a farm-in agreement between BMEL’s subsidiary East African Exploration Limited (EAX) and Africa Oil Corporation for EAX’s entry into the Production Sharing Contracts in both the Federal Democratic Republic of Ethiopia and the Republic of Kenya.

In Ethiopia, Africa Oil will transfer a 30% licence interest to EAX in the Blocks 2/6 and 7/8 Petroleum Production Sharing Agreements located in the highly underexplored Ogaden Basin of southern Ethiopia.

In Kenya, Africa Oil will transfer a 20% licence interest to EAX in the prospective Block 10A Production Sharing Contract, located in the Anza Basin of northern Kenya.

In both areas, Africa Oil has executed a seismic contract with BMEL’s Upstream Petroleum Services Limited (UPSL), geoscience services unit, to undertake the seismic and acquisition using UPSL Sercel 428 equipped seismic crew and new 65 000lb vibrators to carry out a total of 1 250km of 2D seismic data acquisition as part of the farm-in agreement. In each case, EAX will pay for a disproportionate amount of the seismic costs until an agreed cap is reached, as well as paying Africa Oil for a proportion of its back and future operational costs.

In a separate contract, UPSL will acquire 500km of seismic data for Africa Oil and its partner New Age Limited on their Adigala Block in north central Ethiopia in a transaction in which EAX is not involved.

This farm-in transaction is subject to approvals of the appropriate regulatory authorities from the Government of the Federal Democratic Republic of Ethiopia and Republic of Kenya in addition to waiver of pre-emptive rights by an existing partner in the Ethiopian licences.

KENYA

Africa Oil has signed an agreement to acquire all of the issued and outstanding shares of Turkana Energy Inc. (Turkana), a privately held oil and gas exploration company based in Vancouver, Canada.

Turkana’s principal asset is Block 10BB, a highly prospective oil exploration block in northwestern Kenya.

Pursuant to the agreement, Africa Oil will acquire, by way of a plan of arrangement, all of the issued and outstanding shares of Turkana in consideration for 7.5 million common shares of Africa Oil. The Africa Oil shares will be distributed to the Turkana shareholders pro rata to their interest in Turkana.

In addition, existing Turkana convertible loans owing to Turkana shareholders, to a maximum of Cdn $1m, will be exchanged into common shares of Africa Oil at the higher of Cdn $0.90 per share and the lowest price permitted in accordance with the applicable policies of the TSX Venture Exchange.

A meeting of the Turkana shareholders to approve the transaction will be held in mid-July 2009 and the transaction is expected to close before the end of July 2009.

The transaction is also subject to TSX Venture Exchange, Kenyan government and court approvals and to approval by the company’s shareholders of a resolution to increase the company’s authorised share capital.

Turkana has an undivided 100% interest in Block 10BB pursuant to a Production Sharing Contract with the Government of the Republic of Kenya made October 25, 2007, and subject only to a 20% back-in right in favour of the Kenyan government.

Block 10BB is a large block encompassing approximately 13 000km2 located in the Rift Valley of northwestern Kenya. The block is within the Tertiary rift trend of East Africa that has recently yielded major oil discoveries by operators such as Heritage and Tullow which are active in the Lake Albert region of Uganda.

Block 10BB is located immediately west of Africa Oil’s Kenyan Block 10A and Block 9 and further consolidates the company’s holdings in the rich East African rift basin petroleum system (see map).

In an independent report (Gaffney, Cline & Associates, September 2008) prepared for Turkana, an aggregated potential unrisked best estimate of undiscovered prospective light and medium crude oil resources on Block 10BB totals greater than 1.7 billion barrels of oil from 17 leads, five prospects and one existing discovery.

The rift basins of East Africa are highly underexplored despite being surrounded by billion barrel accumulations on all sides. There are four distinct independent petroleum systems that are proven to exist within the company’s existing acreage.

Block 10BB is within the same system as the Lake Albert play.

It has similar rifted structures and reservoirs, as found in Lake Albert, which have proven the existence of the Tertiary source rock that generated the light oil recoveries from the Loperot #1 well drilled by Shell in 1992.

The other three systems within Africa Oil’s portfolio include the Jurassic rift basins of Puntland/Somalia which is on trend and once connected with the highly productive Yemen basins (six billion barrels discovered; the Lower Cretaceous rifts of the Anza Basin in Kenya, which is directly on trend with the Sudanese Muglad Basin (six billion barrels of oil discovered); and the Permo-Triassic rift basins of Ethiopia, which were once contiguous with the super giant accumulations of Madagascar (24 billion barrels in place).

An aggressive 2009-10 work programme is planned for the company’s East African assets, including the company’s new block in Kenya, which will include both seismic and exploratory drilling.

NAMIBIA

Petrobras has acquired from Chariot Oil and Gas Limited, an independent oil and gas exploration group, a 50% interest in the exploration Block 2714A, located in the offshore of southern Namibia. The two companies signed a farm-out agreement for the block.

The agreement was signed by Petrobras’ wholly-owned subsidiary Petrobras Oil and Gas BV and Enigma Oil and Gas Exploration Ltd, a wholly-owned subsidiary of Chariot.

Enigma will retain 50% of the participation and will be the operator of the block.

Under the terms of the farm-out agreement, Petrobras will pay to Enigma:

• a cash payment of US$16.04m, comprised of a signature bonus and past costs including the reimbursement in respect of the recently acquired 3D seismic programme in block 2714A; and

• in the event of a commercial discovery, a payment of a production bonus equal to 4.75% (after royalties) of Petrobras’ share of production up to either two million barrels of oil equivalent or a value of US$118.0m, whichever occurs first.

In addition, Petrobras will perform geological and geophysical studies in order to model the petroleum system of the area, with the option to withdraw from the block before drilling a well. The initial period of exploration expires in August 2010. The document signed by both companies is still subject to approval of the Minister of Mines and Energy of Namibia.

The block covers an area of approximately 5 500km2 in water depths ranging from 150m to 1 500m. It is located in the Southwest African Coastal Basin, between Orange and Lüderitz sub-basins, at an average distance of 80km from the coast.

A 3D seismic programme of 1 000km2 has been concluded recently by Enigma in the block. The processing and interpretation of these data are ongoing and a further 3D seismic acquisition in block 2714A of approximately 1 500km2 is scheduled to start later this year.

After completing the evaluation of the 3D seismic data, Petrobras may elect to enter a renewal period of the contract which includes a commitment to drill an exploratory well, becoming the operator therefrom.

The signature of this agreement is aligned with the strategy of Petrobras to seek opportunities in deep and ultra deep waters in West Africa, where the company already has important operations in Angola and Nigeria.

NIGERIA

The Nigerian National Petroleum Corporation (NNPC) has discovered crude oil from its Oil Mining Lease (OML) 64 situated in Delta State, according to the reports of the Lagos-based This Day newspaper.

Levi Ajuonuma, group public affairs manager of NNPC, said in a statement in June that the well was drilled to a total depth of 11 150 feet and encountered six major hydrocarbon intervals, three out of which are bearing oil with a net thickness of about 50ft.

According to him, the initial test on the well indicates that the oil is similar to most oil discovered in Nigeria, which is sweet light crude. He said production from the well ranges between 1 284 to 3 110 barrels per day and zero water content.

“The discovery will undoubtedly add to the company’s oil and gas portfolio after the final assessment and evaluation of the reservoir,” he said.

He added that a field development plan will soon be drawn up to apprise the field, after which production would commence.

The Nigerian Petroleum Development Company (NPDC), the exploration and production arm of the NNPC, currently produces between 50 000 to 70 000 barrels of crude oil per day and has put in place measures to raise the production level to about 150 000 barrels per day by the turn of the decade.

SENEGAL

First Australian Resources (FAR) is pleased to announce the completion of the Data Acquisition phase of the CSEM Data Acquisition and Geophysical Evaluation Programme over part of its Licence Area comprising Sangomar Offshore, Rufisque Offshore and Sangomar deep Offshore Blocks in Senegal, West Africa; where a number of drilling prospects have already been identified by FAR and its partner Petrosen.

The CSEM data acquisition was funded by Shell and conducted using the MV Boa Thalassa, the world’s first purpose-built EM survey vessel, launched in December 2008 and chartered by EMGS under a long-term contract.

The objective of the programme is designed to enable Shell to determine whether or not to exercise an option to acquire a 70% interest in the Licence Area and enter the second renewal period that includes a well commitment. Shell has 90 days from the completion of the Data Acquisition phase to decide whether to exercise the option.

FAR has been advised by Shell that the Data Acquisition phase was completed on 28 May 2009.

SOMALILAND

The Somaliland Ministry of Water and Mineral Resources announced in February that the country’s first bid round for hydrocarbon concessions has been extended by three months. The deadline for final submission of bids has been pushed to 15 December 2009 and concessions will be awarded on 15 March 2010.

The bid round includes eight concession blocks comprised of more than 89 624km2 of onshore and offshore areas. The bid round was originally scheduled to finalise and award bids in August and December, respectively.

The geology off the coast of Somaliland is analogous to the oil-producing basins in nearby Yemen that have yielded several discoveries to date. Yemen’s Balhaf Graben Basin and Somaliland’s Berbera Basin contain striking similarities in fault trends and structural complexity.

Additional indicators of hydrocarbon reserve potential are the naturally-occurring oil and gas seeps at Dagah Shabel, and most historical wells in the area contain multiple zones with shows of oil and/or gas.

In preparation for the Somaliland licensing round, TGS-NOPEC Geophysical Company, ASA (TGS) acquired 5 300km of seismic, gravity and magnetic data in the offshore areas and 34 700km of high resolution aeromagnetic data covering all known petroleum basins. The surveys mark the first new geophysical data acquired in the area in almost 30 years.

Data acquisition was completed in 2007-2008, and TGS used this data along with existing well logs and interpreted data to create comprehensive interpretation reports for the ministry.

The reports, as well as the newly acquired geophysical data and well logs, are all multi-client products to be exclusively marketed by TGS on behalf of the ministry.

The timing for this historic bid round is as follows:

• 19 February 2009 – Bid round opens.

• 15 December 2009 – Final submission of bids.

• 15 March 2010 – Expected award of concessions.

SUDAN

White Nile Petroleum Operating Co. (WNPOC) has discovered significant amounts of dry, non-associated natural gas in onshore block 8, said the company’s vice president, Ali Faroug Abbas.

“We discovered gas in two wells – Hosan and Tawakul – in block 8,” Abbas told Zawya Dow Jones in an exclusive interview in Abu Dhabi.

“Our plan now is to explore for more gas and oil in this block, and to commercialise it,” Abbas said.

WNPOC, in which Sudan National Petroleum Corp. (Sudapet) and Malaysia’s Petroliam Nasional Berhad (Petronas) each own 50%, made a 108 billion cubic feet discovery in the block in March.

In November, the company found 15 billion cubic feet of gas reserves at Hosan, Abbas said. “We are hopeful we will find more gas in block 8. The potential (after initial tests) is for 16 trillion to 20 trillion cubic feet,” he added.

The latest announcement comes as Sudan, Africa’s largest state, prepares to celebrate its 10th anniversary of becoming an oil-exporting country. Sudan is presently pumping about 520 000 barrels a day
of crude.

So far, the only other gas discovery in Sudan was made in 2005 by Petroenergy E&P, which is a joint venture between Sudapet and China National Petroleum Corp. (CNPC) in block 6. The gas will be used to fire a 400-megawatt power plant in the area.

The gas discovered in block 8 will also be utilised domestically, with Sudapet and Petronas presently screening potential power generation and fertiliser projects. Revenues generated will go towards further gas exploration, Abbas said.

“If this potential is realised, we will start exporting gas to the East, to countries like Korea, China, Japan and Malaysia, but it is unlikely to go to the West until sanctions are lifted,” Abbas said.

TANZANIA

Mafia Bigwa Rufiji permit: Drilling of the Mafia Deep ST-1 well was temporarily stopped at a depth of 5 519m. From this level, a cork of cement of 360m height was put and a liner 7 ‘ cemented, says 60% operator, Maurel & Prom.

These operations, necessary to security measures for the levels of gas discovered, will be followed by an ultimate drilling operation that will allow evaluation of the gas zone under the current cement. In the aftermath, a programme permitting testing of the various levels of gas revealed by electric logs will take place throughout several weeks.

It will be possible to make an evaluation of the resources at the end of all these operations.

In addition, in August 2009, drilling will commence on a new exploration well in the Delta Rufiji. This new prospect, revealed by the seismic survey conducted in 2008 and interpreted in 2009, will be drilled at a depth of 2 000m.

The target of this prospect would possess the same potential as Mafia Deep ST-1.

UGANDA

Tower Resources confirmed that the MBU-125 drilling rig imported from southern Sudan for the Iti-1 well is on site and is being rigged up.

The road conditions and procedures in southern Sudan for exporting the rig and camp in three convoys have proven to be challenging, but the challenge is being met.

An additional two convoys containing the balance of the camp, drill pipe and other peripheral drilling equipment will be loaded and en route to the site early next week.

Tower anticipated the commencement of drilling to be on or shortly after 25 May. A further announcement will be made once drilling begins.

Tower Resources confirmed that the Iti-1 exploration well spud on 28 May. The well is being drilled to an estimated depth of 650m. Operations should take two to three weeks and a further announcement will be made once results of the well have been determined.

Global advised that Tower Resources has completed operations on the Iti-1 exploration well in Uganda Licence EA5.

Tower has advised that the well, which was drilled to a total depth of 592m, did not encounter any producible reservoir sands at the Iti-1 location.

Minor hydrocarbon shows were monitored during drilling, but evidence of limited quantities of oil in the lowermost target horizon remained ambiguous in the subsequent down-hole well logs and pressure test data.

The lack of reservoir at this location could not justify further testing or the immediate move to drill a second well.

A complete re-evaluation of the well data, combined with all other available technical data, will now be undertaken.

Tullow announced that the Kigogole-3 exploration well, which is located in the Butiaba region of Uganda Block 2, has encountered over 20m of net oil pay in two separate zones.

Located approximately 1km from the crest of the structure, the well was drilled to a total depth of 575m and has been successfully logged and sampled.

Excellent Kasamene-type reservoir sands were encountered in the lower zone, with over 15m of net oil pay.

In a separate 5-metre total net reservoir section above the 15-metre main reservoir interval, thin-bedded oil bearing sands were also encountered.

Kigogole-3 is the eighth successful test of the Victoria Nile Delta play fairway within the Lake Albert Rift Basin. The well is located southwest of the Kigogole-1 oil discovery made in 2008, which was recently production tested. This latest result further extends the play and de-risks several adjacent prospects located in Blocks 1 and 2, which are scheduled for drilling later in the year.

The well is now being suspended as a future oil producer and on completion of operations the rig will move to the Wahrindi prospect, 13km to the southwest, close to the shore of Lake Albert. This well is expected to commence later this month and to drill to a depth of approximately 1 300m.

ZAMBIA

The Zambian government was set to issue an international tender offering oil exploration companies the chance to bid for oil exploration blocks in its Northwestern province before the end of May, a government official told Dow Jones Newswires.

The Ministry of Mines and Minerals Development has finalised work on the documents that will invite interested companies to bid for up to seven exploration blocks, located near the border with oil-rich Angola, an official at the ministry said.

“Companies will be selected through a transparent bidding process. Actual oil exploration should start before the end of this year,” he said via telephone from Lusaka, the Zambian capital.

The bids were expected to be advertised in the press before the end of May.

At the end of May, the Zambian president appointed a seven-member panel to oversee licensing, exploration and production of oil and gas.

The panel, headed by Maxwell Mwale, the minister of Mines and Minerals Development, met to kick-start the process.

Zambia announced the discovery of oil in 2007 after numerous tests on soil samples indicated occurrence of oil and gas in the mineral-rich Northwestern province.

However, the country is yet to determine the size of the reserves and whether they are commercially viable.

Under the Zambian mining laws, exploration investors are required to commence work on their licensed areas within two years or risk losing the licence.

Last year, Zambia amended its petroleum act to provide guidance on exploration and production of oil and gas and to added clauses to attract investors in the sector.

Zambia’s mining sector is currently dominated by copper and cobalt mining and the country is Africa’s largest copper producer.

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