A new field containing 14.8 trillion cubic feet (Tcf) of gas is the biggest ever found in Brazil and one of the largest in all of Latin America, says global consulting firm Wood Mackenzie. Petrobras drilled the 1-SPS-35 discovery well this spring in 485 meters of water on the BS-400 Block in the Santos Basin, about 130 kilometers offshore Sao Paulo. The 4,956-meter well encountered 100 meters of gas-bearing sandstone reservoirs. During tests, it produced at the rate of some 25 million cubic feet of gas and 600 barrels of condensate per day; its productive capacity is estimated at greater than 100 million cubic feet per day. Initially the discovery was announced to contain some 2.5 Tcf of gas; that estimate has now been raised substantially. SPS-35 alone triples the 7 Tcf of gas reserves that Brazil counted previously. "The find is of huge significance and is set to completely turn around the traditional dynamics of the Southern Cone gas market," says Matthew Shaw, senior Latin American analyst. Indeed, the find may enable Brazil to supply its own gas needs in the future, instead of importing gas from its neighbors Argentina and Bolivia. The discovery also opens an exciting new gas province offshore Brazil, and Shaw points out that there is abundant open acreage in the vicinity of SPS-35 that should attract strong interest from international explorers. -Peggy Williams 1 Canada Devon Energy is going ahead with development of a new thermal heavy-oil project south of Fort McMurray, Alberta. The company will use SAGD (steam-assisted gravity drainage) technology to extract 35,000 bbl. of crude oil per day from the Alberta oil sands. Total recoverable reserves are 300 million bbl. First production is slated for late 2006 or early 2007. Devon will invest $400 million during the 25-year life of the Jackfish project, in which it owns a 100% interest. 2 Canada Calgary-based EnCana Corp. is making a major push in the tight-gas Cadomin play in the Deep Basin/Foothills region of British Columbia and Alberta. The company reports that it has acquired some 500,000 net acres in an area it calls Cutbank Ridge, centered some 50 kilometers southwest of Dawson Creek. To date, the company has invested C$500 million in land purchases and drilling activities in Cutbank Ridge. EnCana estimates it could recover more than 4 trillion cu. ft. of gas from its holdings, based on two horizontal wells per section, each section containing more than 6 billion cu. ft. of recoverable gas. In this area, the Cretaceous Cadmoin is around 100 ft. thick and is found at depths of 8,000 ft. Going forward, EnCana plans to drill 100 to 200 wells per year in the play. 3 Canada Imperial Oil Ltd. has abandoned its Balvenie well offshore Nova Scotia after reaching a depth of 4,750 meters. The well did not encounter commercial volumes of hydrocarbons. Talisman Energy had a 30% stake in the project. 4 United Kingdom BP has made an oil discovery in Block 16/28 of the Central North Sea close to Andrew Field. The Farragon discovery is estimated to contain 30 million bbl. of oil. Partners in the project are ENI and EnCana Corp. In separate activity, BP has sold $162 million in assets in the Southern North Sea to European firm Perenco. The major divested its shares in 14 gas fields, including Indefatigable, East Leman, Davy, Trent, Tyne, Pickerill and Waveney. It also sold its interests in associated infrastructure, including the onshore Bacton terminal. 5 United Kingdom The U.K. Department of Trade & Industry has given approval to Norwegian independent DNO to develop Broom Field, which is on blocks 2/4 and 2/5 in the North Viking Graben in the North Sea. Broom, which consists of the West Heather and North Terrace discoveries, is seven kilometers west of Heather Field. The new production will be tied back to the Heather Alpha platform, and will come onstream in mid-2004. The development will output around 30,000 bbl. per day. DNO's partners in the project are Challenger Minerals Inc. and Palace Exploration Co. 6 Norway An exploratory well drilled by Norsk Agip west of Kristin Field in the Norwegian Sea found gas and condensate in Cretaceous reservoirs. The 6406/1-2 was drilled in Production License 256 to a total depth of 4,477 meters. The size of the discovery is now being evaluated. Meanwhile, in the Norwegian portion of the North Sea, ExxonMobil has added 30- to 45 million bbl. of recoverable oil reserves to Ringhorne Field. The 25/8/C-20 discovery was drilled from the Ringhorne platform in Block 25/8. The major has also completed a successful appraisal well on the prospect, the 25/8-18 T2. 7 Libya Total SA has started producing oil at Al Jurf Field, in offshore Block NC 137N in 90 meters of water. The field, discovered in 1976, is one of four on the license that is being developed. Total has installed a platform at Al Jurf with 10 production wells connected to an FPSO vessel. The field is expected to produce at the rate of 40,000 bbl. of oil per day. Total operates Block NC 137N and owns a 37.5% interest; Wintershall has 12.5%; and, Libyan National Oil Corp. holds 50%. 8 Mauritania An appraisal well drilled by Woodside Petroleum in offshore Block 4 has encountered a gross hydrocarbon column of 100 meters and a net oil column of 38 meters. The Chinguetti 4-5 was drilled to a total depth of 2,605 meters and is currently being tested, says working-interest-owner Roc Oil Co. Other partners in the venture are Agip, Hardman Resources Ltd. and Fusion Oil & Gas. Next, the group plans to drill an exploration well on the Tiof prospect, 25 kilometers north of Chinguetti in some 1,130 meters of water. 9 Sudan OMV has sold its interests in blocks 5A and 5B to Indian firm ONGC Videsh for $115 million. The blocks, in the Muglad Basin, contain Thar Jath Field, an undeveloped accumulation that was discovered in 2001. The Austrian company had a 26% interest in Block 5A and a 24.5% interest in Block 5B. 10 South Africa PetroSA, the state oil entity, has invested $30 million to acquire a 24% stake in the Ibhubesi Gas venture, a project off the west coast of South Africa. The venture, operated by Denver-based Forest Oil, is kicking off a four- to six-well drilling program on the field, which contains reserves of up to 25 trillion cu. ft. of gas. Present plans are to deliver gas as soon as 2006 at the rate of 250- to 350 million cu. ft. per day. The gas would be piped to Saldanha Bay, where some of it would be used for power generation and industrial customers. The remaining gas would be shipped to PetroSA's Mossel Bay plant on the country's southern coast. Mvelaphanda Holdings also has an option for a 10% share in the Ibhubesi project. 11 Russia Shell says it will spend $1 billion to develop the Salym project in the Khanty-Mansiysk region of Western Siberia. The project consists of three fields-West Salym, Upper Salym and Vadelyp-thought to contain some 800 million bbl. of recoverable oil. The work will be done by the Supervisory Board of Salym Petroleum Development NV, a 50-50 joint venture between Shell and OAO Evikhon, a private Russian firm that is a subsidiary of U.K.-based independent Siber Energy Plc. First production from West Salym, by far the largest of the three fields, is expected by the end of 2005. By 2009, the project will reach its peak output of 120,000 bbl. of oil per day. The partners are already developing Upper Salym, and work at Vadelyp will begin at a later date. 12 Malaysia El Dorado, Ark.-based Murphy Oil Corp. has made two more light-oil discoveries on its Block K, offshore Sabah. The company's Kikeh Kecil-1 was drilled in 4,460 ft. of water some 2.5 miles north of Kikeh Field, but on a separate structural feature. It encountered the same reservoirs found in Kikeh Field, with no water leg, says Murphy. The company has also been successful at its Kikeh-5 well, drilled southwest of the main Kikeh accumulation. That well also encountered a separate fault block. Kikeh was the first deepwater oil discovery offshore Malaysia, and it is estimated to contain between 400- and 700 million bbl. of reserves. Murhpy owns an 80% interest in the 4-million-acre Block K, and Petronas Carigali owns the remaining interest. 13 Australia Santos Ltd. participated in two awards for exploration licenses offshore Southeast Australia. The firm, in partnership with Basin Oil Pty. and Diamond Gas Pty., received Permit Vic/P55 in the mature Gippsland Basin. The partners plan to acquire 100 square kilometers of 3-D seismic data on that block. In the Otway Basin, Santos and Unocal South Australia Pty. picked up Exploration Permit T/35P, which lies southwest of Thylacine and Geographe fields, currently being developed as the Otway Gas Project. The companies pledged to acquire 1,300 kilometers of 2-D seismic data on their new block, which is in a lightly explored area. Australian firm Nexus Energy Ltd. was also awarded a 100% interest in an exploration permit in the Gippsland Basin. The Vic/P56 block covers 135 square kilometers in relatively shallow waters on the eastern edge of the basin, close to Halibut, Tuna, Flounder, Blackback and Marlin fields. Nexus has identified two prospects on the block, Cluverin and Haddock. Potential recoverable reserves are 60 million and 50 million bbl. of oil, respectively.
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