Upstream News

Marathon signs agreements for Kenya, Iraq exploration

In late July, Marathon Oil Corp. signed exploration agreements with two different companies for exploration in Kenya and Iraq.

On July 23, Marathon announced its farmout agreement with Africa Oil Corp. to acquire a position in two onshore exploration blocks amounting to more than 11 million gross acres in northwest Kenya. The transaction includes a 50% working interest (WI) in Block 9 and a 15% WI in Block 12A.

"With this transaction Marathon Oil gains entry into an emerging onshore oil play in Kenya that offers potential across a vast acreage position and fits with our liquids-rich strategic focus, said Annell R. Bay, Marathon Oil’s vice president of global exploration.

Kenya’s Block 9 is approximately 7.5 million gross acres along a prospective Cretaceous Rift Trend. Africa Oil will operate the exploration phase, and Marathon Oil has the right to assume the role of operator if a commercial discovery is made.

Block 12A is approximately 3.8 million gross acres and is contiguous with Block 10BB to the north, which contains the recently announced Ngamia-1 oil discovery. Tullow Oil is the operator of Block 12A with a 65% WI and Africa Oil retains a 20% WI.

The companies expect to drill an exploration well on Block 9 in the second quarter of 2013. On Block 12A, 2-D seismic acquisition is expected to commence in the third quarter of 2012.

In addition, Marathon Oil and Africa Oil have agreed to jointly pursue exploration activities on an additional exploration area in Ethiopia, subject to host country Government approvals.

In consideration for the assignment of these interests, Marathon Oil will pay Africa Oil an entry payment of $35 million which includes prior expenditures, and has agreed to fund Africa Oil’s working interest share of joint venture expenditures in these blocks anticipated to be spent over the next three years up to a maximum of $43.5 million.

Then, on July 31, a subsidiary of the company, Marathon Oil KDV BV, announced the closing of its farmout agreements with subsidiaries of Total SA under which Total acquired 35% working (43.75% paying) interests in the Harir and Safen blocks in the Kurdistan Region of Iraq.

With the transaction, Marathon Oil reduces its stake to a 45% working (56.25% paying) interest in each of the two blocks while remaining operator of the Harir block and exploration operator of the Safen block. A Total subsidiary will become the operator of any development of the Safen block. The Kurdistan Regional Government continues to have a fully carried 20% interest in each of the blocks.

The Harir block is approximately 174,000 gross acres and the Safen block is approximately 105,000 gross acres. Both blocks are located northeast of Erbil.

A 2-D seismic program on both blocks is ongoing and expected to be completed by the end of the third quarter of this year. The first exploration well on the Harir block began drilling July 30, 2012 and will be exploring Mesozoic fractured carbonates with main reservoir objectives in the Cretaceous, Jurassic and Triassic formations. The first exploration well on the Safen block is planned for the first half of 2013.

Noble Energy completes Dumbarton, Lochranza sale

Noble Energy Inc. has closed the previously announced sale of the Dumbarton and Lochranza properties in the North Sea to Maersk Oil North Sea Ltd. Proceeds from the transaction were $117 million and included final closing adjustments from the effective date of January 1, 2012.

Chevron makes gas discovery offshore Western Australia

An Australian subsidiary of Chevron Corp. made a natural gas discovery in the Greater Gorgon Area of the Carnarvon Basin, offshore Western Australia in late July.

The Pontus-1 exploration well encountered approximately 97 feet of net gas pay. The well is located in the WA-37-L permit area in the Greater Gorgon Area gas fields, approximately 40 miles northwest of Barrow Island. The well was drilled in 690 feet of water to a total depth of 16,581 feet.

Chevron Australia is the operator of WA-37-L and holds a 47.3% interest in the permit. Exxon Mobil and Shell Development Australia both hold 25%, Osaka Gas holds 1.25%, Tokyo Gas holds 1% and Chubu Electric Power holds approximately 0.42%.

Apache’s second well increases Bacchus Field production

On August 2, Apache Corp. noted that a second successful horizontal well has increased production at the Bacchus Field in the United Kingdom sector of the North Sea to 12,900 barrels of oil per day.

The latest horizontal well, Bacchus West, penetrated Jurassic-aged Fulmar reservoir sandstones and logged 889 feet (measured depth) of net pay in three sections. The well currently is producing approximately 8,500 barrels of oil per day.

The first well on the field, Bacchus South, commenced production in May at approximately 6,000 barrels per day; it currently is producing approximately 4,400 barrels per day. Apache has a 50% working interest in Bacchus, which is a subsea tie-back to Apache’s Forties Alpha platform.

Following completion operations at Bacchus, the Rowan Gorilla VII jack-up drilling rig is scheduled to move to appraise Apache’s Aviat shallow gas discovery.

CNOOC makes discoveries, starts gas field production

In August, CNOOC Ltd. began production on the Yacheng 13-4 gas field and made two discoveries in the Pearl River Mouth Basin.

Yacheng 13-4 is located about 72 kilometers southwest of Sanya, Hainan Province, in the north part of the South China Sea with an average water depth of about 85 meters. The project was designed to share the existing facilities of the Yacheng 13-1 gas field and build new subsea production equipment for overall development. Three development wells have also been arranged. Yacheng 13-4 is expected to hit its peak production of 0.35 billion cubic meters per annum in 2013.

CNOOC holds a 100% interest in the independent gas field and serves as operator.

On August 20, the company noted two new exploration discoveries in Luda 6-2 and Lufeng 15-1.

Luda 6-2 is located in the Liaodong Bay in Bohai with an average water depth of about 31 meters. The company has successfully drilled Luda 6-2-4 and Luda 6-2-5 this year and encountered 40 and 147.6 meter thick of oil pay zones, respectively. The average daily production was tested to be around 850 barrels.

In addition, Lufeng 15-1 is located in the Pearl River Mouth Basin with an average water depth of 283 meters. Lufeng 15-1-2 drilled in 2012, encountered 26.8 meter thick of oil pay zones and was tested with a daily production of around 800 barrels.

BP makes additional gas discoveries in Egypt’s Nile Delta

BP Egypt announced August 26 the Taurt North and Seth South gas discoveries in the North El Burg Offshore Concession, Nile Delta. These are the fourth and fifth discoveries made by BP in the concession following Satis-1 and Satis-3 Oligocene deep discoveries and Salmon-1 shallow Pleistocene discovery.

The two wells were drilled by IEOC on behalf of concession operator BP, using Scarabeo 4 (mid-water semisub) rig in water depths of 361 and 256 feet (110 and 78 meters) respectively. The wireline logs, fluid samples and pressure data confirmed the presence of gas in one Pleistocene interval in Taurt North and two Plio-Pleistocene intervals in Seth South. Options to tie both discoveries to nearby existing infrastructure are being studied.

Hesham Mekawi, President and General Manager of BP Egypt stated, "The discoveries show our commitment to develop the remaining potential of the shallow reservoirs within the Nile Delta and make the best use of the existing infrastructure.

The parties to the North El Burg Offshore Concession agreement are: BP (operator 50%) and IEOC (50%).

Colombia’s National Hydrocarbons Agency selects Ingrain for characterization study

Houston-based digital rock physics lab Ingrain has been awarded a contract by the Colombian government’s National Hydrocarbons Agency (ANH) to digitize and characterize the high-volume of core they have in storage.

Ingrain’s technology will provide the ANH with knowledge of the sedimentary basins of Colombia in order to better assess the hydrocarbon potential. Utilizing latest-generation technologies, expertise in reservoir rock analysis, and equipment from Carl Zeiss, Ingrain will characterize thousands of meters of whole core currently being stored at ANH’s National Core Repository (Litoteca Nacional de Colombia).

Total enters exploration in Bulgaria with Khan Asparuh offshore license

Paris, France-based Total has signed with Bulgarian authorities for an exploration contract concerning the offshore Khan Asparuh license. The 14,220 square kilometer block was awarded under the licensing round that opened last January 31. The block is located nearly 80 kilometers offshore in the Black Sea in water depths between 100 meters and 2,000 meters. The company has signed an agreement to allow Austria’s OMV and Spain’s Repsol to work on the permit with a 30% interest. Total holds the remaining 40% stake.

"Following French Guiana, Uruguay, Cote d’Ivoire and Mauritania, Total continues to build strategic positions in ultra-deepwater abrupt margin plays. He noted that the license "marks the first time that this type of highly promising play will be explored outside the Atlantic basins, said Marc Blaizot, Total’s senior VP, exploration. According to Blaizot, the license contains a number of both oil and gas prospects.

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