Recent exploration successes by
U.S. independent oil companies in Equatorial Guinea are fueling
a drilling surge that's boosted what used to be one of the world's
poorest countries to become one of the world's fastest growing economiesy.
Indeed, the tiny nation, nestled between the prolific
Niger Delta and the Congo Basin, is commanding a mighty presence.
It's a fairly recent story, emerging just three years
ago when Triton Energy -- responsible for three giant field discoveries
in the last decade in Colombia and Thailand -- discovered the basin-opening
Ceiba Field in the Rio Muni Basin. After setting a world record
for a deepwater development by bringing the oil field on production
in just 14 months, the company has drilled six additional discoveries
-- and only 15 percent of the company's acreage off Equatorial Guinea
has been assessed.
Last year Amerada Hess Corp. acquired Triton, primarily
for the upside potential in Equatorial Guinea.
"Amerada Hess had the vision to recognize the significant
upside -- all of which was in Equatorial Guinea," said Brian Maxted,
Amerada Hess' senior vice president of West Africa. "The exploratory
drilling results since the acquisition have vindicated this vision
-- we have announced four new discoveries and there is plenty of
room left to search.
"Equatorial Guinea is extremely important to our
worldwide portfolio," he continued. "Today it is the largest production
base outside the North Sea and the United States -- and eventually
West Africa will overtake both of those regions and become the primary
source of production."
A Strategy Develops
So how did it all start? Why did Triton take a chance
on a completely unexplored basin off West Africa?
"Back in 1997 Triton was looking for a third leg
to balance its South American and Asian business focus," Maxted
said, "and we decided on West Africa because there was significant
open acreage in the emerging deepwater play outside of Angola and
The company knew, however, that a small- to mid-size
independent couldn't compete with the majors in those hunting grounds.
The signature bonuses alone were extremely prohibitive.
"So, we decided to walk along the West African margin
and see if we could identify similar play types that were largely
unlicensed, where we could gain a significant footprint in a basin,"
"The Rio Muni Basin was completely unlicensed at
that time," he said, "but we realized the geology of the basin was
similar to the Ogooue delta off Gabon, which had about 2.5 billion
barrels of proved reserves."
Triton purchased 2-D seismic spec data in the area
and saw the opportunity to extrapolate the Upper Cretaceous turbidite
play in the Ogooue delta north into Rio Muni.
"On the basis of that work, in April 1997 we speculatively
licensed blocks F and G, which covered about 5,000 square kilometers
-- or 350 Gulf of Mexico sized blocks -- for a $1 million bonus
per block," he said.
The company shot additional seismic in 1998 and by
October 1999 drilled its first well and made the Ceiba discovery
in 2,300 feet of water.
Triton and now Amerada Hess has an 85 percent working
interest in blocks F and G, with South Africa-based Energy Africa
holding the remaining 15 percent.
Triton's timing was fortuitous, because in 1999 the
industry was in the throes of a downturn and contractors were anxious
The firm acquired a massive tanker that was being
converted to a floating, production, storage and offloading vessel
on a speculative basis with just a few months of work remaining.
Also, equipment such as rigs, subsea trees and installation vessels
were available at attractive prices.
The result: Triton brought Ceiba onto production
by November 2000.
"Reducing the development cycle time so that huge
amounts of capital isn't locked up for long periods and ready cash
flow is available is extremely important to making this kind of
deepwater play viable for an independent," Maxted said.
Having an 85 percent working interest helped, too.
"That's unique for West Africa," he added. "This
has given us significant control over our operations and allowed
us to make decisions quickly: along with the Equatorial Guinea government."
Amerada Hess continues to fully develop Ceiba, which
will take the current production of 70,000 barrels of oil a day
to its peak of 100,000 barrels of oil daily in the first half of
Reserve estimates for the field were never officially
announced, but Maxted said 250 million is a good minimum.
Not surprisingly, Triton's success has attracted
other players to the Rio Muni Basin.
Amerada Hess has extended its holdings with a 25 percent stake
in block L that is adjacent to blocks F and G and is operated
In 2000 Vanco Energy Co. licensed the 1.1 million-acre block
K, which is southwest of Amerada Hess's block G, and the firm
indicated the structural setting is similar to the Ceiba Field.
"Immediately following Triton's 1999 Ceiba discovery we were
given an executive order to look at Equatorial Guinea long and
hard," said Janice Walden, a spokesperson for Vanco. "By March
of 2000 we had signed the deal for block K, or Corsico Deep,
where we are operator and 100 percent interest holder."
The firm has acquired existing 3-D seismic data over the block's
northeast region, and Vanco currently is conducting a risk assessment
and full reservoir evaluation of the area.
Vanco hopes to have two partners on the block in place by
later this year and the first well on the block could be drilled
in 2003. The drilling commitment for the block calls for two
wells by 2005.
- Vanco also was part of a consortium that
acquired block N in the Rio Muni Basin earlier this year. Petronas
is operator and has a 60 percent interest in the block, while
Ocean Energy holds 30 percent and Vanco has 10 percent. The 2,744
square-kilometer block is on the Corisco Bay shelf.
Of course, the Rio Muni Basin accounts for just part of Equatorial
Guinea's offshore territory. North of Bioko Island, another
U.S. independent was successful in uncovering a giant oil discovery
in Equatorial Guinea's portion of the Niger Delta.
- United Meridian Corp., which is now Ocean
Energy Corp., got involved in Equatorial Guinea in 1991 when interest
in the country was small.
"Equatorial Guinea's northern offshore region is just south
of and borders Nigeria and is impacted geologically by the Niger
Delta," said Scott Griffiths, senior vice president of exploration
for Ocean Energy. "Several large companies had explored the
area in the 1960s and '70s, but the only successes were two
gas accumulations found at that time."
One of those wells eventually turned into the giant Alba gas
field. At that time gas was not deemed economic, and Equatorial
Guinea fell out of favor." Today the Alba Field is operated
by Marathon Oil.
A 'Crown Jewel'
Unlike virtually the rest of the entire industry,
United Meridian believed this northern region had potential. The
area is situated on one of the world's major producing provinces
in the Niger Delta, and it had a proven working petroleum system,
even though it appeared gas prone.
"This was United Meridian's strategy," he said. "The
company looked for countries where majors had been in the past but
had deemed either the quality or size of the reserves uneconomic."
United Meridian acquired blocks A and B in 1992,
but at that time the firm was relatively small in terms of capitalization
and funding and needed partners to drill the initial exploration
wells on block B. The company showed its prospects to more than
40 companies over two years -- no one saw the technical merits of
taking the deal.
"Everybody's technical assessment of Equatorial Guinea
was that it had a large gas risk, so it was a tough sell," Griffiths
Mobil finally agreed to take a farmout, however,
and drilled two wells. The first test was a dry hole, but the second
wildcat drilled in 1995 discovered the Zafiro Field in Pliocene-age
reservoirs between 5,000 and 6,000 feet. The discovery tested oil
at a rate of 10,000 barrels a day, and three follow up wells were
"All four of those wells tested at high rates," Griffiths
said, "and all four are still producing seven years later."
Based on those four wells, Mobil and United Meridian
planned a fast track development for the field. Zafiro was on production
in 18 months via a FPSO.
The Zafiro story over the years has been phenomenal.
At the time of the discovery reserves in the field were thought
to be between 15 to 35 million. However, additional drilling has
grown the reserves to about one billion barrels today.
Plus, the facilities have been expanded and include
the jade production platform, the Zafiro producer and a floating
storage and offloading facility. An additional FPSO will come on
line next year.
"Over time we have learned that the field covers
a much larger area and the interconnectivity of the reservoirs is
far greater than expected," Griffiths said.
Today Exxon-Mobil is the operator and Ocean Energy
has a 23.75 percent working interest in Zafiro. Development is ongoing,
with about 34 producing wells and current production of approximately
170,000 barrels of oil a day.
"This is the crown jewel of Ocean Energy's property
base in terms of field size and production," Griffiths said.
The Zafiro field is on the toe thrust of the Niger
Delta, which is a structural trend that sits out in front of the
delta just moving into deepwater. The field is in 600 to 1,500 feet
"The field is formed by an underlying structural
high draped over by multiple channels deposited in a slope environment,"
he said. "The main reservoir rocks were deposited by channels funneling
sands into a laterally confined area."
Consequently, many of the channels are interconnected.
Instead of having 35 different channels, the company produces from
three main reservoir tanks with a great deal of interconnectivity.
"That's a situation you can't predict prior to development,"
Of course, it hasn't been all smooth sailing at Zafiro,
which sits right on the border between Equatorial Guinea and Nigeria.
Territorial disputes clouded a portion of the field's future until
earlier this year.
In April Equatorial Guinea and Nigeria signed an
agreement relating to unitization of an oil field that straddles
the maritime border between the two countries, according to IHS
Energy Group's International Oil Letter. This agreement follows
the protocol signed in December of 2001 and unites TotalFinaElf
holding rights to the Ekanga oil field in Nigeria and ExxonMobil's
Zafiro field in Equatorial Guinea.