What ever happened to ...

Some Promise Realized; Others? Not So Much

It’s another year and, in theory, a new decade.

Time to look back at some of the headline plays of the past 10 years.

Not the big, successful plays.

The ones that make us scratch our heads and say:

“What Ever Happened To ... ?”

WEHT Javanese Exploration?

Last year ended with good news from Indonesia. The government said it will work to attract more than $30 billion in oil and gas investment over the next five years.

Cutting-edge technology used in innovative ways has helped in Indonesian exploration – but the story’s final chapter is still unwritten.
Cutting-edge technology used in innovative ways has helped in Indonesian exploration – but the story’s final chapter is still unwritten.

State oil company Pertamina announced plans to increase its capital spending to $4.1 billion in 2010.

TGS-NOPEC Geophysical has highgraded Indonesia’s offshore frontier basins using seismic and seep data (EXPLORER August 2008).

Sounds promising, doesn’t it? But consider the fate of the Cepu block on Java.

Cepu might be the world’s most important oil production area that nobody talks about. Plans still call for Cepu production to increase until it reaches 150,000-165,000 barrels a day.

That’s a key factor in Indonesia’s drive to become an oil-exporting country once again.

ExxonMobil drilled the discovery well at Cepu in 2001, then spent years haggling with the government over operating and development plans and a revenue-sharing agreement.

At best guess, Cepu now produces less than 20,000 barrels a day.

Pertamina subsidiary PT Pertamina EP said it will drill 25 new oil wells in Java, with plans to lift its Javanese oil production to 26,000 barrels per day this year. The company also has drilled exploratory wells on the island’s northern coast.

Indonesia wants to attract outside investment for both oil and gas drilling. It’s trying to shift domestic energy consumption toward natural gas, leaving more oil for export.

If the government shows some flexibility with foreign operators, Indonesian exploration could rebound in the coming years.

WEHT Suriname Exploration?

Offshore Suriname looked promising for exploration, with good production potential and 3-D seismic evaluation under way (EXPLORER August 2005).

According to the U.S. Geological Survey, this region off the northeast coast of South America could hold 15 billion barrels of oil and 42 trillion cubic feet of gas.

Then Noble Energy Inc. and Repsol YPF announced that their West Tapir exploration well, drilled to 12,700 feet in Suriname offshore Block 30 in 2008, did not contain commercial hydrocarbons.

It’s the old story of one bust in a frontier area derailing additional drilling plans.

Meanwhile, exploration interest has moved offshore neighboring Guyana. CGX Energy Inc. of Toronto has been looking for a joint venture partner to drill a 3-D seismic-defined, multiple-target prospect in the Suriname-Guyana Basin.

The company was active in the area in 2000, but Suriname forced it to suspend drilling – the result of a long-simmering, maritime territorial dispute with Guyana.

Both countries later agreed to abide by an offshore boundary determined by the International Tribunal for the Law of the Sea.

WEHT Greenland Exploration?

The industry has recorded a string of tremendous moral victories in Greenland.

As in, “We didn’t find much in the way of hydrocarbons, but we got ourselves some good data and geological information.”

Statoil and three partners restarted exploration activity off the country’s western coast after a drilling hiatus since the 1970s (EXPLORER September 2000).

Now Greenland is offering up 14 new offshore blocks in Baffin Bay for licensing. Heavy interest in the area attracted 13 companies to apply for prequalification as potential operators in 2009.

And Cairn Energy PLC has contracted a drillship to begin exploration activity in Greenland’s offshore Disko West region later this year.

There’s some reason for optimism. Various studies put the oil potential of the Baffin Bay area at 15-20 billion barrels of oil equivalent. Seismic coverage of the offshore has expanded steadily.

Greenland is considered one of the world’s Top 10 hot spots for frontier exploration – if you can call frigid Greenland a “hot” spot – so look for a spate of drilling after the tender round ends this year.

For the country to attract serious and ongoing interest, someone will have to unlock the offshore geology and find significant production.

After that, economics will determine the level of future exploration activity.

WEHT New Zealand Exploration?

Go down under and look below that and you’ll find New Zealand, a country with prospects in deepwater basins (EXPLORER October 2006).

Remoteness is just one of New Zealand’s challenges. Its domestic industry doesn’t have the means for extensive deepwater exploration. The entire country has a population total not much larger than Los Angeles.

Yet, New Zealand has turned into an interesting success story.

First oil began flowing last year from the offshore Maari oil field, the country’s largest. Maari and the adjacent Manaia Field are about 80 kilometers off the southwest tip of New Zealand’s North Island.

OMV Ag of Austria operates the field in a joint venture with three partner companies. One of the minority partners estimated that Maari and Manaia reservoirs together hold more than 100 million barrels of recoverable oil.

Just to the north in the Taranaki Basin lie the large offshore Maui gas and oil field and the Tui Area oil fields. Exploration and evaluation work in the region continues.

Another area of interest is the Great South Basin, offshore and south of New Zealand’s South Island. The country’s Ministry of Economic Development has projected several billion-barrel fields in that basin.

Total spending on oil and gas exploration in New Zealand in 2008 was the highest in a decade, and the country expected to become fully self-sufficient in oil production last year.

WEHT Washington Exploration?

We hear so much about the Washington on the right-hand side of the United States, we sometimes forget about the state on the left-hand side.

EnCana Corp. kicked off a new round of exploration in Washington’s Columbia Basin with a 14,000-foot wildcat near Yakima (EXPLORER November 2005).

Trillions of cubic feet of natural gas might underlie southeast Washington. The problem? Above that potential gas accumulation stretches up to 12,000 feet of Miocene basalt.

Drilling through the stuff is tortuous, expensive and slow. EnCana declared the test noncommercial and sold its interests in the basin to Delta Petroleum Corp. of Denver in 2008.

Last September, Delta announced results from its Gray 31-23 well in the Columbia Basin. The company said it perforated and tested prospective zones at 11,580-12,280 feet, finding high pressures but no commercial gas production.

It put plans for further drilling in the basin on hold.

WEHT Gippsland Exploration?

Not many years ago, it looked like a rush of exploration was about to hit the offshore Gippsland Basin, located in the Bass Strait off the southeast coast of Australia (EXPLORER January 2004).

The basin has generally good seismic coverage. There’s a ready market for production. The region is dotted with currently producing oil and gas fields, up to 75 kilometers offshore. A network of pipelines extends into the area.

And drilling goes on, mostly for development or for testing the extent of producing sands. But exploration hasn’t boomed.

In 2008, Gippsland player Nexus Energy Ltd. plugged and abandoned a deep exploration well in the basin after evaluation showed a series of water-bearing sands.

The biggest news out of the Bass Strait recently is an apparent success drilled in the Bass Basin, in Tasmanian waters, by a joint venture of Origin Energy Ltd., AWE Ltd. and two partners. Their Rockhopper 1 well was cited as a new field discovery, with evaluation ongoing in January, as Origin Energy announced it was preparing to sidetrack the Rockhopper-1 well.

Wireline logging operations there have been completed and the well plugged below the kick-off point.

The sidetrack is designed to appraise the hydrocarbons encountered to date by intersecting the main reservoir sections approximately 1.3 kilometers south and down-dip from their penetration in Rockhopper-1, to assist in assessing the volume of oil and gas discovered in Rockhopper-1.

Bass Strait Exploration Company Ltd. of Melbourne and partners hold exploration rights in part of the eastern Gippsland Basin. The company is looking at additional seismic and has made noises about moving exploration into deeper water.

Extending production into a new part of the basin could be just what Gippsland needs to jump start activity.

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Emphasis: International