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Success Rate Makes for Good Year

Discoveries Bat .400

In baseball parlance, 2003 was a year where singles and doubles added up to make a winner — even though the fans were wanting to see towering home runs.

The year "did not produce much in the way of large and exciting new finds that were not anticipated," said IHS senior editor Ken White, but it was nevertheless a good year for the industry with success rates averaging over 40 percent.

While drilling levels are down, White said the success rate indicates operators are being more selective in the prospects they drill, and that greater resources, particularly 3D seismic, continue to be employed.

Another feature that appears to be encouraging, White continued, is discoveries in established areas.

"In particular," he said, "the finds in Poland and the Cooper Basin in Australia, — the latter, although small by world standards, represents a major company making success for the minnows involved."

Another feature of 2003, according to White, appears to have been deals — or, in some cases, the lack of them.

"On the one hand we had the $US 6.75 billion deal between BP and Tyumen Oil, and Sidanco and Devon acquiring Ocean Energy for $US 5.3 billion," he said. "The failed deals included the much publicized $US 13 billion tie up between Yukos and Sibneft and, of course, the $US 25 billion Saudi Gas Initiative that comprised three projects and which had been under discussion since 1998."

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In baseball parlance, 2003 was a year where singles and doubles added up to make a winner — even though the fans were wanting to see towering home runs.

The year "did not produce much in the way of large and exciting new finds that were not anticipated," said IHS senior editor Ken White, but it was nevertheless a good year for the industry with success rates averaging over 40 percent.

While drilling levels are down, White said the success rate indicates operators are being more selective in the prospects they drill, and that greater resources, particularly 3D seismic, continue to be employed.

Another feature that appears to be encouraging, White continued, is discoveries in established areas.

"In particular," he said, "the finds in Poland and the Cooper Basin in Australia, — the latter, although small by world standards, represents a major company making success for the minnows involved."

Another feature of 2003, according to White, appears to have been deals — or, in some cases, the lack of them.

"On the one hand we had the $US 6.75 billion deal between BP and Tyumen Oil, and Sidanco and Devon acquiring Ocean Energy for $US 5.3 billion," he said. "The failed deals included the much publicized $US 13 billion tie up between Yukos and Sibneft and, of course, the $US 25 billion Saudi Gas Initiative that comprised three projects and which had been under discussion since 1998."

IHS Energy's Global E&P Reporting Service, whose editors cover E&P activity in more than 200 countries, provided information on major discoveries of 2003. That list includes:

AFRICA

Angola

Some 10 deepwater discoveries were made off Angola in 2003. One of the more important is the Total-operated Gindingo 1, the company's first strike in ultra-deepwater Block 32. The well tested 7,400 b/d and 5,700 b/d of light oil from two separate zones. It is located in 1,445 meters of water and the structure could straddle the limit between Block 32 and Block 16 operated by CNR.

Nigeria

In October the Nsiko 1 wildcat in deepwater block OPL 249, operated by ChevronTexaco, was confirmed as an oil discovery. It reportedly encountered a substantial amount of net hydrocarbon pay in multiple zones, one of which was tested and flowed 6,500 b/d of high quality crude. Pre-drill reserve estimates were in excess of 300 mmbo.

AUSTRALIA

BHP-Billiton operated three Carnarvon Basin oil strikes in 2003, having combined recoverable reserves in excess of 120 mmb. These were:

Crosby 1 in permit WA-12-R, which encountered a gross oil column of 34.7 meters with 29.4 meters of net pay and in place reserves of 100 mmb.

In WA-155-P Ravensworth 1 established 43.5 meters of net pay in the Lower Barrow Group, to which recoverable reserves of 50 mmb have been assigned.

The smallest of the three, Skiddaw in WA-255-P, has recoverable reserves of 35.5 mmb and already has been appraised by one well.

LATIN AMERICA

Brazil

Petrobras had a banner year, making a 14.8 tcf discovery in the BS-400 Block in the Santos Basin. The 4-SPS-035 discovery and 1-SPS-37A could conceivably change Brazil's natural gas strategy. The company also appears to have discovered long-sought-after crude oil both in the Sergipe/Alagoas Basin and Espirito Santo Basin. In the former, the 1-SES-147 discovery on SEAL 100 Block reportedly found 150 mmb of 42 degree oil. In the BES-100 Block in the Espirito Santo, the 1-ESS-123 reportedly found 450 mmbo of 40 degree oil.

Petrobras also has found another 2.95 billion barrels of heavy in the Campos Basin, including 950 million barrels in the Jubarte and Cachalote fields and 150 million barrels in the Marlim Leste Field.

And although Brazil has not proved very friendly to outsiders, El Paso did make a gas discovery close to infrastructure in the Santos Basin that caused the company to reconsider pulling out of Brazil: the 1-ELPS-14B-SPS in BS-001 Block.

Trinidad

In October, it was confirmed that the BHP-Billiton-operated Howler 1 wildcat was a gas and condensate discovery. It is an important Upper Cretaceous find, as this reservoir unit has not been a significant producer in Trinidad & Tobago. Local sources indicate BHP-Billiton tested 18 mmcfg/d and 137 bc/d from the Upper Cretaceous Naparima Hill Formation.

Venezuela

In November, PDVSA completed the Tacata 2X wildcat in the Maturin sub-basin as an oil and gas discovery after conducting extensive tests on the Capaya and Carapita formations. Venezuelan vice minister of hydrocarbon and PDVSA's director Luis Vierma, stated that the Tacata 2X well is a major oil and gas discovery, and is estimated to contain 236 mmb of light and medium oil and up to 3 tcf of gas

FAR EAST

China

The country had a particularly good year, reporting nearly 40 potentially commercial discoveries in a number of basins both onshore and off. Three of the more recent completions have resulted in significant reserve additions. Huo 10, with 700 mmb oil in place, is described as a major breakthrough in the foreland belt along the southern margin of the onshore Junggar Basin. Maoba 1 in the onshore Sichuan Basin is deemed to have established reserves of 1.1 tcf of gas, and appraisal wells 2 and 3 are believed under way. Also in the onshore Sichuan Basin is Puguang 1, a deep test that was spudded in 2001. Drilled to a total depth of 5,700 meters, the well has tapped a structure with reserves possibly in excess of 3 tcf of gas.

Three appraisal wells are mooted, one of which is believed to have spudded.

India

The most significant well was the Dhirubhai (D6-D 1) discovery in April, which followed on from the previous Dhirubhai discoveries (1 to 4) in 2002. This further extended the Dhirubhai structures, and confirmed them as the biggest gas discovery in India for almost three decades. Latest revised figures suggest gross in-place reserves of 8.6 tcf. The eighth well drilled on the Reliance Industry KG-DWN-98/3 block, D6-D 1 is believed to have encountered in excess of 100 meters of net gas pay.

Indonesia

In April Unocal abandoned its Ranggas Selatan 1 wildcat in the Makassar Strait Rapak PSC as an oil and gas discovery. In June Unocal abandoned its Gehem 1 wildcat in the Makassar Strait Ganal PSC as an oil and gas discovery. It encountered 188 meters net gas and condensate pay and five meters net oil pay. Gehem 1 is located about midway between the Ranggas oil and gas discovery 10 kilometers to the northwest in the adjacent Rapak PSC and the Gada gas discovery 10 kilometers to the southeast.

The strikes extend Unocal's deepwater success there.

EURASIA

Kazakhstan

In November the Agip KCO consortium tested 1,550 bo/d at Aktote 1 (AK 1) wildcat and also confirmed that exploration well Kashagan SW 1 (KSW 1) tested 2,100 bo/d on a 32/64-inch choke from a Carboniferous interval. Both wells will impact on the reserves base offshore Kazakhstan, where the Agip KCO is developing the nine-billion-barrel Kashagan discovery.

Russia

While the vast majority of drilling remains onshore, Russia made two important offshore discoveries. In the Caspian Sea, Lukoil recorded its fourth consecutive strike in the Severniy license with the Sarmatskaya 1 wildcat, which tested oil and gas from three Jurassic intervals. Pre-drill reserve estimates were 879 mmboe. Forming part of Gazprom's drive to increase gas reserves off the Yamal Peninsula, its Gasflot subsidiary tested 13.7 mmcfg/d from Cenomanian reservoirs in the Obskaya 1 well. Reserves are estimated at 1.7 tcf.

EUROPE

Norway

Marathon announced in April that it had discovered a 47-meter gross oil column in the Heimdal Formation 25/4-7 (Kneler) exploration well. The well was the first of three designed to evaluate the West Heimdal area.

Poland

2003 may prove to be a landmark year for PGNG, as in its Gorzow Wielkopolski-Miedzychod 69/98/p license it confirmed two further discoveries in an accumulation that has estimated in-place reserves of 730-1,100 mmb with 20-50 percent recoverable. The two new finds were Grotow 1 and Lubiatow 1 — the latter establishing an oil column of 53 meters, approximately the entire thickness of the dolomite section.

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