First, create a new strategy. Then embrace
new technology, and don't be afraid of new relationships.
Finally, get ready to reap the rewards of new discoveries.
It sounds simple, but that's the basic story behind
Texaco's success in the deep waters of Nigeria at the Agbami prospect,
one of the world's 10 largest discoveries of the past decade.
Texaco's story provides an example of creative perseverance
as well as a primer for those who would enter the global arena in
the 21st century.
It started a little over five years ago — and not
with a bang. Texaco's initial drilling on its deepwater Nigeria
leasehold was mixed, but the wells did find oil. The firm's geoscientists
found that the reservoir in the area was similar to the Gulf of
Mexico deepwater sands, but without the complications of salt.
Texaco drilled its first operated well at the Agbami
prospect in 1999. The company brought Petrobras in as a 20 percent
partner on Agbami to take advantage of that firm's knowledge of
deepwater systems and to establish a good working relationship in
anticipation of future activity in Brazil, according to Bruce Appelbaum,
former president of exploration and new ventures for Texaco and
current head of mosaic resources.
Agbami was the first prospect Texaco identified after
applying new technology to the process of finding exploration targets
— with impressive results.
"We established a 3-D visualization center for the
exploration group, and this technology facilitated the process of
targeting the best prospects," Appelbaum said. "We had a great deal
of 3-D seismic data in the region, and with visualization technology
we were able to look at large amounts of data quickly and focus
on the most prospective areas."
While the science was critical to Texaco's deepwater
Nigeria play, it was only about 50 percent of the equation.
"I tell our people that rocks and relationships each
make up half of a successful exploration prospect," Appelbaum continued.
"You absolutely must develop a strong working relationship with
your indigenous partner, and we had a long, healthy history with
Actually, Texaco has had a long-standing relationship
with Nigeria — through subsidiaries including Texaco Nigeria (TNPlc)
and Texaco Overseas (Nigeria) Petroleum Co. Unlimited (TOPCON) —
that dates to 1913, when Texaco began marketing its products there.
TOPCON began producing oil in the 1970s, and today produces nearly
70,000 barrels of crude oil per day from six shallow water offshore
production facilities off the Bayeisa State.
TOPCON operated its fields through a joint venture
with the Nigeria National Petroleum Co. (NNPC). TOPCON held a 20
percent interest in its fields. Prior to the Texaco-Chevron merger,
Chevron held a 20 percent stake and NNPC had 60 percent.
Currently TNPlc owns and operates 200 service stations
and supplies motor fuels to more than 100 third party-owned operating
outlets. The firm has a significant oil storage capability in Nigeria,
including a 103,000-barrel storage terminal in Apapa, near Lagos.
Texaco also owns several manufacturing facilities in the country.
Texaco began its deepwater program in Nigeria in
1995, when it entered into three joint ventures with Statoil/BP,
Mobil and Famfa, an indigenous Nigerian oil company. In January
1999 Texaco and Famfa announced the Agbami discovery on block 216,
70 miles off the coast in the Central Niger Delta. The wildcat is
in 4,700 feet of water, which made it the deepest water depth well
in Nigeria at that time.
The Agbami discovery well encountered 420 net feet
of pay in multiple oil zones, from 8,200 feet to the total depth
of 12,400 feet. The well penetrated stacked reservoir sands saturated
with oil, ranging in overall column thickness from 400 to more than
1,000 feet. Preliminary data at the time of the discovery indicated
the reservoirs contained several hundred million barrels of recoverable
"We have made excellent progress in focusing and
positioning our exploration program in areas that can yield high
results," said John J. O'Connor, then-president of Texaco Worldwide
Exploration and Production, at the time of the discovery. "This
discovery is a direct result of those efforts."
When Texaco and Famfa were granted exploration rights
to the 617,000-acre block 216 in late 1996, acquisition, processing
and interpretation of the 3-D seismic data using Texaco's 3-D visualization
technology reduced the well's cycle time about 18 months — extremely
fast in deepwater plays.
One year later in January 2000 Texaco announced the
first Agbami appraisal well, which confirmed that the structure
had potential recoverable reserves in excess of one billion barrels
of oil equivalent. The test well surpassed expectations and, together
with other technical data, suggested that the Agbami discovery likely
ranks among the largest single finds to date in deepwater West Africa.
The structure spans an area of 45,000 acres and extends
from block 216 into block 217. Texaco's share of the production
from this field is expected to exceed 50 percent.
Agbami 2 was drilled in 4,800 feet of water to a
total depth of 15,683 feet and encountered 534 feet of pay in five
separate oil-bearing zones, one of which flowed at a maximum rate
of 10,000 barrels of oil per day. Surface equipment limitations
prevented a higher flow rate.
"The successful conclusion of the well test sets
the stage for development of a world-class project that will add
substantially to the company's resource base," O'Connor said at
the time, "and will significantly increase Texaco's future production."
Before development plans could be considered, however,
an additional four-well appraisal program was completed in August
2001, which confirmed earlier reserve figures and provided Texaco
with additional valuable information, allowing the project team
to remain on track for first oil in mid-2005.
The drilling program defined the productive limits
of the field and established reservoir continuity. The results will
help form the basis of a development plan incorporating conceptual
facilities design, reserves, production rates and well count, while
experience gained drilling the appraisal wells will optimize well
design for development drilling.
The Value of Exploration
With peak production estimated at 200,000 barrels
of oil a day by 2007 and capital investments projected at $3.5 to
$4 billion, Agbami is clearly a world class and high impact project.
ChevronTexaco and partners will develop the Agbami
Field using subsea wells tied back to a floating production storage
and offloading vessel, and a dry tree unit with drilling capabilities
located in about 4,400 feet of water. Production will flow from
the dry tree unit to the FPSO for processing. The firm expects a
total of 37 wells will be necessary to fully exploit the field.
Appelbaum said the most critical element in the Agbami
Field is the continuity of the reservoir.
"If you have to drill many extremely expensive delineation
wells, the commerciality of the field is impacted adversely," he
The first wells drilled at Agbami cost from $60 to
$90 million — but, those costs are coming down considerably as
ChevronTexaco and its partners' geoscientists learn more about the
pressure regimes in the reservoirs and the best drilling practices.
"Development wells will likely cost about one-third
of those first wells," he said.
Just how big is Agbami? It is one of the 10 biggest
discoveries of the 1990s, and Appelbaum said he witnessed a phenomenon
at the field he had only previously heard about.
"During the deep production tests we could actually
see the pressure results of tidal effects on the oil flow," he said.
"That was a first for me, although I understand this effect has
been seen in some of the largest Middle Eastern fields.
"That was certainly an indication we had a sizable
discovery," he laughed.
Appelbaum knows the reorganization that brought all
Texaco's exploration professionals under the same umbrella was a
major factor in the Agbami discovery.
"Because the team was centralized they were able
to feed off each other," he said. "All the various disciplines could
talk and learn from each other — we weren't reinventing the wheel
in every area of the process. When people can communicate and interface
with each other it creates a more productive environment and fosters
a learning/collaborative situation for exploration teams.
"As super majors grow, it becomes more difficult
to replace the monumental amount of reserves they produce yearly,"
he continued. "The whole reason for the large acquisitions we've
witnessed in the last several years is the difficulty of finding
"But, at the end of the day, we do still have to
find new reserves — and people who can find oil and gas are going
to become more and more valuable to companies."