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Persistence Can Pay |
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Archives -
2007 Archive
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Written by J. Cresswell
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Tuesday, 22 May 2007 |
The Atlantic Frontier spirit is most definitely alive and kicking in the Faroes with the William prospect being drilled this year — but making sure exploration continues remains crucial as it might take years before any commercial oil or gas discoveries are made.
IN November 2006, a new task force was created in a bid to realize the still latent potential of the UK Atlantic Frontier. This is not the first time such a grouping has been gathered together to tackle the West of Shetland conundrum — some of you may recall the ill-fated Aurora Project of the mid/late 1990s. The difference this time is significantly greater clarity of purpose, reinforced with data from further seismic work, data from a variety of wells and, of course, Chevron’s exciting sister Rosebank/Lochnagar discoveries that are currently the subject of extensive appraisal, with 500 million barrels of recoverable oil being speculated.
According to the British Department of Trade & Industry, reserves West of Shetland represent around 17 percent of the UK’s remaining oil & gas of which, for example, 2 trillion cubic feet of gas has been found but is proving a challenge to develop commercially.
Success needed: Once a week, DTI, BP, Exxon Mobil, Chevron, DONG Energy and Total meet, seeking a way ahead that might make economic and strategic sense and the task force is scheduled to report to the British energy minister late Q1/early Q2 this year.
The prize is tantalizing:
•Development of 17 percent of UK’s remaining oil and gas resource
•Investment of 4 billion+ gbp
•15+ years gas production satisfying 6 percent of UK demand
•More than 30 new production wells
•Some 800 km of new pipeline
When viewed from Tórshavn, the sense of purpose that has apparently emerged on the UK side is surely both encouraging and frustrating. After all, five Faroese offshore wells have been drilled so far, without a potentially commercial result.
A sixth well — the William probe — is scheduled for late Q3/early Q4 by BP via a farm-in with licence holder Anadarko.
A seventh, Ann Marie (partners ENI, Faroe Petroleum) should follow, most likely in 2008 subject to rig availability, though well planning started in 2006. One advantage that Anne Marie has over William is that it is basalt-free.
To the average Faroese, even oil industry professional, the pace of exploration has been painfully slow, with nothing much to show for the effort and expense, though the Round One, Hess-operated 6004/16-1 well teased by encountering a 170m gross column of light oil and gas, but which was deemed non-viable.
And, of course, with the Third Faroese Licensing Round slated for the back end of this year, it goes without saying that a positive result from William is badly needed. What does lie beneath the basalt shield and will the experience gained from last year’s dry Brugdan probe offer valuable pointers?
What is becoming clear is that the Faroe Shelf, like most ‘new’ plays around the world, is not going to give up its prize — assuming there is one — easily. Even where there is early success, and Mauritania on the NW Africa portion of the Atlantic Frontier is a prime example, this can quickly give way to frustration with a string of dry or inconclusive wells drilled.
The hunt for oil and gas in the Norwegian sector of the Barents Sea is in its different way proving highly frustrating too — again more ‘dusters’ than finds.
Such disappointments are happening despite the tremendous strides made in survey techniques and data processing/interpretation over the past 20 years, especially the now widespread use of 3D seismic and, in the case of the Faroes, long-offset and low frequency seismic because of the ability of such techniques to ‘see’ beneath basalt, albeit with modest clarity.
A good example of how hopes can build and, in a matter of days, be dashed is the Wellington well drilled last year on 23rd UK Licensing Round acreage West of Shetland by independents Hurricane and Sunshine.
The target was a three-way dip, fault-bounded closure targeting Jurassic aged Rona Sandstone at a location 65 km south-west of the giant Clair field and 45 km south-east of the Foinaven field. Wellington-1 became a nine-day wonder, or rather, failure. Sunshine bravely stated on August 30: “Despite encountering reservoir quality sandstone in the primary objective Rona sandstone, no hydrocarbons were encountered.”
Eyes on Corona Ridge: But that is the nature of the exploration game and the slow pace of the North-West European Atlantic Frontier hunt is amply illustrated in a piece of work prepared by Nick Loizou of the UK DTI and published in January 2003.
In his conclusions, Loizou notes: “Following the discovery of the Foinaven and Schiehallion fields in the early 1990s, exploration success outside Quadrant 204 acreage of the Faroe-Shetland Basin has been rather limited.
“It has become clear that the Foinaven area is in a rather unique geologic position in terms of hydrocarbon generation, migration and trapping. Many companies that have carried out exploration along the UK Atlantic Margin perhaps have visualized that most of all the wells historically drilled were located on ‘valid prospects’, which is reflected in the overall poor success rate of 1 in 7.
“Interestingly, this analysis shows that from the recent wells drilled, less than 50 percent were located on what could be termed ‘reliable, robust structures’. Not surprisingly, with the wells that were located on the more reliable, robust structures, a higher success rate of more than 1 in 2 has been achieved.”
He concedes hope too: “The UK Atlantic Margin can still be a major hydrocarbon province but there are lessons to be learnt from the activity so far. The challenge ahead lies in enhancing the possibilities of finding further hydrocarbons in commercial quantities. Undoubtedly there is capacity to improve the exploration success rate on the UK Atlantic Margin by carefully evaluating and integrating all the relevant data (including wells that have failed) to unravel the true geology.“
Loizou’s last point is critical and provides much food for thought in terms of where the Faroese hunt goes.
Talk of the Faroes Oil Industry Group (FOÍB) is the Corona Ridge, a UK play that may stretch into the Faroese portion of the Faroe-Shetland Channel and which has structures with hydrocarbon potential that could straddle that boundary.
Bold profiles: As Nils Sörensen, FOÍB’s 2007 chairman puts it: “It’s so early in the game that there’s no reason for pessimism, not with new areas like the Corona Ridge. In fact there’s rather a lot of activity going on out there, it’s just that it’s not so visible in the news; it’s more a business as usual sort of thing.”
With the Rosebank/Lochnagar appraisal programme and mounting hope that Hess will revisit its Cambo discovery — an appraisal well plus a west of Ireland wildcat are indicated in the US group’s 2007-2009 outline plans — the Corona Ridge could ultimately yield prizes of huge economic and strategic value.
In its 2006 results published in March this year, Faroe Petroleum says: “Prospects on the Corona Ridge, targeted by Chevron, show significant promise for substantial discoveries, and Faroe Petroleum holds five licences on this play.”
But, like sister independent Atlantic Petroleum, Faroe is having to look elsewhere for viable quantities of oil and gas that can be produced, so delivering much needed cash flow to coffers that, other than the occasional replenishment through stock market fund-raising, have so far seen money going just one way… out the door.
And so it will be for some years yet, as is clearly recognized by both companies. But it is encouraging that they are keen to stay in the hunt; moreover, their profile remains admirably bold. One thing is abundantly clear in the oil and gas business — persistence really can pay. Eventually.
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