Saturday, May 22, 2010

Tullow To Begin Massive Exploration

... Oil giant seeks more black gold in Ghana, rest of world

Tullow Oil plc (Tullow), Operator of the Jubilee Field in Ghana, is set to commence a new round of massive oil exploration campaign with up to four wells in the company’s Deepwater Tano license in Ghana. The search for the black gold due to start in June this year follows the company’s successful work at the Tweneboa-2 oil well.

Tullow’s fresh exploration will not be limited to Ghana. Significant wells are also planned in Liberia, Sierra Leone, French Guyana and Guyana to test the extension of the Jubilee play in the Equatorial Atlantic region.

Tullow goes into these massive exploratory works, while looking forward to its first oil flow from Ghana’s Jubilee Field in the last quarter of this year. The company sees the expected oil flow in Ghana as a landmark event for itself, its partners and the people of Ghana.

According to Tullow, besides the Jubilee Field programme and plans for an accelerated basin-wide development to significantly enhance the value of the Lake Albert Rift Basin in Uganda, “a high-impact drilling campaign is planned for the second half of 2010.”

Given the extent of this activity, Tullow's Board believes the outlook for 2010 is very positive.

In an Interim Management Statement released on May 12, 2010, the Group said it would announce its half year Trading Statement and Operational Update on 6 July 2010. The release said Tullow has continued to perform very strongly in 2010. Tullow said it has also strengthened its balance sheet by completing a £925 million equity placing. GHANA Giving an Operational Update on its activities in Ghana, Tullow cited the commissioning of ‘FPSO Kwame Nkrumah MV21’, named after Ghana’s first president. The official Commissioning of the FPSO was performed in Singapore on May 1, 2010. The vessel will set sail for Ghana at the end of May, to be connected to subsea equipment which have since been installed on the seabed. According to Tullow, the drilling phase of the project was finished in February 2010 and completion equipment are now being installed in the wells with production scheduled to commence in late 2010, while ongoing well completion work continue for a further three to six months. During this period, facilities will be commissioned and production will be steadily ramped up to an expected plateau rate of 120,000 barrels of oil per day, Tullow announced. They disclosed that in January, the Tweneboa-2 appraisal well in the Deep Water Tano license proved Tweneboa to be a major oil and gas-condensate field. The potential of this expansive 200sqkm turbidity fan system will be evaluated with an exploration and appraisal drilling campaign scheduled to commence next month. According to Tullow, drilling will start on the high-impact Owo-1 exploration well, which will test the upside potential of the greater Tweneboa resource range in the West of the structure. “This will be followed by a well on the Onyina prospect, which lies between the Jubilee and Tweneboa fields. The rig will then return to the Tweneboa field to drill further exploratory appraisal wells. In parallel, conceptual field development planning is in progress with the aim of completing an assessment of field commerciality in mid-2011. “In April, the Atwood Hunter rig drilled the Dahoma-1 well, in the southeast Jubilee area, some 11 km down-dip from known oil. Water bearing reservoirs were encountered below a possible oil-water contact. “Indications of oil migration in the reservoirs suggest potential for oil trapped up-dip. The rig is now drilling Mahogany-5 to test up-dip oil accumulations east of Mahogany-3,” the statement revealed. Uganda In Uganda, Tullow announced that it has made significant progress towards aligning equity interests across the Lake Albert Rift Basin. According to Tullow, on 17 January 2010, it exercised its right of pre-emption on the Heritage Oil Plc asset sale to acquire a 50% interest in Blocks 1 and 3A for a consideration of up to US$1.5 billion. Tullow said on 2 February 2010, a formal request was submitted for consent from the Government of Uganda for the assets to be transferred to Tullow, and the government has indicated its intention to approve this transaction in the next few weeks. Tullow said it has been working closely with the Government of Uganda to farm down a proportion of its interests in the Basin and has selected two partners, “CNOOC and Total, and each partner will acquire a one-third interest in each of the three blocks.” Tullow said the move “will result in a unified partnership with considerable technical, operational and financial capability. In addition, it will enable Uganda to become a significant oil producing nation with the potential to produce at rates significantly in excess of 200,000 bopd. The new partnership arrangements will be finalised and approved shortly after the pre-emption”. Tullow disclosed that “in Block 2, the Kasamene-2 and Kasamene-3 appraisal wells were drilled in January and March respectively. The wells successfully delineated the upside potential of this field and provided essential reservoir data for the future development project. Extended well testing on the Kasamene field is expected to commence in the second half of 2010, and the crude oil produced will be trucked to local industry. The ultimate objective of this appraisal programme is to support the development of the field with first commercial oil production targeted for the fourth quarter of 2011. “In April, the Kasamene-3A well made a further oil discovery adjacent to the Kasamene field in the Wahrindi North fault block. The rig has now moved to drill the Nzizi-3 appraisal well as part of the Nzizi gas development project, and the well is expected to complete later this month. First commercial gas production is targeted for the fourth quarter of 2011. “To facilitate an accelerated Exploration and Appraisal programme, a second rig is due to commence drilling in Block 1 in June 2010. The programme will include appraisal of the Ngiri (Warthog) discovery and a comprehensive exploration campaign, east of the Jobi-Rii field, including the material Mpyo (Crocodile), Bbegeri (Leopard) and Jobi-East prospects, before year end. Additional rig capacity is currently being procured for later in the year.” Rest of Africa Production performance from the African portfolio is in line with expectations. In April, Tullow completed the first of two planned wells in the Ruvuma Basin in southern Tanzania. The Likonde-1 well, located in the Lindi block, encountered thick sands with hydrocarbon shows which are encouraging for the future potential of the basin. In Gabon, drilling in the Onal licence area has yielded the Maroc Nord OMOC-N-1 discovery where Tullow has a 7.5% interest. Further wells are planned to appraise this discovery and additional prospects are being drilled in the region where Tullow has back-in rights. In addition, the Noix de Coco-1 well in the Azobe exploration license commenced drilling in April and is expected to reach total depth later this month. In the Equatorial Atlantic area, plans for four high-impact wells in Liberia, Sierra Leone and Mauritania during the second half of the year are well advanced. Europe Gas production in the UK is ahead of expectations. A well performance optimisation campaign on the Schooner and Ketch fields yielded excellent results and the Thames fields have performed strongly. An infill well on the Ketch field is expected to commence in May with drilling operations forecast to take approximately three months, with first production expected by year end. On 25 March, Tullow exited its exploration interests in Portugal. South Asia

In Bangladesh, production remains steady at 120mmscfd, the maximum processing capacity of the facilities. In March 2010, a hydrocarbon dewpoint control system was commissioned which has resulted in a considerable increase in condensate recovery from the gas stream and delivery of gas to the main pipeline. In Pakistan, drilling operations on the Shekhan-1 well are ongoing with results expected later this month.

South America

Activity has focused on the transform margin from Guyana through Suriname to French Guiana where the Group is seeking to replicate its success in Ghana. Acquisition of a 2,500sqkm 3D seismic survey in French Guiana was completed in March and initial interpretations are very encouraging. Plans are progressing for drilling operations to commence in both French Guiana and Guyana around year-end.

By J. Ato Kobbie/The Business Analyst

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