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BHP Billiton To Spend $US1.1 BB On GoM Atlantis Project

BHP Billiton will proceed with the development of the Atlantis field oil and gas reserves in the Gulf of Mexico, committing $US1.1 BB ($1.86 BB) to the project, after the Atlantis-6 appraisal well confirmed the presence of hydrocarbons in the previously unexplored northern part of the structure.

Atlantis-6, located in 1,643 m of water in the Green Canyon Block 743, had a pre-drilling estimated gross proven and probable reserves of 635 MMboe. But BHP Billiton Petroleum President and Chief Executive Officer, Philip Aiken, said on February 10th this number would be further revised upwards.

"This is another major success in our deep water Gulf of Mexico petroleum strategy", Aiken said. The well encountered hydrocarbons in several zones, including 184 m of gross oil pay, 140 m of net oil pay and 109 m of gross gas pay, 61 m of net gas pay, and was drilled to a total depth of 6,137 m.

BHP Billiton will initially spend $US355 MM ($602 MM) on detailed engineering and design work, purchasing of long-lead items, and awarding major contracts. "The funds will cover the completion of project engineering, pre-drill and completion of the initial producing wells, and construction and installation of production facilities and subsea equipment", Aiken said.

"Development of the Atlantis field adds significant value to the company. With the approval of the Mad Dog project last year and the equity we purchased in associated pipeline infrastructure for these two large developments, the company's Gulf of Mexico assets are poised to make a substantial and long-term contribution to company earnings."

First oil is targeted for the third quarter of calendar 2006, with production expected to reach plateau levels at nameplate design capacity within the first six months of operation. Aiken said the Atlantis field, discovered in June 1998, had an estimated production life of about 15 years and was believed to be the third largest oil and gas field in the Gulf of Mexico.

"It is one of the 50 largest hydrocarbon fields ever discovered among the more than 31,000 fields found to date in the United States", he said. BHP Billiton has a 44% working interest in the Atlantis-6 well and the Atlantis field. BP is the operator with a 56% interest in the well and development project.

Work Together For Oil And Gas Future: Shell Explorer

Energy companies need to work smarter with other companies in the industry, big and small, pursue innovative techno-logies and integrate “social performance” into their business operations, if they are to meet changing supply patterns and increased demand for oil and gas.

That's the way forward for the global energy industry if it is to “survive the oil and gas world of the future”, according to the chief executive of Shell Exploration and Production, Walter van de Vijver. He said the need for change was being driven by a rapid decline in oil production by 2020, particularly in the USA and the North Sea, leading to increased demand from OPEC countries, Russia, the Caspian region and deep water West Africa.

He said the industry should take advantage of new opportunities for partnerships such as those with national oil companies and private companies that were once purely domestic. “Traditionally, Shell has worked with other major companies in joint ventures”, van de Vijver said. “Some focus on extracting hydrocarbons, others on commercialising technologies. We are now working on moving towards partnerships on broader issues. There is much more to be gained from collaboration than competition.”

Speaking at the Cambridge Energy Research Associates conference in Houston recently, van de Vijver said innovations in technology were essential to drive down cost, arrest decline rates in mature fields and explore new areas. “This industry is good at technology. We can demonstrate innovative capability, to push back the boundaries of oil and gas field developments over many decades. We can point to the dramatic improvements in subsurface imaging; breakthroughs in deep water capability and well technology.”

van de Vijver said it was essential to integrate a strong policy of social performance into day-to-day operations. “Better social performance will require new skills and new perspectives on the way we do business. There are great opportunities ahead for our industry to improve our reputation, to increase our contribution to the world and to deliver what all our stakeholders expect of us. We should make the most of them.”

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The Moose Is Loose In PNG

The largest drilling programme ever to take place in Papua New Guinea was expected to get underway at the end of March with the spudding of the first of eight wells in the Moose prospect by Canadian company InterOil Corporation.

The Moose prospect primary targets are the Late Cretaceous Pale and Subu Sands, at 1,500-2,000 m, with a secondary target Eocene limestone at 1,100 m. The drilling of the Moose prospect, which is expected to continue during 2003, follows two successful stratigraphic wells drilled by InterOil which discovered a new oil system. Technical studies were carried out by CSIRO's Petroleum Division.

InterOil Chief Executive Officer, Phil Mulacek, said the Moose prospect was in an area its exploration team feels could be a new world class basin. "Due to the attractive logistics of the Moose prospect, which is located close to an airstrip and navigable river, a discovery can lead to early development and production", he said.

Mulacek said the mean estimate (P50) of the Moose prospect was 350 MMbbl. InterOil currently has 100% working interest in PPL 238 within which the Moose prospect is located. The PNG Government has a right to take a 22.5% interest in the Moose prospect. "InterOil has contracted RB Drilling to operate the drilling equipment under the management of InterOil's wholly owned subsidiary, SPI (208) Limited", he said.

InterOil is focused on Papua New Guinea and the surrounding region, and is developing an integrated energy business consisting of an oil refinery, petroleum exploration, and retail assets. The 32,500 bopd refinery is currently under construction in Papua New Guinea and is scheduled to be producing product by year-end 2003.

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