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№ 6 (June 2012)

Pre-Salt Rush to African Opportunity

   Recognizing similar geological formation offshore Africa as offshore Brazil, majors and independents are lining up along the West African coast in anticipation of huge pre-salt oil and gas discoveries.

By By Guy Brown, Technical Correspondent for Petroleum Africa Magazine reprinted with the permission of PA publisher, from February 2012 issue

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   The success story of pre-salt discoveries offshore Brazil is leading international oil companies to search for similar geological formations elsewhere. With the continents of the Americas and Africa joined during the Cretaceous period 120 million years ago, particular attention is focused on the coast of West Africa, which has common geological ancestry with Brazil’s Santos Basin.

   The Campos Basin and Blocks 20 and 21 in the Kwanza Basin, Angola for instance, existed in the same depositional basin and were only 50-100 miles apart during the Cretaceous period. Analysis by Cobalt International Energy (Cobalt) confirms that the Campos and Kwanza Basins share similar pre-salt histories and characteristics.

   One of those characteristics is that the pre-salt layer is found at a great depth. Petrobras estimates that oil and natural gas lie below a 2,000-meter deep layer of salt, itself below an approximately 2,000-meter deep layer of rock under 2,000-3,000 meters of the Atlantic. Drilling and extracting pre-salt oil and gas is accordingly expensive, with a ballpark figure for a well that can exceed $150 million - although Petrobas pegs the average well at $100 million. Pre-salt oil is however typically of good quality.

   The potential jump in reserves for African countries lying along the Atlantic continental shelf is huge. According to the Brazilian oil regulator Agencia Nacional do Petroleo, Gas Natural e Biocombustiveis (ANP), the pre-salt findings on the Brazilian continental shelf indicate reserves of over 50 billion barrels of oil. That is nearly quadruple the country’s previously established reserves of around 14 billion barrels. Bloomberg on January 19 reported on a university study by former Petroleo Brasileiro SA geologist Hernani Chaves, a professor at the Rio de Janeiro State University, that estimates Brazil’s pre-salt deposits to be even greater - at least 123 billion barrels.

   It follows that all the countries along the West African coast, especially Angola, Republic of Congo, Democratic Republic of the Congo, and Gabon, are pursuing pre-salt oil and gas, and Namibia is touted as a further huge prospect.

Angola

   Angola is furthest along in realizing pre-salt gains. Recent advances in tectonic reconstruction qualify parallels between Angola and the pre-salt Santos and Campos areas of Brazil. Petroleum Geo-Services (PGS) has indicated it will use its extensive MultiClient library on both sides of the Atlantic to take a closer look at these links.

   Angola had a pre-salt licensing round last year, which resulted in awards announced in December 2011 to companies including Statoil, Total, BP, ConocoPhillips, Repsol, Petrobras, ENI, and Cobalt [see Box: Angola’s Pre-Salt Players].

   Cobalt Energy International is drilling offshore Angola, with three blocks and a 40% working interest in each block. National oil company of Angola, Sociedade Nacional de Combust veis de Angola-Empresa Publica (Sonangol), approved the company’s drilling plans for its operated offshore Block 21 in May 2011 - for the Cameia-1and Bicuar-1 pre-salt exploratory wells.

   Block 21 is located in the deepwater offshore south-central Kwanza Basin, some 200 km southwest of Luanda. The water depth in the block is 300 to 1,600 meters.

   Cameia-1 was completed and represented Cobalt’s first pre-salt discovery offshore West Africa. In its January investor’s presentation this year, Cobalt reported:
A significant oil column;
High quality volatile oil recovered through Modular Formation Dynamics Testers (MDTs);
Net pay estimates better than expected;
No oil/water contact; and
High quality carbonate reservoir.

   Reflecting the challenges in pursuing pre-salt plays, Cobalt also reported that it experienced mechanical difficulty in setting the liner hanger, and a production test will be completed once mechanical issues have been resolved.

Surge in 3D Seismic Activity

   3D seismic is a critical tool in exploring pre-salt potential. TGS-NOPEC Geophysical Co. (TGS) announced in January that it reached final agreement with Sonangol to commence acquisition of a 3D multi-client survey covering nearly 12,500 sq km offshore Angola. The survey will initially commence over Blocks 35, 36 and 37 with acquisition scheduled to be complete during Q3 2012.
“Entry into this market is consistent with our plans for strategic growth. TGS’ commitment to expanding multi-client data in the offshore areas of West Africa has extended over 10 years and we are excited to have the opportunity to now add 3D data in offshore Angola to the TGS data library”, - commented Rod Starr, senior VP Africa, Middle East, and Asia Pacific for TGS.

   TGS will process the 3D seismic data in both time and depth using its sub-salt capability developed in similar basins. Preliminary products will be available to participating companies in Q4 2012 with a final processed product expected by Q4 2013. The survey is supported by industry funding.

   PGS is also shooting seismic offshore Angola. The company announced in the beginning of this year that its vessel Ramform Valiant started the acquisition of over 26,000 sq km of GeoStreamer¨ data on five blocks in Angola’s Kwanza/Benguela Basins. The survey was for a group of oil firms who recently signed agreements for the five blocks.

   BP, Total, and Statoil have been made operators of Blocks 24, 25, 38, 39, and 40 with Sonangol as a partner on the blocks. All four oil companies have committed to funding the survey.

   In February, the vessel PGS Apollo joined the Ramform Valiant. The acquisition will be continuing with both vessels until Q4 2012.

   PGS teams started processing data in March, utilizing the latest depth imaging technology and building on their experience of illuminating pre-salt targets in Angola. Together, the two vessels will operate 20 months on this project.

Republic of Congo

   Republic of Congo (RoC) is also looking at pre-salt options. London-based oil and gas exploration and production company SOCO International reported in December 2011 that the Makouala Marine 1 (MKM-1) exploration well spudded on November 19. MKM-1 is in the Marine XIV block, located in the Congo Basin, offshore RoC. The well encountered hydrocarbons in the Tchala, and in the Upper and Lower Sendji formation horizons.

   The MKM-1 well targeted the post-salt Sendji formation reservoir within a four-way dip closed structure. The well encountered hydrocarbons in both the primary and secondary reservoir targets. However, analysis of the wireline logs indicated that the reservoir sands at the location were not as well developed as predicted and there was insufficient overall pay thickness for commercial flow rates. The well will be plugged and abandoned.

   The rig will now be released and drilling of the contingent third well in the program will be deferred in order to incorporate the well results into the interpretation of the remaining prospects.

   Partners on the block are Soco International with a 29% stake and operatorship, Lundin Petroleum with 18.75%, Raffia Oil SARL holds 18.75%, state-run SNPC has 15%, Africa Oil & Gas Corp. a 10% stake, while PetroVietnam holds the remaining 8.5% stake.

Democratic Republic of Congo

   In the Democratic Republic of Congo (DRC), Houston-based EnerGulf Resources is exploring pre-salt potential in the Lotshi block located offshore DRC. The Lotshi block covers approximately 500 sq km of the Les Zones du Bassin C™tier in the onshore coastal salt basin of western DRC. EnerGulf is the operator of the project and has a 90% interest and DRC state oil company Cohydro holds a 10% carried interest.

   According to a prospective resource report by consulting firm DeGolyer and MacNaughton, the area has a mean estimate of 313.2 million barrels, across seven prospects and four independent plays. The seismic program was completed in 2010, and EnerGulf has said that the block is on trend with the DRC M’Boundi giant field and situated in a similar geological setting.

   In October 2011, EnerGulf announced it will continue with plans for a mid-2012 drill program on the Lotshi block. It is also commencing construction of a school and health clinic on the block as required by the community improvements provision of the PSC. EnerGulf said it also continues to consider negotiations regarding a farm-in with qualified industry co-venturers for the Lotshi block.
Chairman/CEO Jeff Greenblum commented: “We are excited to be in the exclusive club of the West African hydrocarbon elephant hunt. We are on trend with the West Africa/Brazil major hydrocarbon producing play types. EnerGulf’s leadership has recast Block 1711 as a premier exploration opportunity and we are also pleased to increase our interest in Block 1711 and remain as operator until a qualified deep offshore operator joins us. We are also looking forward to drilling our world class potential Lotshi Block in the DRC in mid-2012.”

Gabon

   International companies are also lining up in Gabon. Royal Dutch Shell, Petrobras, Repsol, and Cobalt have all shown interest in the country, while Harvest Natural Resources (Harvest) has announced discovery in its Dussafu PSC. Harvest operates the Dussafu PSC, holding a 66.667% interest. Panoro Energy Group holds the balance with 33.33%.

   Harvest provided an update on its drilling operations in the Dussafu Ruche Marin-1 (DRM-1) well in July 2011, announcing an oil discovery in June in the pre-salt Gamba reservoir with plans to deepen the well to test Middle and Lower Dentale exploration potential and sidetrack to appraise the extent of the Gamba oil discovery.

   Subsequently the DRM-1 well was deepened to reach a true vertical depth subsea (TVDSS) of 11,355 feet to test the prospectivity of the Middle and Lower Dentale formations. Analysis indicated that Harvest has discovered a second oil accumulation with approximately 35 ft of oil pay within the secondary objective of the Middle Dentale formation.

   The Gamba discovery has been appraised by drilling a sidetrack well (DRM-1ST1) 0.75 miles to the southwest to test the lateral extent and structural elevation of the Gamba reservoir. The sidetrack well was drilled to a total depth in the Upper Dentale of 11,562 ft, (9,428 ft TVDSS) and found 19 ft of oil pay in the Gamba reservoir.

   In August 2011, Harvest announced that a Ruche sidetrack well encountered oil 1.2 km to the southwest of DRM-1. And Panoro Energy announced a further discovery in a second sidetrack well drilled 890 meters northwest of DRM-1.
According to Panoro, initial indications are that the oil in place volume for the Gamba reservoir is around 30-40 million barrels, with estimated recoverable volumes of 6-15 million barrels. “Panoro is encouraged by the Ruche Marine oil discovery in Gabon. We now plan to evaluate potential development concepts for Ruche Marine which, if encouraging, may lead to a commercial declaration as early as 2012]. Furthermore, the discovery confirms our view of the high exploration potential of the Dussafu block and allows us to refine and upgrade our prospect inventory in preparation for further exploratory drilling,” said CEO Kjetil Solbraekke.

Petrobas & Ophir Energy

   Petrobras signed an agreement in June 2011 to acquire 50% of the rights of Ophir Energy (Ophir) blocks of Ntsina Marin and Mbeli Marin, located in the Coastal Basin, offshore the northern region of Gabon. Ophir remains operator of the two blocks. According to PreSalt.com, the acquisition of the blocks is aligned with PetrobrasÕ 2020 Strategic Plan, which aims to contribute to the discovery and appropriation of reserves in Brazil and abroad, maintaining the reserve/production ratio above 15 years, and to intensify the assessment of the exploratory potential, particularly of the pre-salt section along the Atlantic Basins.

   The Ntsina Marin and Mbeli Marin blocks cover an area of 6,683 sq km, with water depths ranging from shallow to 2,400 meters. On January 3, Ophir announced that the PGS Apollo seismic vessel commenced mobilization from Port Gentil on December 26. The 2,100 sq km 3D seismic program is expected to take 42 days to complete, and is specifically designed to mature pre-salt targets for drilling in late 2012.

   Elsewhere in Gabon, Cobalt has a pre-salt prospect inventory in the Rabi-Kounga field (940 MMBOE) and Maruba #2 (1982), with a pre-salt oil discovery in Maruba 2. The company acquired 6,000 sq km of 3D seismic in 2010, and says 3D processing continues to confirm the presence of pre-salt structures. Total Gabon and Cobalt anticipate drilling an initial pre-salt well in late 2012 or early 2013.

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