Oil exploration update

[Willi]

Hong Kong firm gets third oil-exploration licence
published: Saturday | December 1, 2007


File
Energy consultant Dr. Raymond Wright says the first oil well is expected to be drilled in 2008.

John Myers Jr., Business Reporter

The search for oil is gaining momentum with a third licence, approved by Cabinet last week, awarded to a Hong Kong-based firm to conduct exploration activities in Jamaica's waters for oil and natural gas deposits.

Hong Kong's Proteam has been given the rights to explore four of the 20 designated off shore research blocks demarcated by the Petroleum Corporation of Jamaica (PCJ) and is expected to commence seismic surveys by February next year.

Proteam has contracted the services of Geophysical Service Incor-porated (GSI) to conduct seismic survey.

Two exploration licences spread over a total of eight blocks were previously awarded in 2005 by the Government to the Finder/Gippsland joint venture out of Australia, and Rainville Energy Ltd. out of Canada. The Finder/Gippsland joint venture was awarded the rights to explore five of that number and Rainville given the rights for the remaining three blocks.

A compensation agreement, which provides compensation for fisherfolk - whose activities within the island's most fertile breeding ground for fish off the south coast and where a major part of the exploration activities will be centred might be affected - was signed last week between representatives of Finder/Gippsland, Rainville, Proteam and the Jamaica Fisherman's Co-operative Union .

With the compensation agreement, an authority, comprising a claims investigator, a claims verification committee and a claims appeal tribunal will be put in place to adjudicate any claims that may arise for compensation for damage arising from activities associated with the search for oil.

The agreement was formulated as a measure to protect mainly the fisherfolk who derive earnings from fishing activities on and around the Pedro Banks, which is located within the exploration zone.

This is not the first time that Jamaica has set out to find oil. Eleven wells were drilled between 1955 and 1982. Ten of these showed yields of oil and natural gas.

Out of those exploration activities, three known active-gas seeps were located, one onshore oil seep and several other core holes, which showing evidence of the presence of oil were identified.

However, the results were not enough to attract any commercial interest.

Valuable fossils

But with major advances in exploration technologies and recent developments in the energy sector, the PCJ - the agency of government responsible for developing the country's petroleum resources, - is convinced that explorers will be able to unearth this valuable fossil and is attempting once again to re-ignite the interest of exploration companies.

The agency so far has been successful in attracting three, and hope to woo others.

PCJ consultant, Dr. Raymond Wright, says he is confident now more than in the past, that if exploration is concentrated in the cretaceous rocks or older limestone formations underwater, which are located in the deeper areas of Jamaica's offshore boundaries, then the prospects of finding oil would be greater.

"What we need to do is to first of all find some oil ... and then we will continue further to find out where the best reservoirs are or where the best drilling structures are," he said.

"It is quite possible and we hope that the oil and gas that has been found in the Jamaican offshore area has not dissipated and we can find a way to find it."

Most of the work done in the past, said Wright, a geologist, has been in what he referred to as "shallow carbonates" going to a depth of 10,000 feet where you have tertiary limestone or 'younger' limestone.

"What we need to do is to look at the more deep-seated rocks which are of an older age; and they are actually excellent source rocks," he said.

The former PCJ managing director said the largest of the three companies, Finder/Gippsland, has completed its seismic surveys and was now searching for an equity partner to commence drilling.

"The company that is most advanced is the Finder/Gippsland joint venture and during the course of 2008, I expect that they will have found an equity partner to drill a well. I am not sure where they will drill that well," Wright said.

multiclient survey

In the meantime, he said, the PCJ will also be doing a multiclient survey for the other blocks to establish whether there is interest in prospecting the remaining areas.

"If there is, we will consider putting them out to (tender) again to see if we could have some bids for them, informally or otherwise."

Although no commercial oil has been found yet, Jamaica has been deriving earnings from the exploration activities through training and acreage fees, which the exploration companies have to pay to the PCJ as a condition of their licence.

So far, Jamaica has earned approximately $22 million.

Each company is required to pay an acreage fee of US$4 per square kilometre that is explored.

john.myers@gleanerjm.com

Source: Financial Gleaner, Friday, November 30, 2007

[Assasin]

Massive deep-water oil find in Brazil challenges technology

By Jack Chang, McClatchy Newspapers Sat Dec 1, 6:00 AM ET


RIO DE JANEIRO, Brazil — This country, famed for its development of sugar-cane-produced ethanol, soon could become one of the world's great oil powers— if its state-controlled energy company, Petrobras , can tap a potentially massive deposit beneath the South Atlantic Ocean.
ADVERTISEMENT
if(window.yzq_d==null)window.yzq_d=new Object();window.yzq_d['RC.EWELEYrk-']='&U=13b1c897k%2fN%3dRC.EWELEYrk-%2fC%3d627951.11757257.12295638.1414694%2fD%3dLREC %2fB%3d5055976';
Experts believe the deposit, in the Tupi field 180 miles off the southeastern Brazilian coast, holds up to 8 billion barrels of light oil and natural gas. If confirmed, the deposit would be the largest petroleum find in seven years and would propel Brazil to the No. 12 position in oil reserves, after the United States and ahead of Canada and Mexico .
Analysts estimate that the deposit could be worth as much as $60 billion and predict that Brazil , which last year for the first time produced as much oil as it consumed,
could become a major oil exporter.
Yet the find will challenge Petrobras' reputation as one of the world's best at exploiting deep-sea oil deposits.
About 70 percent of Petrobras' oil production comes from deep-water wells, making it the world's biggest oil producer at such depths. But the Tupi deposit is deeper than Petrobras has ever drilled— under 7,000 feet of ocean water and more than 16,000 feet of rock, sand and salt, including a 1.2-mile-thick layer of rock-hard salt.
How to tap into the find has set off a technological race, spurred because the potential rewards of exploiting the deposit are so great— especially as the price of oil nears $100 a barrel.
"It's among the most complicated projects in the world in terms of deep water," said Caio Carvalhal , a Brazil -based research associate with the U.S. consulting firm Cambridge Energy Research Associates . "But Petrobras has proved in the past that it is up to the task."
Company officials have said that years of planning lie ahead, and experts estimate that the Tupi field won't start operating fully until 2013. Although the company announced the find last year, it just released estimates of its size in November. The company will have to drill more wells to better calculate the size of the deposit.
"This was the first time that we arrived at this depth, and the technology is expensive," said Guilherme Estrella , Petrobras' director of exploration and production. "The costs are elevated, but the quality of the oil brings robustness and viability to this investment."
The Tupi field is the latest landmark in a technological race to the bottom of the ocean that many say is the energy industry's future.
Already, about a third of world oil production is offshore, with as much as 15 percent coming from deep waters, said energy consultant David Llewelyn , who's worked extensively in Brazil . Some of the most promising offshore oil regions lie in the so-called Golden Triangle, made up of the Gulf of Mexico and the coasts of Brazil and western Africa .
In 2005, U.S.-based Chevron and its partners drilled the deepest offshore oil and gas well in history at 34,189 feet below sea level in the Gulf of Mexico , according to Transocean , the world's largest offshore drilling contractor, which completed the well. The deepest onshore well, at 37,016 feet, was completed earlier this year on Sakhalin Island , off the Russian coast, for ExxonMobil.
Last year, Chevron announced it had found one of the biggest oil deposits in the United States , as much as 15 billion barrels of petroleum, more than 28,000 feet below sea level in the Gulf of Mexico .
"This is where the industry has to go to make the big finds like this," said Thomas Marsh , the Houston -based vice president of the consulting group ODS-Petrodata, a world leader in offshore exploration analysis. "And a lot of money is being spent on getting the industry going where it needs to go."
Oil companies reach such ultra-deep deposits by lowering drill bits into the ocean floor through a system of pipes connected to a floating platform on the water's surface. The pipes and drills get smaller the farther into the ocean floor they penetrate. At maximum depth, they're only about 8 inches wide, which increases their chances of being damaged.
The dangers come with the intense water pressure and heat, which can damage even the hardiest of metal drills. Temperatures 30,000 feet below the ocean floor can reach 400 degrees Fahrenheit, hot enough to turn oil into natural gas.

The biggest technical challenge of the Tupi deposit is penetrating the solid salt layer, which can become a kind of gel that squeezes and resists the drill bit. The salt also can interfere with sound wave-based seismic imaging that engineers use to figure out what's below it.
The deposit's location far from the Brazilian coast also complicates the task of delivering an estimated 53 million cubic feet of natural gas daily to consumers in the project's pilot phase.
Because natural gas can't be stored, Petrobras might have to build an enormous gas pipeline that would stretch 180 miles to shore or install gas liquefaction facilities above the deposit to turn the natural gas into storable liquid.
Despite all the difficulties, Petrobras will rise to the challenge, said Marcio Rocha Mello , president of the Brazilian Association of Petroleum Geologists and a former head of the company's geosciences section.
Before confirming the Tupi find, Petrobras already had drilled 15 wells into the solid salt along Brazil's southeastern coast, mapping an undersea basin of oil and gas stretching about 500 miles long.
"We've already put a lot of training and resources into this," Rocha Mello said. "The technology involved is already fully understood. It's not going to be a problem."
Drilling the first well alone cost $240 million , and tapping the Tupi deposit will require investing at least $5 billion at the outset, Llewelyn said. Petrobras controls a 65 percent stake in the deposit, with British company BG Group and Portugal's Gal Energia controlling the rest.
Petrobras has made such investments pay off in the past largely through innovation. The company pioneered the use of floating platforms to drill wells and store oil and has come up with new ways to heat and transport extracted petroleum.
The company has tried such technology in more than two dozen countries, including in the United States , and shared its know-how with countries also looking at going deep. In the process, Petrobras has lowered its costs for finding new deposits.
And unlike state energy companies in Venezuela and Mexico , Petrobras is known as one of the best-run firms in the industry.
Innovation has come with risks, however, and even tragedy. In 2001, a Petrobras rig that was then the largest in the world caught fire and sank off the Rio de Janeiro coast, killing 11 people.
Despite such setbacks and the enormous investments required, the Tupi discovery guarantees that Petrobras will be exploring the ocean floor off the Brazilian coast for years to come. "With a find this size, the cost isn't really an issue," said energy consultant Llewellyn. "You really just have to do it."