HDR hardman resources limited

the 2003 drilling program

  1. 187 Posts.

    Found an interesting article on HDR on the link below. Some interesting points coming out:

    - The 2003 drilling program may test "a suspected oil column up-dip of Chinguetti-1". I wonder what this is? I thought Chinguetti appraisal is over?

    - "Nick Cameron, Fusion's director of global exploration services, estimated potential reserves discovered to date [i.e Chinguetti and Banda] at 400 MMbbl." What does this mean?? Optimistically, Chinguetti and Banda combined should only be about 250 mmbbl?

    Can anyone shed some light on this??

    As to price action of HDR, the huge day last week when 2.7 million shares went through and finished the day at 54c looked very positive. If HDR can stay above 49.5c for the rest of the week, I think we will have seen the lows for HDR for this year. Therefore, barring any disasterous news (like Chinguetti project being canned or civil unrest in Mauritania), then hold on for the ride for the rest of the year. Assuming Chinguetti gets the go-ahead, the Leafcutter well will be almost thrown in for free. I estimate that if there are 15mbbl of recoverable oil in Leafcutter, that would be worth about 15c to HDR. If it's a duster, there's plenty of action are left ahead to soothe shareholders. So risk-reward wise, I think HDR is beginning to look [very, dare I say] attractive.

    http://os.pennnet.com/Articles/Article_Display.cfm?Section=Articles&SubSection=CurrentIssue&ARTICLE_ID=173911&VERSION_NUM=1

    Smaller independents leading exploration of neglected northwest plays

    Mauritania focus of emerging province

    Jeremy Beckman
    Editor, Europe

    Australia is leading the chase for north-west Africa's untapped deepwater resources. Woodside Energy is eyeing fast-track development of its recent Chinguetti discoveries off Mauritania. Farther south, Perth-based Fusion Oil & Gas has designs on untested offshore plays from Gambia to Guinea-Bissau.

    Fellow Perth company Hardman Resources coaxed Woodside into Mauritania. During the 1970s and '80s, western companies carried out intermittent exploration, but this ceased when Mauritania aligned with Iraq over the 1991 Gulf War. A period of rehabilitation into the global community followed. Later on, when Mauritania decided to open its offshore acreage, Hardman was the first to respond, signing up for several licenses. Due to its limited resources, partners had to be brought in, the main one being Woodside, which today operates blocks 2-6.

    Coincidentally, Woodside had been looking to diversify overseas. According to International Exploration Manager Peter Grant, it had become too reliant on production from Australia's North West Shelf LNG project and the Wanaea/Cossack oil fields – the latter in any case were in decline. However, the company's options were limited, as Grant explained at a recent conference in London.

    "We couldn't go into countries where we would have to sign exploration bonuses. Also, we had to measure what was on offer against Australia's own fiscal system, which was pretty competitive," Grant explained.

    Northwest Africa was the chosen launch-pad. Woodside secured production via a stake in BHP's Ohanet LPG project in eastern Algeria and a higher-risk exploration portfolio via the farm-in to Hardman's blocks. Here, it operates production sharing contracts (PSCs) A and B (blocks 3, 4, and 5) off the central-southern coastline, with partners Agip, Fusion Oil & Gas, Hardman, and ROC.

    This acreage covers an area of 18,570 sq km, extending from the nearshore out to 2,000 m water depth. The early focus of exploration was in 790 m of water, where Chinguetti was discovered. Woodside also operates block 2 to the south and block 6 to the north, in association with Hardman and ROC. Energy Africa is an additional partner in block 2, while Petronas recently farmed into block 6. Nearby, Woodside has acquired interests off Senegal and the Canary Islands.

    Chinguetti drilling history

    During 1998-2002, the partners acquired 10,400 km of 2D, and 6,200 sq km of 3D, seismic across PSCs A and B. This proved costly, but necessary, Grant said.

    "It's the only way to reduce the risk of dry holes in this region."

    The datasets revealed a wide range of potential drilling targets, some of which were quickly pursued.

    Chinguetti-1, the first well the Scarabeo 7 semisubmersible drilled in 2001, targeted a faulted anticlinal feature overlying a salt dome in PSC B. The well intersected a 115-m gross oil column in Tertiary sandstones. Later that year, a second well testing a Cretaceous prospect, Courbine, found sub-commercial gas.

    Following analysis of both wells, further 3D seismic was acquired, and field development planning began. In July 2002, the drillship Deepwater Discovery was engaged for a step-out appraisal well, Chinguetti 4-2, in an up-thrown block on Chinguetti's northern flank. This confirmed the first well's promise, encountering a 90-m gross hydrocarbon column from several oil-bearing sandstones. A subsequent test produced 1,560 b/d of oil on a choke setting restrained by sand inflow.

    "The quality of the oil was tremendous," Grant said.

    The partners then decided to test another prospect, Banda, in shallower water (300 m) to the east in PSC A, close to the boundary with PSC B. This structure lay within the same Tertiary reservoir fairway, but further up-slope. The well, designated Chinguetti 4-3 in accordance with the authorities' wishes, provided a second discovery, with a 110-m gross gas column overlying a 23-m gross oil column.

    Subsequently, the drillship returned west for a second appraisal well, Chinguetti 4-4, in the southern downthrown sector of the Chinguetti accumulation, and 1.5 km northwest of the original discovery. This too was successful, and the oil/water contact turned out to be 69 m deeper than anticipated.

    "We don't know if there is a gas cap," Grant said, "but at least we know now where the oil/water contact is on both sides of the field, with a 280-m gross oil column in the downthrown block. Channel sands in all the wells tested to date have exhibited 25-40% porosities, which is also very good."

    Later, the run of successes was broken when the drillship moved 63 mi north for a largely dry well on the Thon structure in Area C of block 6, in 660 m of water. This tested a new play type in Maastrichtian channel sands.

    This year's drilling campaign has still to be firmed up, but the consortium is thought to be contemplating up to five wells on PSCs A and B. A suspected oil column up-dip of Chinguetti-1 requires testing. According to Peter Dolan, chairman of partner Fusion, Banda too will have to be appraised, and there may also be further exploratory drilling – possibly of targets in underlying Cretaceous intervals.

    "There are a lot of different play types," Dolan says, "and one needs to understand them to make better judgments about the area's ultimate potential. Also, there are regular acreage relinquishment obligations in Mauritania. We want to know as much about our acreage before being obliged to relinquish it.

    "We have two different sets of fiscal terms, shallow and deepwater. The latter is more benign. Banda's location probably overlaps these two sets of terms, so there may be complex negotiations prior to any development. There may have to be some sort of accommodation between the government and the joint venture partners."

    Nick Cameron, director of global exploration services, estimated potential reserves discovered to date at 400 MMbbl. Woodside Managing Director John Akehurst has been quoted as predicting a floating production-based scheme on Chinguetti producing 50,000-70,000 b/d from five wells. This could tie in Banda, or the latter could be developed with its own facilities.

    How any joint scheme would manage Banda's or future gas discoveries has yet to be resolved.

    "Gas is not our preferred outcome, as there is no immediate way of monetizing it," Dolan says. "However, a certain amount of gas in the petroleum system is good, as that produces energy. The gas-oil ratios we have found in the reservoirs to date have been very satisfactory. On the plus side, the gas within Banda is exactly where you'd want it, that is, 'at the top of the champagne bottle,' while everything downdip is probably oil."

    According to Grant, last year's campaign cost $60 million for four wells, with the drillship contracted at day rates of $350,000 to $400,000. Its power generation requirements outstripped those of the capital Nouakchott. In time, drilling costs will come down "through sheer experience," Dolan said. "It's a case of making sure you're more efficient when conducting engineering work – running casing, testing BOPs, installing wellheads, and so on."

    The consortium's biggest challenge is bringing in support infrastructure, Grant concluded. "Mauritania has no history in petroleum, no petroleum engineers, no regulations, so we're working closely with the government to speed up the process. On the good side, as they're starting from a clean sheet, they can also put in good regulations relating to offshore structures and pollution."

    Some exploration is also planned in the Dana Petroleum-operated block 7 to the north, where Hardman is a partner. Mauritania hopes to maintain the momentum through an ultra-deepwater licensing round. Ted Ellyard, Hardman's managing director, said, "There are so many channels, with an abundance of exploration prospects, as off Angola. But who would find these? We need discoveries by other groups, so that more companies can share the infrastructure investments."

    New exploration focus
    Hardman also drew Fusion to Mauritania, the initial attraction being the area's geophysical characteristics. Today it employs 12 staff, half of which are geologists and geophysicists, and according to Dolan, this expertise is primarily focused on exploration.

    Dolan formed the company with Managing Director Alan Stein while both were colleagues at a geoscience consultancy, Ikoda.

    "We became aware in the mid-1990s that West Africa was an area of increasing interest," Dolan said. "We both decided we wanted to get involved in an equity sense, although that's difficult to accomplish when you're a consultancy, so we formed Fusion as a new company."


 
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