Phillips plans extra well in Timor Gap oil field
Phillips plans extra well in Timor Gap oil field
DARWIN, Australia (Bloomberg): Phillips Petroleum Co. said it
plans to drill an extra well to extend the life of the Elang-
Kakatua oil fields in the Timor Sea after original estimates of
reserves fell by half to 15.7 million barrels.
The extra well, to be drilled in mid-January, could extend the
life of the field into 2001. Elang-Kakatua began producing in
July 1998, at a development cost of US$105 million.
Phillips partners, including Petroz NL and Santos Ltd., plan
to re-enter one of the wells and drill a "side-track" well which
tests a section of reservoir that isn't connected to the
producing areas.
"If this is successful, it will extend the life of the field
well into 2001,'' said Jim Godlove, Phillips' area manager for
Darwin, the Northern Territory capital 500 kilometers southeast
of the offshore fields. Godlove said Elang-Kakatua will become
uneconomic by the end of next year if no more oil is found.
Santos shares rose as much as 2 cents, or 0.5 percent, to
A$4.13. Petroz shares fell as much as 0.5 cents, or 1.6 percent,
to 31.5 Australian cents.
Elang-Kakatua is the first oil development in the Zone of
Cooperation in the Timor Gap between Australia and East Timor. A
treaty that governs oil production in the coffin-shaped zone was
agreed 10 years ago between Australia and Indonesia. Now that
East Timor is independent, the new country will become
Australia's partner.
As recently as February, Petroz was saying the proven and
probably reserves of the fields were 29 million barrels, with
potential for a further 25 million barrels.
Later in the year, though, output started declining rapidly,
and in August Petroz warned shareholders the reserves would be
reduced.
The new well would tap further deposits, indicated on seismic
surveys of the area, which aren't directly connected with the oil
now being pumped.
The field was developed by BHP Petroleum, a unit of Broken
Hill Proprietary Co., which early this year sold its 42.4 percent
stake to Phillips. Santos Ltd., the third-largest Australian-
based oil and gas company, and Inpex Sahul Ltd. Each own just
over 21 percent and Australian oil company Petroz NL holds 15
percent.