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.