Unocal discovers oil

Unocal discovers oil

SUGAR LAND, United States (Reuter): Unocal Corp said Monday it drilled seven successful oil and gas exploration wells in the Mahakam Delta area offshore East Kalimantan in Indonesia.

"Based on the drilling to date, we currently estimate that these discoveries contain more than 40 million barrels of oil equivalent of recoverable oil and gas with a finding cost of about 50 cents per barrel," Unocal said.

Four of the wells came in the first phase of Unocal's Saturation-Exploration (S-X) program, which the company called "a revolutionary way of doing business in Indonesia.

"It maximizes the drilling dollars and reduces up-front costs by using a keep it simple,' optimized risk approach," it said.

The S-X program employs slim-hole wellbores and a specially modified rig to drill the wells. The company uses wireline formation testing to obtain necessary reservoir information, thus avoiding the traditional, high-cost test methods.

"A typical S-X well costs about US$1 million and takes under 10 days to complete," Unocal said. "This compares with $4.3 million and more than 50 days for a conventional exploration well."

The company expects to drill 20 S-X wells this year, the first phase of a three-year, 60-well program. So far, Unocal has completed 12 wells in the S-X program, yielding four discoveries.