Oil explorers to invest $3M in Angola deepwater wells

Wood Mackenzie Ltd.

BP Plc, ConocoPhillips and Statoil ASA are among oil explorers investing at least $3 billion in wells off Angola next year in the country’s biggest deepwater drilling campaign, Wood Mackenzie Ltd. said.

Wood Mackenzie Analyst David Thomson said that the companies will drill 20 wells beneath a layer of salt about 3 miles (5 kilometers) under the seabed at a cost of about $150 million each, and that shifting rigs from the Gulf of Mexico could add a further $50 million per well.

The drilling will test the industry’s Atlantic mirror theory that there may be huge deposits of oil deep beneath the sea off West Africa similar to those across the ocean in Brazil, where some of the biggest finds of the last decade have been made. Angola hopes it can tap offshore reserves to help it surpass Nigeria and become Africa’s biggest oil producer.

Thomson said that Angola is considered to have Africa’s biggest pre-salt potential, and that exploration looks set to deliver big oil. “Angola wants to increase output from 1.78 million barrels a day in July to more than 2 million barrels a day in 2017, a target that looks eminently achievable,” he said.

Petroleo Brasileiro SA, Houston-based Vaalco Energy Inc., Repsol SA, Eni SpA and Total SA are among companies slated to drill. Most have commitments to produce seismic imaging and to drill two wells by 2016.

Maersk Oil Angola SA has identified five drilling targets across Blocks 8 and 23, with one to be drilled this year and more in 2014. The explorer may sell equity in the blocks, where it currently owns 50 percent of each. The company made Angola’s first pre-salt discovery in the Azul field in Block 23 in 2011 and plans to appraise the find once a rig has been hired, Thomson said. He estimated that the Azul field holds 150 million barrels.

Thomson said that Cobalt International Energy Co. may drill two of three prospects in Block 20 and 21, and that the Block 21 Cameia field discovered by Cobalt last year may produce 150 million barrels in the first stage in 2017 with 100,000 barrel a day capacity.

Petrobras is expected to drill a follow-up well to Ogonga in Block 26 next year, Thomson said. He added that the initial well took eight months because hard, mineral-rich rock below the salt layer required frequent drill bit replacements.

The fields in Angola are estimated to be smaller than those found in Brazil, with the possible exception of Lontra. Most are likely to hold hundreds of millions of barrels rather than the billions found across the ocean, Thomson said.

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