CAPITAL: Algiers

MONETARY UNIT: Dinar

REFINING CAPACITY: 482,760 b/cd

OIL PRODUCTION: 850,000 b/d

OIL RESERVES: 9.2 billion bbl

GAS RESERVES: 130.6 tcf

Political unrest clouded Algerian petroleum operations in 1997.

The country began opening its downstream operations to private local and foreign companies. Parliament agreed to lift the state refining monopoly, restructure the petrochemical and fertilizer industries, encourage oil exploration partnerships, and develop Hassi Messaoud gas reserves.

France`s Total pointed out that it was the only oil company to have maintained a continuous presence in Algeria since petroleum production began. That presence dates to 1947.

Upstream developments

Algeria`s crude oil production capacity was likely to jump by at least 25% from 1995 to 1-1.5 million b/d by 2000, the International Energy Agency predicted. NGL production capacity was to climb 27% to 655,000 b/d. Gas output would probably grow 58% to 86 billion cu m/year.

Sonatrach said exploration was moving toward the southern part of the country, to the Ghadames and Illizi basins in the southeast and the In Salah area in the southwest. It said Ghadames production was climbing toward 250,000 b/d of crude by 2000 and 500,000 b/d in 2005.

Nearly 50 companies were active in Algerian E&P operations in 1997. Baker Hughes Inc. listed 27-31 land rigs running in the country for most of the year.

Anadarko Petroleum Corp. added 500 million bbl of oil and condensate since 1995, bringing its Sahara reserves to a gross 2 billion bbl. Anadarko drilled 10 wells, including six discoveries, in the first 9 months of 1997.

Since drilling its first discovery well in 1993, Anadarko had discovered 10 oil fields, three of which were under development planning. Hassi Berkine South field was to start up in early 1998 at an initial 60,000 b/d. Ultimate output was to be 150,000-200,000 b/d.

Development was also under way at Anadarko`s Hassi Berkine North and Qoubba, formerly Berkine East, fields. All three fields are on Block 404. Output from the three fields was expected to rise to more than 300,000 b/d in 2000.

BHP Petroleum and Anadarko drilled two discoveries in 1997, including a Triassic sandstone pool discovery on Ghadames Block 402a. It flowed 5,526 b/d of 43° gravity oil. BHP also operates Block 401a just northeast of Block 402a.

Some of the Algerian discoveries ranked among the largest recent finds in the world. One delineation well drilled by Burlington Resources-LL&E-Talisman-Sonatrach flowed 22,700 b/d of oil and 58 MMcfd of gas from two Triassic TAGI intervals and a newly discovered Devonian reservoir. Almost half the flow came from Devonian. The well is 13/4 miles south-southwest of the MLN field discovery well.

All of the fields are southwest of and on trend with El Borma oil field in Tunisia and Algeria.

In the northern Ghadames basin, ARCO 75% and Turkey`s TPAO 25% gauged a combined 1,539 b/d of oil from two zones at the Semhari 1 well 75 miles northeast of supergiant Hassi Messaoud oil field. It was the third in a five-wildcat program on the Hassi Bir Rekaiz and Guerrara Blocks.

Discoveries in which France`s Total, with its long history in Algeria, was involved included Hassi Messaoud oil and gas field and Hassi R`Mel gas fields in the Triassic basin in 1956 and Mereksen oil field in the Illizi basin in 1973.

GAS liquids exploitation began in 1996 at Tin Fouye Tabankort gas/condensate field, discovered in 1962 in the Illizi basin near the Libyan border. The field had been producing from an oil ring since 1968 and unprocessed gas since around the same time.

A dual-train plant to separate LPG and condensates was to start up in 1999. Capacity is 18 million cu m/day of gas, 900,000 metric ton/year of condensate, and 700,000 tons/year of LPG. Tin Fouye Tabankort field holds reserves estimated at 114 billion cu m of gas, 13 million tons of condensate, and 12 million tons of LPG. Interests are Total and Sonatrach each 35% and Repsol 30%.

Mereksen field (Sonatrach 51%, Total 49%) started producing in 1975. Its 1995 output was 400,000 tons/year.

Petro-Canada Ltd. reported a gas/condensate discovery on the Tamadanet prospect on the Illizi basin Tinrhert Block. The 1997 discovery well, Hassi Imoulaye-1 (HIM-1), was the company`s third well at Tamadanet and second discovery. The HIM-1 well cut 246 ft of gas/condensate pay in four Siluro-Devonian zones. It flowed a combined 55 MMcfd of gas and 4,650 b/d of condensate on three drillstem tests. On a fourth test, flows were 8.8 MMcfd of gas, 490 b/d of condensate, and 1,965 b/d of water.

Petro-Canada started up Tamadanet field in May 1996 at 12,500 b/d. Development and production the balance of that year led it to cut proved and probable reserves to 20 million bbl from 43 million initially.

Repsol planned a $57 million project to start production in 1998 from Tifernine field in the Illizi basin 375 miles southeast of Hassi Messaoud oil field. It planned to drill five to seven wells to produce 12,500 b/d of 37° gravity oil on electric submersible pumps from F6 Devonian inferior C-1 formation at 930 m TVD.

BHP Petroleum acquired 100% interest in a production sharing contract on the 9,000 sq km Boukhechba Permit in the Illizi basin. This area is just west of Tin Fouye Tabankort oil and gas field and south of Rhourde Nouss and Rhourde El Hamra oil and gas fields. The work program is two wells and 500 km of new seismic and reprocessing 500 km. Drilling was not expected until 1999.

Agip and Sonatrach agreed to jointly explore 2,300 sq km Area 213 in the Illizi basin about 400 km south of Hassi Messaoud. It is close to transportation and processing infrastructure.

ARCO was in early stages of a $1.3 billion enhanced oil recovery project in the Triassic basin at Rhourde El Baguel field, one of Algeria`s largest fields. The company will use infill wells and its miscible gas injection process to recover an incremental volume of more than 500 million bbl of oil equivalent, eventually boosting output to 125,000 b/d from 25,000 b/d.

BP Exploration Operating Co. Ltd. started acquiring 2,000 line-km of 2D and 750 sq km of 3D data to support drilling of nine wells in 2 years in an area known as District 3 northwest of In Salah in the Sahara 1,200 km south of Algiers. Sonatrach made 40 gas discoveries in areas around In Salah in the 1950s but suspended development because it found supergiant Hassi R`Mel field in 1956. BP`s license area is reckoned to have seven finds that hold 5 tcf of gas plus a number of prospects with total potential of a similar volume. Overall project spending was pegged at $3.5 billion.

Sonatrach and BP at yearend hired JGC/Kellogg, a joint venture of Japanese firm JGC Corp. and Houston`s M.W. Kellogg Co., to perform conceptual engineering for the In Salah gas development.

Algeria was also paying attention to some of its more remote, less-drilled basins. Sonatrach let a 2 year, $4.1 million contract to Gustavson Associates, Boulder, Colo., for geological studies of the oil and gas potential of the Bechar, Ahnet, and Timimoun basins.

Processing activity

Algeria inaugurated an LPG plant with a capacity of 40 million cu m/day of gas at Hassi Messaoud. It is part of a network being developed to double Algeria`s LPG exports by 2000.

Transportation

Gazoduc Maghreb Europe began deliveries to Cordoba, Spain, of gas from Algerian gas and oil fields in early 1997 through Phase 1 of its $2.4 billion, 858 mile, 48 in. pipeline from Hassi R`Mel via northern Morocco and the Gibraltar Straits. An extension from Cordoba to the Portugal border started up shortly thereafter. The pipe consumed more than 600,000 metric tons of high strength steel.

Capacity of the system was to be hiked gradually to 19 billion cu m/year from the initial 8 billion.

Algeria also wanted to hike capacity of the Trans-Med pipeline to Europe via Italy to 24-30 billion cu m/year from 7 billion.

Sonatrach had a project to build a 30 in. domestic pipeline to serve Ghadames/Illizi basin fields being developed by Anadarko and others.

Algeria was one of eight nations that exported LNG, a U.S. Energy Information Administration study noted in 1997. It had 19% of the export market in 1996, competing with Russia and Norway as major suppliers of gas to Europe.