What's new in exploration

	Vol. 225 No. 6
PERRY A. FISCHER, EDITOR

Guiding gas exploration. Although it doesn't sound as exciting as thermogenic gas, finding and exploiting microbial gas deposits, which account for as much as 20% of the world's natural gas resources, is becoming increasingly important. Basin-centered gas deposits are still likely to be thermogenic, but in basins carved out by glaciers, new research suggests that freshwater from melting ice sheets thousands of years ago set the stage for production of natural gas along basin margins.

Researchers at the University of Michigan and Amherst College have found that chemical signatures in well water pinpoint places where biogenic gas is most likely to be found. Their most recent work is described in a paper published in the May/June issue of the Geological Society of America Bulletin. A U-M doctoral student, Jennifer McIntosh, was lead author of the paper. “The fluids in the Michigan basin are some of the most saline fluids in the world,” McIntosh said. “When freshwater penetrated into these basin margins, it suppressed the salinity and created an environment that was conducive to methanogenesis within organic-rich black shales.”

“We see large decreases in the calcium-to-magnesium and calcium-to-strontium ratios in high bicarbonate waters associated with microbial gas deposits, indicating methanogenesis caused calcite to precipitate within the Antrim Shale,” McIntosh said. This implies that by using the elemental chemistry of these shale wells, evidence of methanogenesis can show companies where to explore for microbial gas. “It's a relatively inexpensive analytical tool, compared to other methods that have been used, such as stable isotope chemistry,” She added.

The method has potential in many other areas, such as the Illinois basin, as well as other parts of the world that have similar black shales. “There are organic-rich deposits in many basins throughout the world, and a lot of these have been covered by continental ice sheets, so these may represent areas where freshwater has penetrated into basins and microbial gas has been generated.” McIntosh compiled water chemistry data from basins in Africa, Asia and North America and found similar water chemistry in other areas with microbial gas deposits.

Some interesting survey results. A recent survey by KPMG LLP, the audit, tax and advisory firm, shows that oil and gas executives are optimistic with respect to their companies' US upstream capital spending. The survey, which polled 126 global corporate and technical executives in March and April, found that 20% of the respondents stated that their FY 2004 upstream capital spending (excluding acquisitions) in the US market would increase 10% or more, with 12% saying it would increase by less than 10%. Conversely, 13% expect their spending to decrease by less than 10%, while 7% cited that it would fall by 10% or more. In addition, 43% believe that capital spending will remain “about the same.”

As for politics, 56% are optimistic that a comprehensive domestic energy policy will be reached within the next two to five years, while one-third of the respondents believe such a policy is unlikely to happen. When asked if federal acreage now off-limits to producers were to become available for leasing and permitting, 35% said they would increase their US spending by 10 – 30%. However, respondents cited two major constraints to US oilfield activity in 2004: the lack of high-quality prospects and not enough qualified people to handle available opportunities.

On mergers and acquisitions, the majority expect mergers and acquisitions in North America to increase. Fifty-four percent expect consolidation among small independents, while 52% expect large and super-large independents to acquire smaller companies. It is interesting that, in terms of price versus consumption, only 24% said that today's current natural gas prices are having a “significantly negative effect” on industrial production; 60% say high prices are having a “modestly negative” effect on consumer spending; and 59% indicated that high prices are having a “modestly negative” effect on inflation.

Noteworthy discoveries. The astute reader may have noticed that, since the debacles of Enron's house of cards and Shell's reserves, as well as the passage of Sarbanes-Oxley, reserve estimates are becoming increasingly rare. While there is no hard data to support that case, this editor has noticed that it has become more difficult to high-grade or otherwise state the significance of new field discoveries. That being said, here are some finds that may fit the subtitle given above.

   Another Angolan deepwater discovery. Total Exploration has another deepwater discovery offshore Angola. The Canela-1 well marks the second deepwater discovery on Block 32. The new field is located 88 mi off the Angolan coast in 5,053 ft (1,540 m) of water. The well was drilled to 11,975-ft TD (3,650-m) and tested 6,800 bpd of light oil. Canela-1 is located 9 mi southeast of the previously announced Gindungo discovery, and 12 mi west of Lirio field in Block 17. Plans call for drilling the next well on Block 32 within a few months. Sonangol is the concessionaire of Block 32. Total is the operator with a 30% interest associated with Marathon Oil (30%), Sonangol P&P (20%), Esso Angola (Block 32) Ltd. (15%) and Petrogal (5%).

   Central Syria saw a good discovery by Croatian oil company INA Naftaplin, which said it has discovered a gas field with estimated reserves of 500 Bcf central Syria. INA said the field, named Jihar, was the third discovered by the company in Syria since 2002, but declined to give an estimate of its daily output capacity. Syria's gas reserves are estimated at 8,500 Bcf.

   A deepwater Gulf of Mexico sidetrack has confirmed and further delineated the initial April Ticonderoga field discovery. Kerr-McGee's discovery well encountered more than 250 ft of net, high-quality hydrocarbon pay, primarily oil, in three zones. The company estimates that Ticonderoga, located on Green Canyon Block 768 in about 5,250 ft of water, offers potential resources of 30 – 50 million boe. Operated by Kerr-McGee with 50% interest, Ticonderoga could be developed as a subsea tieback to the company's 100%-owned Constitution truss spar facility that will be located 5 mi to the north. Noble Energy owns the remaining 50% interest. The Ticonderoga well was drilled to a 13,556-ft MD. A sidetrack confirmed the down-dip limit of the reservoir. The company is analyzing the reservoir to carryout additional appraisal work this year.