With 44% of Africa's industrial output, South Africa should be a natural target for oil and gas supplies, but that movement still is in the building stages.
To the northwest, Shell Exploration & Production discovered the 2 Tcf to 200 Tcf Kudu field offshore southern Namibia. It would like to get that gas to shore and move it into South Africa.
To the northeast, Sasol discovered gas at its Pande/Temane complex in Mozambique and will use that as part of a US $1.2 billion project that includes a 560-mile (895-km) pipeline. It also has transmission and distribution rights for 10 years from the date of first production.
South Africa has its own production. State oil company Soekor E&P Pty. is the established player here. It started operating in 1965 and discovered first gas in 1980 for the Mossgas project and first oil in 1989. First oil production started just 4 years ago. It owns its own offshore drilling rig, the Omega.
Soekor produces oil from the Oribi and Oryx offshore fields in Block 9 off the nation's south coast to the Orca production platform. Recent production was 26,500 b/d of oil from reserves of some 22 million bbl.
The company also operates Sable field on Block 9 with 20 million to 30 million bbl of oil and a planned peak production of 40,000 b/d from six wells producing to the Bluewater (UK) Ltd. Glas Dowr when it starts producing late next year or early in 2003.
That won't provide gas supplies. At present use rates, Mossgas will run out of gas for its gas-to-liquids plant in 2008 unless someone steps in with more supplies.
That's probably one reason South Africa invites foreign investment and enhances that invitation with some of the best lease terms in the world, an income tax of 34% and royalties at 5% or less. The government gets a 10% carried interest until a prospect proves commercial, then it can back in with a 10% working interest. Operators also make 10% available to the black empowerment organization, Mvelaphanda Holdings.
That was good enough for two US-based companies. Pioneer Natural Resources Co. picked up some 13 million acres off the south coast in blocks 7, 9 and 10 through 14. It also has a percentage of the Sable project.
One Sable appraisal well operated by Pioneer, the E-BB2, 75 miles (121 km) south of Mossel Bay, found 324 ft (100 m) of gas sands in five primary zones. Pioneer calls it potentially a "multi-Tcf field."
Pioneer's experience demonstrates South Africa's potential. It discovered the Boomslang prospect in Block 9 early this year with 108 ft (33 m) of net pay at 6,600 ft (2,013 m). That well tested at 3,120 b/d of oil, 300 b/d of condensate and 26 MMcf/d of gas.
That discovery launched Pioneer into an appraisal program. The E-DQ2 well in that program went to 8,110 ft (2,472 m) in a fault block 1.25 miles (2 km) south of the discovery and penetrated 590 ft (180 m) of high-quality sand in the same interval that yielded high production rates in the discovery well, but that sand was below the oil-water contact.
Pioneer will continue the appraisal work.
Forest Oil Corp. has an even brighter story to tell from its drilling program in Block 2 off South Africa's west coast.
The A-Y1 discovery well for its Ibhubesi offshore field tested at a rate of 71.4 MMcf/d of gas and 1,376 b/d of condensate on an 80/64-in. choke.
It has drilled four wells to complete its 2001 program at the field and come up with three good wells revealing a combined initial test rate of 177 MMcf/d and 1,900 b/d of condensate.
The company estimates reserves in the field at 3 Tcf, and it plans a $1.4 billion subsea development and pipeline project to get the gas to market.
Forest also said it has mapped the play and found a 2,934-sq mile (7,600-sq km) trend extending north of the field into Block 1, and seismic information ties the trend to a well that tested at 33.1 MMcf/d.
Ibhubesi is about 70 miles (113 km) southeast of Shell's Kudu field, and it's also in the Orange River Basin.
Forest conducted a feasibility study on its project and found potential gas markets for 30 MMcf/d to 200 MMcf/d of gas. With supply and demand in hand, it plans to go to an independent engineering firm for an analysis of reserves that it can take to its financial backers.
Forest has 70% of the project with Anschutz Overseas as 20% partner and Mvelaphanda Holdings as 10% interest owner.
Among potential users are the Mossgas plant and the Saldanha gas-fired power plant. Another possibility is the $500 million Cape Power plant, although supplies for that plant have been linked to Shell's Kudu discovery.
South Africa's Sasol also is on the lookout for local oil and gas after giving up its exploration program in Sofala Bay, offshore Mozambique. It picked up exploration blocks 3A and 4A off the west coast of South Africa and south of the Forest properties.
It plans to start seismic acquisition within a year and - depending on the results of the survey - follow up with a drilling program.
Six wells have been drilled in the two blocks. Four were dry, and the other two had gas shows.
South Africa seems to be on a roll with good terms and good prospects for companies that don't have the deep pockets to develop a complex infrastructure.

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