Cairn’s Plunge Offshore Senegal Boosts Reserves Estimate

The Atlantic Margin hydrocarbon resource’s potential is looking brighter for Cairn Energy, which has upped its best estimate of reserves for the SNE discoveries offshore Senegal to 473 million barrels (MMbbl).

The increase of nearly a third, up from 385 MMbbl estimated in March, comes as the company gears up for another phase of drilling following favorable SNE-4 appraisal well results. Striking a 100-meter (m) oil column in upper sands, Cairn said in May that the well confirmed the reservoirs stretch to the eastern end of the SNE Field.

The U.K.-based independent, which delivered the higher resource estimate Aug. 16 as part of its half-year report, also said the associated 2C oil in place for the SNE wells exceed 2.7 Bbbl based on independently verified best estimates.

Further exploration potential of about 500 MMbbl exists.

The exploration pursuit is being planned amid continued market volatility. Lower commodity prices, the result of a supply-and-demand imbalance, have prompted many oil and gas companies to cut exploration budgets among other areas as profits have shrunk. But possibilities for oil and gas payouts in some underexplored areas have been too great for some to overlook.

“Drilling is scheduled to re-commence in Senegal shortly, benefiting from lower costs across the sector,” Cairn Energy’s CEO, Simon Thomson, said in a statement. “The program contains options for multiple wells and in addition to ongoing appraisal of the SNE Field, the joint venture continues to assess optimal locations for further exploration drilling on the acreage.”

The third phase of exploration and appraisal drilling is set to begin in fourth-quarter 2016 or early 2017. With two firm plus multiple well options, Cairn said its focus will be on deliverability of reservoir units not tested yet and connectivity of upper reservoir units over development well testing—among other goals.

Conceptual development planning is already in the works. An FPSO vessel with tiebacks is a development concept being explored. The project could see 15 to 20 wells drilled before first oil, envisioned sometime between 2021 and 2023.

“As we plan future activity, we can see clear potential to access additional cost savings from the current lower-cost operating environment,” Cairn said. “A rig tender and services process is well advanced as we prepare for stage three of the campaign and is benefiting from the lower cost environment and significant availability of high quality rigs.”

Cairn Energy, the operator, has a 40% working interest in the Sangomar Deep, Sangomar Offshore and Rufisque blocks, with partners FAR Ltd. and PETROSEN, Senegal’s national oil company, holding 15% and 10%, respectively. Woodside Petroleum Ltd. is currently in the process of buying the remaining 35% interest from ConocoPhillips (NYSE: COP), which is exiting deepwater exploration. The deal, which includes the FAN deepwater discovery, is expected to close by year-end 2016.

Woodside’s CEO, Peter Coleman, has described the region as an “underexplored and highly prospective emerging oil province” with “high-quality resources.” The company is also acquiring a 65% interest in the AGC Profond Block, which is south of the SNE and FAN discoveries between Senegal and Guinea-Bissau, as it builds up assets offshore West Africa.

During the first half of the year, Cairn and partners completed a four-well appraisal campaign that confirmed the field’s extension to the north, south and east and also confirmed the presence of good quality 32 degree API crude. Results from the BEL-1, which targeted the Bellatrix prospect above the main SNE Field and evaluated the field’s deeper Northern Flank, revealed the shallower targets were gas and impermeable.

However, the deepened appraisal well confirmed that the reservoirs extend to the north, Cairn said.

Velda Addison can be reached at mailto:vaddison@hartenergy.com.