INTERNATIONAL

Activity will be brisk on the U.K. continental shelf for the next two years, according to a recent update on the regionÕs farm-out opportunities by Scotland-based international consulting firm Hannon Westwood.

At present, 220 wells are planned through 2009, two-thirds of which are fully funded, representing an increase from the 107 opportunities identified in a late 2006 report. Only half of those were fully funded.

The West of Britain (Morecambe Bay) region had only one well planned in late 2006; there are now nine wells planned for that area. In the West of Shetlands region, 17 wells are planned, versus just four in the previous report. In the Central North Sea, 94 wells are planned, nearly double the 48 in that region on the drawing board less than a year ago.

The farm-out proposals are split evenly between North American and U.K. companies. ÒThese companies are offering exploration investors a broad range of opportunities for their investment dollars and commitment to the true opportunity remaining in the U.K.Õs oil and gas business future,Ó Hannon Westwood reports.

1 Greenland Husky
Energy Inc., Calgary, was awarded exploration licenses on Block 5 (2007-22) and Block 7 (2007-24) offshore Greenland, approximately 120 kilometers off the west coast of Disko Island in water depths of 500 meters. The two blocks cover an area of 21,067 sq. kilometers. The company has an 87.5% operating interest in both holdings and GreenlandÕs National Oil Co. has the remaining 12.5%.

2 Cuba

Sherritt International Corp., Toronto, plans to invest $1.2 billion in Cuba during the next two years in oil, gas, electricity, nickel and cobalt mining. While Sherritt did not give specifics, a Cuban official announced plans to drill 39 exploration wells this year, including 26 that will include foreign investment. CubaÕs plan includes drilling for oil and gas close to FloridaÕs coast. U.S. congressional proposals could ease restrictions of the 45-year embargo against Cuba by allowing U.S. firms to invest in Cuban exploration, but measures have yet to be approved. Sherritt is the largest foreign producer in Cuba with 30,000 net bbl. a day.

3 Suriname

El Dorado, Arkansas-based Murphy Oil signed a production-sharing contract with SurinameÕs state-owned Staatsolie for the 8,700-sq.-kilometer Block 37 off its eastern shore. The 2.1-million-acre tract lies in water depths of 49 to 305 meters. The agreement covers a six-year term with commitments to drill two exploration wells and conduct a four-year, 3-D seismic study. The state-owned company has given no reserve potential, but says the initial exploration stage calls for a $40-million investment.

4 United Kingdom

Results on a Central North Sea discovery were reported by Houston-based Carrizo Oil & Gas Inc. The Huntington discovery, drilled in Block 22-14b, was flow-tested at a combined rate of 11,034 bbl. of oil equivalent a day from Paleocene Forties and Jurassic Fulmar sands. Carrizo has a 15% working interest in the block. Calgary-based Oilexco Inc. is the operator. The well has been shut in pending partner meetings to formulate a development plan, Carrizo reports. Other partners are U.K.-based Altinex Oil (UK) Ltd. and Germany-based E.ON Ruhrgas UK Exploration & Production.

5 Poland

FX Energy, Salt Lake City, Utah, confirmed its Roszkow well flowed 12.6 million cu. ft. of gas a day during production tests in its Fences I concession in west-central Poland. Results of the test indicated average porosity of 23% and a pay thickness of 100 ft. The most recent test exceeds results of a drillstem test released by FX earlier this year. FX and its partner, Polish Oil & Gas Co., plan to acquire 155 square kilometers of 3-D seismic in the 850,000-acre Fences area. POGC operates the discovery with a 51% interest, and FX holds the remainder.

6 Ukraine

Marathon Oil Corp., Houston, signed a cooperation agreement with UkraineÕs state gas monopoly, Naftogaz Ukrainy, for technical studies in Dnipro-Donets Basin in the north-central part of the country. The companies will evaluate a 26,000-sq.-kilometer area during the next three years.

7 Tunisia

Dallas independent Pioneer Natural Resources made its fifth discovery in a row in Jenein Nord Block in Tunisia. Based on wireline logs and downhole samples, the latest discovery well, Farrah, will be perforated and tested in three intervals that total 20 meters. Pioneer has plans to drill three more exploration wells in the block by year-end. It will also acquire additional 3-D seismic data and participate in three exploration wells on adjacent nonoperated blocks. First production from Jenein Nord is anticipated by year-end.

8 Equatorial Guinea

ExxonMobil spudded the first of two important deepwater wildcats. The Esmerelda-2 is being drilled in Block B, and the Langosata prospect will be drilled in Block C. Oklahoma City-based Devon Energy Corp. is partner in the projects, which have mean resource potentials of 300- and 400 million bbl. of gas condensate, respectively.

9 Qatar

The estimated cost of the Qatargas 4 LNG plant rose to $8 billion, up from between $6- and $7 billion in 2005 when the deal was announced. State oil and gas company Qatar Petroleum owns 70%; Royal Dutch Shell, 30%. The plant is the final stage in QatarÕs plan to boost liquefied natural gas capacity to 77 million tonnes by 2010, up from about 31 million. The Qatargas 4 project will produce around 1.4 billion cu. ft. of gas a day from QatarÕs giant North Field, the largest pure gas reservoir in the world. The gas will be liquefied at a 7.8-million-tonnes-a-year LNG plant. The bulk of the LNG exports are destined for the U.S. east coast. Shell has arranged for receiving capacity at the Elba Island LNG terminal near Savannah, Georgia.

10 United Arab Emirates

Four international operators are in the running for the rights to develop Shah Field, a mega sour-gas project. ConocoPhillips, ExxonMobil, Occidental Petroleum and Royal Dutch Shell made the short list, according to reports. The companies will submit revised bids to state-run Abu Dhabi National Oil Co. with their plans for developing the reserves.

11 India

Oil and Natural Gas Corp. made five oil and gas discoveries in eastern offshore and northeast India. A gas discovery in Mahanadi Basin established 3- to 4 trillion cu. ft. of reserves. A second discovery was made in MN-DWN-98/3 Block about 60 kilometers off the Paradeep coast in Orissa. ONGC has drilled five wells to date in Mahanadi Basin. Its first discovery was made in 2006.

12 China

ChinaÕs commerce ministry has approved three modification agreements filed by Far East Energy Corp., Houston, to extend the exploration periods of its three production-sharing contracts by two years. Two of the agreements relate to its PSCs for the Shouyang and Qinnan areas of Shanxi province, and the third agreement refers to its Enhong and Laochang contracts in Yunnan province. All are extended until June 30, 2009. Far EastÕs coalbed-methane concessions have 30-year terms and cover 1.32 million acres. The company spudded its first long-reach horizontal well in Qinnan Block, which it plans to drill to about 3,000 meters in the #3 coalseam. The well is estimated to cost $1.2 million. Qinnan Block is some 500,000 acres and is near a pipeline that serves Shanghai.

13 Australia

Australian firm BHP Billiton and partner Apache Corp., Houston, approved the $1.7-billion development of the Pyrenees oil project in WA-12-R in the Exmouth sub-basin, offshore northwestern Australia. The companies plan to use a floating production, storage and offloading vessel and subsea wells. First oil production from Pyrenees is expected during the first half of 2010. BHP owns 71.43% and Apache holds the balance. The Pyrenees fields of Crosby, Ravensworth and Stickle were discovered in WA-12-R in July 2003 and have estimated recoverable oil reserves of between 80- and 120 million bbl. Water depths in the area are 170- to 250 meters.

14 Australia

Santos Ltd., Adelaide, plans to build an LNG facility in Gladstone, Queensland, to process and export coalbed methane. The proposed Gladstone LNG project includes a 3- to 4-million-tonne- a-year LNG processing train and associated infrastructure. The estimated cost is $4.37- to $6.11 billion. Its coalbed-methane reserves and contingent resources total more than 4.65 trillion cu. ft., with significant upside potential, Santos reports. Half the investment is expected to be in the Gladstone plant and the other half in QueenslandÕs Bowen and Surat basins. A final investment decision is expected by year-end 2009 for exports beginning early 2014.