In Canada, the Alberta Energy and Utilities Board (AEUB) has affirmed its interim decision that natural gas producers must not produce gas from 917 wells in the provinces' oil-sands development area around Fort McMurray. The wells, completed in shallow gas zones that overlie bitumen deposits, are capable of producing 120 million cubic feet of gas per day. In the area in question, bitumen is produced by the steam-assisted gravity drainage (SAGD) process. Steam is injected into paired horizontal wells drilled into bitumen deposits that are too deep to surface-mine. The steam, which is a major expense in these projects, softens the bitumen so that it can be pumped from wellbores to the surface. The rationale for the decision is that production of gas would lower reservoir pressures in the shallow sands to the point that the gas sands could become thief zones. Some owners of SAGD projects operate at fairly high pressures, which increases the possibility of steam loss into low-pressure zones. The top-gas problem affects about 15% of Alberta's bitumen reserves. About 280 billion cubic feet of reserves are contained in the disputed wells, and the AEUB has reduced royalties on owners' production outside the area to compensate for the loss of gas resources. Gas producers maintained that the well shut-ins are not necessary, but they were unsuccessful in their appeals. 1 Trinidad & Tobago Calgary-based Canadian Superior Energy will drill three wells during the next three years on Block 5(c), about 56 miles off the east coast of Trinidad. The company has acquired and reprocessed existing 3-D seismic data over the block, which it calls Intrepid. The company is looking for a semisubmersible rig to drill in water depths from 492 ft. to 1,476 ft. In separate activity, Oklahoma City-based operator Kerr-McGee Oil & Gas Corp. has acquired a 25% interest in the southern part of Block 2(c)and a 30% interest in Block 3(a). The two offshore blocks are adjacent to Block 3(b) and BHP Billiton's Angostura Field in 150 to 300 ft. of water. Kerr-McGee holds interests in more than 340,000 gross acres offshore Trinidad and Tobago. 2 Brazil Maersk Oil of Denmark, a newcomer to drilling offshore Brazil, planned to drill its first wildcat by the end of 2005. The company has exploration rights to BM-S-29 in the Santos Basin in water depths from 100 to 400 meters. The company is targeting the shallower side of the block, according to Ogilvie's E&P Daily. 3 Faroe Islands BP Amoco Exploration (Faroes) Ltd. and Shell UK Ltd. plan to drill a wildcat on License 004 on the Faroe Islands shelf in 2007. Additionally, the companies started negotiations in 2005 to replace the remaining two committed wells in License 004 with a sub-basalt exploratory well on license area 007. The companies drilled the Svinoy well on License 004 in 2001 and says results from that well reduced its attractiveness. The two companies also have agreed with Anadarko Faroes Co., the licensee on 007, to drill an exploratory well on the William Prospect. BP and Shell will farm into the license and BP will become the operator. 4 U.K. Sweden's Lundin Petroleum has completed Phase 2 of its drilling campaign in Broom Field, on the western edge of the North Viking Graben in the North Sea, and has stepped up gross production to 32,000 bbl. per day. Broom has better deliverability than the company expected and water-cut is coming in later than expected. The Phase 2 wells included the sidetrack of the original West Heather 2/05-18 and the completion of the first North Terrace 2/05-23. Both wells produce through the Broom subsea manifold to the Heather platform. Production could go higher, but Lundin has bumped up against the capacity limit of the Heather platform, which it also operates. Nearby Thistle field is shut in for a work program to debottleneck separation capacity. 5 U.K. Calgary-based Talisman Energy Inc. reports a possible 50-million-bbl. discovery by its 13/23b-5 well, drilled near the company's Ross and Blake fields in the U.K. sector of the North Sea. The Lower Cretaceous discovery is approximately 15 kilometers northeast of Ross and 10 kilometers northwest of Blake. During drilling, the company appraised the discovery with the 13/23b-5z sidetrack southwest of the main borehole. The sidetrack found thicker oil-bearing sands and tested at 6,700 bbl. of oil per day. A second sidetrack, the 13/23b-y, was drilled to the west and also found thick sand. 6 Equatorial Guinea Devon Energy Corp., Oklahoma City, has made an offshore discovery that it hopes to fast-track to first oil in 2008. The firm discovered oil with the Venus well on Block P. The shallow-water well was drilled to a total depth of 7,100 ft. and hit 150 ft. of net oil pay. It was subsequently sidetracked downdip to delineate the discovery and hit 114 ft. of net oil pay. The discovery is productive from multiple channel sands and has similar geology to Zafiro Field. Devon will reprocess 3-D seismic that was shot on the block in 2006 and then drill up to three quick appraisal wells. 7 Uganda Australia's Hardman Resources Ltd. is currently preparing a site on Block 2, a license that covers the northern part of Lake Albert and the surrounding onshore area, for a two-well program. Hardman and its joint-venture partner, Ireland-based Tullow Oil, are planning to drill the Mputa-1 and Waraga-1 prospects, both targeting onshore structures associated with the rift-bounding fault and containing potentials in excess of 100 million bbl. of oil. Mputa is also associated with surface seeps. 8 Yemen Canadian firm Calvalley Petroleum Inc.'s drilling program on its Hiswah Field in Block 9, onshore Yemen, has chalked up another success. The operator has completed the Hiswah-7 horizontal development well, successfully drilling into the oil-bearing Saar-Naifa formation. The well reached a total depth of 1,900 meters and had a horizontal section of 576 meters. It was drilled approximately 250 meters west of the Hiswah-6 horizontal well, which tested at rates of up to 3,700 bbl. of oil per day. The Hiswah-7, together with other four Hiswah horizontal wells, will be produced after production facilities are in place. Within the next few days, the drilling rig will move to another Hiswah location to begin the next horizontal development well. 9 Azerbaijan The BP-led Azerbaijan International Operating Co. has brought the eighth well on production from the central portion of Azeri Field, part of the massive Azeria-Chirag-Gunashli complex offshore Azerbaijan in the Caspian Sea. The company plans to ramp the well up to 20,000 bbl. of oil per day to bring production from the field to 230,000 bbl. per day. The company predrilled 12 wells for the platform and is hooking them up one at a time. 10 China CNOOC Ltd. has entered two contracts on South China Sea acreage with Texas American Resource Co., an Austin, Texas-based independent. Texas American has taken a production-sharing contract on Block 03/27, which covers 10,569 square kilometers in the Pearl River Mouth Basin in water depths from 50 to 100 meters. The company has also signed a geophysical agreement on Block 28/20, which covers 7,625 square kilometers in the same basin. Texas American will acquire 3-D seismic, and has an option to sign a PSC with CNOOC for the block at the end of the agreement. 11 Vietnam Chevron and Petronas Carigali, Malaysia's state oil company, have teamed to take 50% each in Block 122 in the Phu Khanh Basin in Vietnam's latest licensing round. The tract is in water depths from 50 to 2,500 meters off the central province of Phu Yen, northeast of Ho Chin Minh City. Vietnam estimated reserves in the full basin at 2 billion bbl. of oil. ONGC of India won Block 127 in the round and Pogo Producing Co., Houston, won the license for Block 124. 12 Philippines State-owned Philippine National Oil Co. is poised to take on the contract to develop the marginal oil rim associated with Shell's producing Malampaya gas condensate field offshore Palawan. Malampaya's oil rim may hold between 25- and 40 million bbl. of 30-degree crude oil. Shell and partners Chevron and state-owned Philippine National Oil Co.-Exploration Corp. have pulled out of the development of the oil rim and will relinquish their rights. PNOC believes costs for the oil-rim project will be $700- to $900 million. 13 Australia Woodside Petroleum is set to drill three big offshore exploration/appraisal wells in Australia on its Browse, Pluto and Otway gas projects. The first probe will be the deepwater Calliance-1 exploration well in the WA-28-R concession, offshore northwest Australia. This well, to be drilled in a water depth of 570 meters, is the second of two wells at the operator's Browse fields. The first well, the just-completed Brecknock-2 appraisal, intersected a gross gas-bearing interval of 151 meters in the Plover formation. After Calliance-1, Woodside will head south to the Carnarvon Basin to spud the Pluto-3 appraisal well in 590 meters of water. The recent Pluto-2 well in WA-350-P intersected a gross gas column of 63 meters. Woodside is pushing both the Browse and Pluto projects as standalone liquefied natural gas developments. Finally, Woodside will drill the exploration well Thylacine South-1 in 100 meters of water at the Otway gas project off Victoria, southeast Australia. Otway is under construction and scheduled to start up in mid-2006.

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