Hess Begins Pre-Development Studies As Tullow Pares Back
BMI View: After a seventh consecutive discovery, independent Hess announced not only that it would submit an appraisal plan to regulators by mid - 2013, but that it had already launched pre-development studies on its Cape Three Points Block. Following a fall in the production target for the TEN development, which is awaiting regulatory approval, Hess' move is a vote confidence in Ghana's offshore potential.
Following its seventh consecutive discover y at the Deepwater Tano / Cape Three Points (CTP) block offshore Ghana, US independent Hess has announced it has already started pre-development st udies. With the latest strike Hess encounter ed 12m of net oil pay and - leveraging its' extensive experience in geologically similar Equatorial Guinea - reported it would submit appraisal plans to the government of Ghana by June 2 2013. If appraisal is successful, the CTP licen c e could join Jubilee and possibly the Tweneboa-Enyerna-Ntomme (TEN) block as oil producing field's offshore Ghana.
|Well Name||Net Pay (m)||Hydrocarbon Type||Water Depth (m)|
|Paradise-1||126||Oil and gas condensate||1841|
|Hickory North-1||30||Gas condensate||1967|
Proving up the CTP block's potential comes at a welcome moment for Ghana's nascent oil industry, with the development of the Tullow- and Kosmos-led TEN projects awaiting regulatory approval. Tullow recently confirmed a downward revision to peak production from TEN, from an initial estimate of 100,000 barrels per day (b/d) to 80,000b/d. Tullow exploration director Angus McCoss told Upstream in February that the lower 80,000b/d target was 'the most valuable development that we've been able to identify'. The development plan was submitted to regulators in Ghana and first production is targeted for early 2015 - with peak output reached by 2018. The US$4.5bn project does not include the cost of a floating production and offloading unit (FPSO).
The revised production target may be recognition of lessons learned from the more challenging than expected start-up of the Jubilee field, where Tullow encountered a number of operational problems and current output is still below target. Restoring well productivity required the use of acid stimulation at a cost of some US$160mn. Production is now on track to reach the 120,000b/d at some point in 2013, although this is not in-keeping with the original field development schedule.
Potential production from the CTP block upon successful appraisal would help to offset the impact of lower production from TEN. Additionally, as Hess moves closer to commercial production from the licence, it is more likely that the firm will sell off a share of its interest in order help cover the cost of development. At present, Hess has a 90% interest in the block, with remaining share held by the Ghana National Petroleum Company (GNPC).
Strong interest in Atlantic margin plays has drawn significant investment into exploration the corresponding coasts of Africa and South America. Ghana has benefited from such interest and exploration in the country's waters has helped confirm the hydrocarbons potential of these types of play. Existing production, more discoveries and a favourable operating environment will support further investment in Ghana's oil and gas sector. However, new discoveries and investment in commercialisation will have to be made in order to maintain growth in production.
|New Production Necessary To Maintain Growth|
|Ghana Oil Production, Consumption & Net Exports ('000b/d)|