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Tullow
Oil Starts Gas Search Offshore Ghana
07-10-2008
 Tullow
Oil Plc is looking at the gas potential of the large offshore Jubilee oil
field in Ghana, a move that could further boost the project's estimated 1.8
billion-barrel recoverable resources.
Mahogany-2 well, which was drilled to appraise the resource potential of
Jubilee, flowed 5,200 barrels of oil and 5.3 million cubic feet of gas a day
during testing work in June.
Tom Hickey, the chief
finance officer, said developing the gas resources in Jubilee could add 20
percent to 25 percent to the site's existing reserves.
"There's a lot of gas in the Jubilee structure. We're trying to decide what's
the best thing to do with the gas," he told the media.
Tullow is considering certain options, including selling the gas to the domestic
market or re-injecting it to the reservoir to further lift the field's output
and avoid flaring, he added.
Jubilee is expected to pump around 120,000 barrels a day once onstream in 2010,
said Hickey, adding the field is capable of producing "north of 250,000 barrels
a day in five years' time."
The field will be developed in phases, with the development plan expected to be
approved before the end of the year.
"There's no show stopper" for the 2010 target start-up for Jubilee, stressed
Hickey.
Mahogany-2 lies in the West Cape Three Points license, in which Tullow holds a
22.9 percent stake. Its partners include Kosmos Energy and Anadarko Petroleum
with over 30 percent stake each, E.O. Group 3.5 percent, Sabre Oil & Gas 1.854
percent and the Ghana National Petroleum Corp 10 percent.
Anadarko on June 10 said the Mahogany-2 drilling results validated Jubilee's
recoverable oil resources potential of 500 million to 1.8 billion barrels,
higher than the consortium's earlier estimates of only up to 1.3 billion
barrels.
Hickey said Jubilee and the rest of its projects are all well funded and Tullow
doesn't have to seek additional funding to support future capital spending.
Tullow raised its capex guidance for 2008 to 480 million pounds from 400 million
pounds as it steps up drilling work in Ghana and Uganda.
It has available funds of "well north of $2 billion", which mainly include $1
billion in operating cash flow, $400 in unused debt facility and 400 million
pounds in gains from asset disposals, Hickey noted.
Tullow sold $1 billion worth of assets in the first half of 2008, including its
11 percent stake in the M'Boundi field in Congo and certain North Sea projects.
The asset disposal will cut the group's production by around 6,000 boepd to
6,500 boepd, with M'Boundi's share totaling up to 4,500 boepd, added Hickey.
In a trading statement, Tullow said it raised output by 1 percent to 70,550
boepd in the first half and expects to produce 70,000 to 72,000 boepd in the
full year, below its previous guidance of 70,000 to 74,000 boepd and the 73,100
boepd it pumped in 2007.
The 2008 guidance does not include the impact of disposals.
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