BHP in bid to spike oil production

BHP Billiton and its partners are expected to start drilling an exploration well in its block 2c as it tries to find additional hydrocarbon reserves. The company is drilling its well, Canteen North 1, which is, as the name suggests, is situated north of its Canteen oil discovery, which forms part of its greater Angostura discovery. The well comes mere months after the company started producing natural gas from its facilities and as it tries desperately to keep its oil business going amidst low production. BHP Billiton and its partners operate the Angostura field in Block 2(c) 24 miles east of Trinidad close to Toco. Oil and gas resources were discovered within a large faulted structure known as the Greater Angostura structure.

Angostura-1, drilled in 1999, was the discovery well for the field, intersecting some 950 feet (gross) of gas pay within Early Oligocene sands. Gross recoverable oil reserves are estimated at 90-300 million barrels in place, with recoverable reserves of up to 160 million barrels. The range of gross recoverable gas volumes is 1 and 2.3 trillion cubic feet, with a midcase recoverable volume of 1.75 trillion cubic feet with the mid-case resource estimated at 450 million barrels of oil equivalent. Since BHP and its partners started production from Angostura, its crude production has fallen from 60,000 barrels of oil/day to around 13,000 barrels. BHP has been plagued by the extent of faulting in the Angostura discovery, which has made it difficult to produce because the oil is captured in small faults and an extensive amount of wells will have to be drilled to maximise its production.

The consortium has designated the well a tight hole, which means that neither the Ministry of Energy nor members of its consortium can comment on the well unless they receive permission from the operator BHP. But well-placed sources at the company tell the Business Guardian that the well is expected to encounter oil rather than gas. BG has learnt that the intended structure is relatively small and a best case scenario suggest that a discovery will only add a few million barrels of reserves, but could add an additional 4,000 bo/d to BHP and the country’s crude production. With crude prices well over US$90 a barrel, the partners feel they can make money from any discovery. In addition, if a discovery is made, there will not be need for the company to spend money to put in additional facilities as the plan is to produce any discovery from its canteen platform by drilling deviated wells.

The present well is being drilled to a depth of just over 5,000 feet and is also slightly deviated. The partners say the decision to drill an exploration well had to do with the strong oil prices. It also had to do with the company finally getting its hands on improved seismic data, which it was able to reprocess, and could now see clearly what it feels is an oil structure. BG was told that the consortium is convinced that there is oil in the formation and not gas, because it found that as it moved from west to east in the block, the discoveries moved from natural gas to oil and condensate. T&T’s crude production is the lowest it has been in the last 50 years, and for the first time last year, average less than 100,000 barrels a day.
Even with high crude prices, the country has not significantly benefitted due to low crude production.