Trinidad, Senegal, Egypt efforts bear fruit
BP (ticker: BP) announced highlights of its Q2 2017 exploration activities today, collecting the results of several different projects.
Four discoveries representing 17+ Tcf of gas
BP reports that it has made four gas discoveries so far in 2017. Two separate discoveries were made near Trinidad and Tobago. The Savannah exploration well was drilled into an untested fault block in 500 feet of water, and encountered about 650 feet of net pay. The strong results from this well mean BP expects to develop the fault block using a tieback to the nearby Juniper platform.
The Macadamia well, also offshore from Trinidad, recently drilled below the existing SEQB discovery. The well found seven intervals of pay, with a total of 600 feet net pay. The success of this well, and the previously-established SEQB discovery, mean BP will likely develop the area using a new platform in the future. According to BP, Savannah and Macadamia discovered a combined 2 Tcf of gas.
BP also was part of the Yakaar-1 well in offshore Senegal. Drilled by Kosmos Energy (ticker: KOS), Yakaar-1 encountered 148 feet of net pay. Kosmos estimates that Yakaar-1 discovered a P50 resource of 15 Tcf of gas. This well is the sixth successful well Kosmos has drilled in offshore Senegal and Mauritania. According to estimates from May 2016, the Senegal-Mauritania fairway may contain up to 50 Tcf of resource.
The Qattameya Shallow-1 exploration well in offshore Egypt announced successful results in March. Drilled in water depth around 300 feet, Qattameya encountered about 120 feet of net gas pay. The company is currently considering a tieback to nearby infrastructure. This discovery is the third gas discovery in the offshore block, and BP is already developing the nearby Atoll field.
Gas becoming focus of BP’s efforts
These discoveries fit well with BP’s current strategy. The company seeks to shift away from oil and toward gas production. BP Russia President David Campbell recently commented on this shift, saying “It is important in order to meet the increasing demand for cleaner energy. Gas is a growing proportion of BP’s portfolio and by the middle of the next decade we expect around 60% of our production to be gas, compared with around 50% today”
BP is also adding more offshore leases to allow further exploration efforts. In the United Kingdom’s 29th offshore licensing round, the company acquired 25 blocks, giving it the largest amount of acreage from that sale since the late 1990’s. Additional licenses were purchased in recent U.S. GOM sales. The company has also secured exploration licenses in Newfoundland and Mexico, and has increased its stake in the Senegal operations with Kosmos.
Uneconomic projects eliminated
BP is in the process of reviewing its portfolio, evaluating if projects make economic sense in the current price environment. BP has decided to relinquish its 50% stake in Block 24/11 in offshore Angola. While the company made a gas discovery there in 2014, it is not commercial.
In late 2016, the company announced it would not continue exploring in the Great Australian Bight, in offshore southern Australia. BP’s partner Statoil has assumed full ownership and operatorship, and BP is discussing exiting the blocks with the Australian government.
