Chevron eyes drilling in 2010 after long silence

After nearly nine years of refraining from drilling any exploratory well, US oil giant Chevron along with British company Cairn is set to drill an well in Patuakhali in search of oil or gas, preparation for which begins in February next.

Petrobangla sources said drilling of the well in Block-7 would take place between September 2010 and July 2011 costing about $ 21million.

The oil companies would drill two more wells around that area if this drilling operation produces positive results.

Bangladeshi company Bapex holds 10 percent carried over interest in this block where Chevron-Cairn had conducted nearly 1,500 km of seismic survey in 2006 and 2008.

“Data generated by the two-dimensional seismic survey has allowed Chevron to determine the most suitable location for exploratory drilling in Charkajal union under Golachipa upazila of Patuakhali district,” said a Petrobangla official.

Between February and August next, Chevron-Cairn would develop the drilling site along with access roads, storage areas and other amenities. Between September next and July 2011, they would go for the drilling.

The drilling operations, which will last three to four months, include construction of concrete drilling pit, mobilisation of drilling rig and associated equipment, management and treatment of waste and decommissioning of rig and materials.

Since 2001, except for Irish Tullow's discovery of gas in Bangora and Lalmai in 2003 and 2004, there had been no gas discoveries in the country by a foreign oil company. Tullow's Bangora field is currently producing 100 million cubic feet gas per day (mmcfd).

The only other foreign company that attempted to find a new gas field during this period was Canadian Niko (involving Tengratila gas structure). But Niko's deal with the government actually allowed it to develop already used and abandoned gas field. Niko's inefficient operation in Tengratila caused two consecutive blowouts.

Chevron (previously Unocal and Occidental) has been the most successful foreign oil company in Bangladesh which is producing nearly 900 mmcfd from three gas fields in Moulavibazar, Jalalabad and Bibiyana -- almost half of the country's daily gas production. Moulavibazar field is producing 52 mmcfd, Jalalabad 173 mmcfd and Bibiyana 641 mmcfd.

Bibiyana field is Chevron's biggest discovery. It was initially estimated to have 2.4 trillion cubic feet (TCF) recoverable gas. Following studies and reassessment, Petrobangla recently put its recoverable reserve at 5.76 TCF with proved and probable reserve estimated at 7.43 TCF.

Chevron has invested around $920 million in these three fields, and recovered it from gas sales.

But the company has not drilled a single exploratory well in the country since 2001.

Cairn, on the other hand, discovered and developed the country's first off-shore gas field in Sangu back in 1996. This gas field is almost exhausted. Cairn's other bids to discover gas in blocks 15 and 16 had so far produced no positive results.

Now, Cairn with its partners Santos and Halliburton Brown & Roots is planning to undertake a 3D seismic survey of the Magnama structure in Block-16 at the end of 2009 and in early 2010.

Chevron signed the PSC (production sharing contract) for Block-7 in 2001 with a five-year moratorium that gave it the privilege to hold the block without any exploration work. Normally, PSC demands that the oil company concerned conduct seismic survey to some extent and drill an exploratory well in the first three years. Success in these tasks allows the company to enter the next phase of four years.

In 2006, Chevron conducted a 1,000 km seismic survey in the region and found at least three potential hydro-carbon zones. For better understanding, the company wanted further survey instead of going by the PSC rules. Following negotiations with Petrobangla, Chevron-Cairn penned an additional agreement last year for further surveys.