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Petsec plans $28M capital program, much going into Gulf
Allen Baker Petroleum News Contributing Writer
Petsec Energy Ltd. is planning to spend US$28 million this year on capital projects, with the bulk of the Australian firm’s funds being plowed into the Gulf of Mexico.
The company expects natural gas production from the Gulf of 6.5 billion cubic feet this year, up from 4.5 bcf in 2003 and just 46 million cubic feet in 2002, when the company was just getting back on its feet. This year’s higher production should provide sufficient cash flow to fund the 2004 exploration and development budget, Petsec Chairman Terry Fern told the company’s annual meeting May 25.
But Fern said three wells drilled off China this spring produced disappointing results, with two dry holes and the third well yielding relatively heavy 18-20 degree API oil, though in high quality sands.
The three wells, drilled in April and May in the Beibu Gulf about 36 miles off the southern coast of China, cost the company $2 million. Petsec holds a 25 percent working interest.
Work in that region with partner Roc Oil of Australia will continue over the next three months, Fern said. Concentration will be on the successful new 12.8.3 well, which showed 36 feet of pay, confirming an estimate of oil in place of 80 million to 90 million barrels, and on the 12.8.1 field, about a mile to the west, which contains an estimated 10 million barrels of recoverable oil. Four Gulf wells planned In the Gulf of Mexico, Petsec is planning four wells from the Vermilion 258 platform, with drilling to start in September. Company engineers think there’s a potential for 20 bcf of recoverable gas there. The first well drilled on that block this year, the Vermilion 258 No. 2, found an estimated 9 bcf of recoverable gas, with 42 feet of pay. That well followed on Vermilion 258 No. 1, punched in December, which showed 85 feet of net gas pay.
Petsec, which has a 100 percent working interest in Vermilion 258, expects the initial pair of wells to flow 15 million to 25 million cubic feet daily when production starts later this year. The lease is about 70 miles off the coast of Louisiana.
Overall, Petsec holds five contiguous leases in Vermilion and interests in a total of 13 leases in the Gulf of Mexico, including productive wells in West Cameron blocks.
The company estimates that its Gulf reserves hold 36 bcf of recoverable gas, and executives see “continuing opportunity to acquire additional Gulf of Mexico leases that will have a further substantial impact on the company,” according to Fern, Petsec’s chairman.
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