Premier Oil announced in its trading and operations update that it is working with joint venture partners Talos Energy (operator) and Sierra Oil & Gas to progress the appraisal program for the Zama-1 discovery in block 7 in the Sureste Basin offshore Tabasco, Mexico.

The Ensco 8503 drilled the Zama-1 prospect. Photo from Ensco.

According to Premier, the joint venture partners are working with Mexican state oil firm Pemex, who holds position in a neighboring block, to move onto the next phase of drilling. Talos discovered that the Zama reservoir may reach into Pemex's nearby block, and the firm has been working with Mexican regulatory authorities to deal with the issue. (Editor's note: OE will discuss this topic and the Zama field in a future issue.)

Premier said it expects the appraisal program for Zama to begin in either 2H 2018 or early 2019.

Zama, which is thought to contain 1.4-2 billion bbl of light oil, ranks among the top 15 largest shallow water discoveries worldwide in the past 20 years, according to Pablo Medina, senior analyst, Latin America upstream, Wood Mackenzie, in statement back in July 2017.

Talos operates block 7 with 35% interest. Its partners include Sierra (40%) and Premier (25%). 

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Talos makes major 'historic' oil find off Mexico

UK-based explorer Rockhopper says the Premier Oil-operated Sea Lion project, offshore the Falkland Islands, is moving towards sanction by year's end. 

Sea Lion schematic Phase 1, 2, and 3. Image from Rockhopper.

Premier similarly stated in its operations report that the latest draft of the field development plan (FDP) was submitted to the Falkland Islands Government (FIG) in November last year. The public consultation for the environmental impact statement (EIS) is expected to begin this month, and last for 42 days, according to Sea Lion partner Rockhopper.

"Premier is in discussions with contractors for the provision of a range of services including vendor finance in respect of the Sea Lion Phase 1 Development and letters of intent are being signed," Premier noted.

Rockhopper stated in its operations update that it expects during Q1 2018 that the joint venture will enter further agreements related to drilling and the subsea system, again covering both the provision of services and the balance of the targeted vendor financing.

“We are delighted to have entered into exclusive [letters of intent] with a number of the key contractors to Sea Lion and are hopeful of entering more during Q1 2018," said Sam Moody, Chief Executive of Rockhopper. "This news, alongside good progress with FIG on the FDP discussions, and continued engagement with FIG and other stakeholders on the EIS, represents good progress in taking the steps required to sanction the Sea Lion development at the end of 2018."

Sea Lion is 200km north of the Falkland Islands, and sits in 450m water depth, on the eastern edge of the North Falkland Basin. In August 2016, Premier reduced development costs to US$1.5 billion, or $45/bbl breakeven project cost.

A 2016 report estimated the Falklands Greater Sea Lion Complex could contain more than 500 MMbbl of 2C or contingent resources. When gas is added to the total, the estimate could potentially be around 747 MMboe.

Premier operates the field with 60% interest. Rockhopper holds the remaining 40%.

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Taming a Sea Lion

Tullow Oil has picked up six licenses offshore Peru, spanning 28,000sq km, the UK-based firm confirmed today (10 January).

Map of Peru blocks. Image from Tullow.

Following negotiations with Perupetro, Tullow has agreed to acquire 100% stake in blocks Z-64, Z-65, Z-66, Z-67 & Z-68. The agreements are pending approval by Peru's governmental authorities (the Ministry of Energy and Mines, and the Ministry of Economy and Finance). A formal signing is expected by Q1 2018, Tullow said in today's trading and operational statement.

Tullow will also pick up 35% interest in the Z-38 licence through a farm-down from Karoon Gas Australia, also subject to government approval, the firm said.

"The new acreage will complement [our] South America position and contains a number of attractive leads and prospects," Tullow said in the announcement. "The Z-38 licence is already covered by high quality 3D seismic and includes the Marina prospect, which is a potential candidate for drilling in 2019."

Tullow will join other independent operators who have picked up acreage offshore Peru.

BPZ Energy brought the Corvina field, in block Z-1, online in 2010.  OE profiled the field's buoyant tower solution in December 2013.

In October 2017, Anadarko Petroleum said it signed an exploration agreement with the government of Peru to explore 4.7 million acres across three deepwater blocks in the Trujillo Basin offshore Peru. Anadarko said it expects to invest approximately US$5 million to conduct evaluation activities primarily consisting of reprocessing existing seismic data and collecting piston cores from the sea floor to evaluate the potential.

However, it hasn't all been good news in Peru. In November, Baron Oil & Gas relinquished block Z-34 after frustrations due to a "lack of regulations relating to deepwater drilling" and other delays.

Elsewhere in South America, Tullow says processing of 3D seismic data shot offshore Guyana on the Kanuku and Orinduik licences last year is on going and should help pave the way to a drilling program beginning in 2019. However, Tullow is also considering moving drilling plans sooner into late 2018.

Tullow also announced that while drilling on the Araku-1 in neighboring Suriname, in block 54, was unsuccessful the well proved the presence of a new petroleum system in the Demerara plateau. A two-year extension was granted for the adjacent block 47 where the Goliathberg prospect is a potential drilling candidate for 2019, Tullow said.

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Fanning the E&P flames

Just days after announcing the US would make 90% of the country's Outer Continental Self (OCS) open to future oil and gas lease sales, US Secretary of the Interior Ryan Zinke said he would take Florida off the table after the state's governor, Rick Scott, voiced concerns.

Map of Eastern Gulf of Mexico. Image from BOEM.

"President Trump has directed me to rebuild our offshore oil and gas program in a manner that supports our national energy policy and also takes into consideration the local and state voice," Zinke said in a statement. "I support the governor's position that Florida is unique and its coast is heavily reliant on tourism as an economic driver. As a result of today’s discussion and Governor Scott’s leadership, I am removing Florida from consideration for any new oil and gas platforms."

Gov. Scott rejoiced in the decision. "By removing Florida from consideration, we can now focus on how we can further protect our environment, including our proposal for record funding for the Everglades, our springs, our beaches and our state parks. I will never stop fighting for Florida’s environment and our pristine coastline."

The decision to remove Florida from consideration begs the question if the concerns of other coastal governors, such as California, will be able to persuade the Trump administation to reconsider plans to drill there as well.

California's Attorney General Xavier Becerra posted on Twitter following the announcement that by using the same criteria as Florida, California should also be exempted.

.@SecretaryZinke: California is also "unique" & our "coasts are heavily reliant on tourism as an economic driver." Our “local and state voice” is firmly opposed to any and all offshore drilling.

If that's your standard, we, too, should be removed from your list. Immediately. https://t.co/T6W6JaPCPh

— Xavier Becerra (@AGBecerra) January 10, 2018

According to the US Bureau of Ocean Energy Management, which is under the direction of the Department of the Interior, the Eastern Gulf of Mexico, which is off of Florida's western coastline, is under congressional moratorium until 2022 as part of the Gulf of Mexico Energy Security Act of 2006.

The National Ocean Industries Association (NOIA) has issued a statement opposing Florida's exemption, calling it "disappointing" and "premature."

"The Outer Continental Shelf Lands Act (OCSLA) clearly outlines a deliberative, inclusive and lengthy review process before any preliminary leasing proposals are finalized," says NOIA President Randall Luthi. “Removing areas offshore Florida this early in the planning process prematurely curtails dialogue and thorough study of the possibilities for future development of offshore resources that could provide additional energy and jobs for working Floridians. In addition, for a state whose tourism economy is dependent on a secure and affordable transportation fuel supply, failure to secure domestic production and supply of fuels actually is a greater economic risk than offshore development. 

“The Secretary’s announcement has not eliminated the need for a comprehensive dialogue about America’s long-term offshore energy promise. Through the OCSLA process, as initiated by the Secretary, all stakeholders are given the opportunity to comment. Having heard from the Governor of Florida, we look forward to commenting and sharing our views on what resources, owned by the American people, should be open and considered for exploration and production.”

The American Petroleum Institute (API) issued a statement also calling the move premature.

"Americans support increased domestic energy production, and the administration and policymakers should follow the established process before making any decisions or conclusions that would undermine our nation's energy security," says API President and CEO Jack Gerard. "The Gulf of Mexico is the backbone of our nation’s offshore energy production and restricting access to the Eastern Gulf puts hundreds of thousands of jobs at risk across the country and along the Gulf Coast, particularly in Florida, Alabama, Louisiana, Texas, and Mississippi. Not only that, but securing reliable sources of energy helps fuel other industries like tourism, especially in states like Florida that relies on more than 200 MMbbl of gasoline and diesel each year to fuel its economy. 

"The fact is offshore operations are safer today than ever before. Advanced technology, safety standards, best practices, and regulations are designed to protect workers, the environment and marine life. Since 2010, more than 100 standards were created or strengthened, including for improved safety and environmental management, well design, blowout prevention, and spill response to ensure we have the best protections and highest safety measures in place. And not only have offshore operations coexisted successfully with industries like commercial and recreational fishing and tourism for decades, but our industry and the US Department of Defense work together to ensure all offshore operations take place without any impact to existing or future military activities."
 

Read more:

Zinke to open 90% of US offshore to exploration