Oil explorers test Atlantic mirror with $3 billion Angola wells

BP Plc, ConocoPhillips and Statoil ASA (STL) are among oil explorers investing at least $3 billion in wells off Angola next year in the country’s biggest deepwater drilling campaign, Wood Mackenzie Ltd. said.

The companies will drill 20 wells beneath a layer of salt about 3 miles (5 kilometers) under the seabed at a cost of about $150 million each, David Thomson, a Wood Mackenzie analyst based in Edinburgh, said by phone. Shifting rigs from the Gulf of Mexico could add a further $50 million per well, he said.

The drilling will test the industry’s Atlantic mirror theory that there may be huge deposits of oil deep beneath the sea off West Africa similar to those across the ocean in Brazil, where some of the biggest finds of the last decade have been made. Angola hopes it can tap offshore reserves to help it surpass Nigeria and become Africa’s biggest oil producer.

“Angola is considered to have by far and away Africa’s biggest pre-salt potential,” Thomson said today. “Exploration looks set to deliver big oil and the next 18 months will help answer just how big.”

Angola wants to increase output from 1.78 million barrels a day in July to more than 2 million barrels a day in 2017, a target that “looks eminently achievable,” Thomson said.

Petroleo Brasileiro SA, Houston-based Vaalco Energy Inc. (EGY), Repsol SA (REP), Eni SpA and Total SA (FP) are among companies slated to drill, Thomson said. Most have commitments to produce seismic imaging and drill two wells by 2016, he said.

Maersk Oil Angola SA has identified five drilling targets across Blocks 8 and 23 with one to be drilled this year and more in 2014, Thomson said. The explorer may sell equity in the blocks, where it currently owns 50 percent of each, he said.

Azul Field

The Danish company made Angola’s first pre-salt discovery in the Azul field in Block 23 in 2011 and plans to appraise the find once a rig has been hired, the analyst said. He estimated Azul holds 150 million barrels.

Cobalt International Energy Co. (CIE) may drill two of three prospects in Block 20 and 21, Thomson said. Results are expected this year from exploratory wells in the Block 20 Lontra prospect and Block 21’s Mavinga, Lynne Hackedorn, a spokeswoman for the Houston-based company, said in a July 31 e-mail. Lontra may hold more than a billion barrels, company documents show.

The Block 21 Cameia field discovered by Cobalt last year may produce 150 million barrels in the first stage in 2017 with 100,000 barrel a day capacity, Thomson said.

Petroleo Brasileiro, known as Petrobras, is expected to drill a follow-up well to Ogonga in Block 26 next year, the analyst said. The initial well took eight months because hard, mineral-rich rock below the salt layer required frequent drill bit replacements, he said.

The fields in Angola are estimated to be smaller than those found in Brazil, with the possible exception of Lontra. Most are likely to hold hundreds of millions of barrels rather than the billions found across the ocean, Thomson said.