Significant progress continued in Australia and Brazil, Pure Energy was acquired and an alliance to develop shale gas in the USA was formed.
E&P Highlights
- First oil flowed from the Tupi Extended Well Test (EWT) in the Santos Basin, Brazil
- Significant progress in Brazil – drilled seven successful wells, performed five drill stem tests, shot over 3 000 square kilometres of 3D seismic and cored over 275 metres of reservoir
- Acquired Pure Energy Resources Limited in Australia
- Formed an alliancewith EXCO Resources, Inc. in the USA to develop shale gas
- Completed asset exchange with BP,which concentrates operations in the UK central North Sea
- Increased total reserves and resources by 10% to 14.5 billion boe
- Drilled 28 conventional wells with 17 successes, including Brazil, Norway, Oman and Trinidad and Tobago. Completed around 200 unconventional wells
Production was 234.9mmboe in 2009 (2008 226.7mmboe), reflecting higher production from Australia, Trinidad and Tobago, Tunisia and production from the USA. Production growth of 4% was below original expectations principally due to weakness in demand and the delay to the start-up of the Hasdrubal project in Tunisia.
In 2009, proved reserves were 2 600 mmboe (2008 2 459 mmboe). Total reserves and resources increased by 10% during 2009 to 14.5 billion boe as at 31 December 2009 (see chart), amounting to 62 years of production at 2009 levels.
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PRODUCING COUNTRIES |
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| Egypt |
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 BG Group’s net production from Egypt was 58.1mmboe. The Group’s production is from its two gas producing areas offshore the Nile Delta – the Rosetta and the West Delta Deep Marine (WDDM) concessions.
In 2009, BG Group celebrated 20 years of working in Egypt. The Group has played a leading role in the development of Egypt’s natural gas industry and continues to be a key supplier to the domestic market. BG Group currently accounts for approximately 40% of all gas produced in Egypt.
BG Group announced the start up in May 2009 of Phase 5, a compression project in the WDDM concession (BG Group 50% and concession operator), to extend plateau production from WDDM reservoirs. In August, BG Group announced the delivery of first gas from the Sequoia sub-sea development located 90 kilometres offshore Egypt in the Mediterranean Sea. Straddling both the WDDM and Rosetta concessions, the Sequoia unitised development brings into production six new sub-sea wells, three located in each of the concessions, which will help maintain overall plateau production. BG Group is currently evaluating future phases of WDDM that will extend the current production plateau. The Group sanctioned phase 7 in 2009. In April 2009, BG Group was awarded North Gamasa Offshore (BG Group 100%) in the latest licensing round by the Egyptian Natural Gas Holding Company. The concession agreement formalising the award was signed in early 2010 and the initial work programme will include the acquisition of 3D seismic data.
 BG Group net production in the UK totalled 55.6mmboe. BG Group believes that significant potential remains in the UK Continental Shelf (UKCS).While it is amature basin, it is still a highly promising area and BG Group remains one of the most active players. The Group aims to continue producing at least 50mmboe every year to 2014 and beyond.
In September, BG Group announced the completion of an exchange of equity interests in certain North Sea production assets with subsidiaries of BP plc (BP). BG Group acquired BP’s entire equity in the Everest, Lomond and Armada fields and part of BP’s equity in the Erskine field, all located in the UK central North Sea. In return, BG Group transferred its equity interests and operatorship in fields in the southern North Sea to BP. As part of the transaction, BG Group took over operatorship of Everest and Lomond. The asset exchange demonstrates the Group’s commitment to the UKCS. It consolidates and strengthens BG Group’s position in the central North Sea and gives the Group control of key infrastructure hubs, allowing the operational performance of mature fields to be optimised and the development of other opportunities in the surrounding area.
The Buzzard field (BG Group 21.73%), achieved peak production of 226 000 bopd gross during 2009.With total estimated ultimate resources exceeding 700mmboe, the field is one of the largest discovered in the UKCS in more than 10 years. The Buzzard Enhancement Project is on schedule. The project involves the construction of an additional processing platform to remove hydrogen sulphide, due to be installed in 2010, which will extend plateau production.
 BG Group is joint operator of the Karachaganak field (BG Group 32.5%) in north-west Kazakhstan which in 2009 produced 41.5mmboe net to BG Group. Output was lower than anticipated due to the economic conditions.
During 2009, 3D seismic data was acquired across Karachaganak. The survey finished ahead of schedule with zero recordable incidents after 777 000 hours and 1.15million kilometres driven. The detailed 3D survey is expected to yield considerable benefits as the Karachaganak field enters future stages. The final results are not expected until 2011.
The fourth stabilisation train project, sanctioned in 2006, is now due to be onstream in 2011. The expanded project includes 13 additional wells and is anticipated to increase export oil sales to more than 10mtpa and develop gross reserves of 300mmboe.
In 2009, BG Group has been reviewing the Karachaganak Phase 3 development plans. Partners have aligned around a new multi-stage Phase 3 concept, which would yield improvements in manpower profile and cost phasing, and would deliver improved economics for investors and government alike. The Group is in discussions with the government on the shape and timing of this programme.
A key export route for Karachaganak production is via the CPC pipeline (BG Group 2%). In December 2009, shareholders agreed to expand the pipeline, which will more than double capacity by 2015, subject to a final sanction decision expected towards the end of 2010. BG Group and the Karachaganak partners will have additional firm capacity and the opportunity to capture capacity unused by other shareholders.
Production in Trinidad and Tobago during 2009 was 29.9mmboe net to BG Group.
A new production contract to supply 220mmscfd of gas from the East Coast Marine Area to The National Gas Company of Trinidad and Tobago Limited for up to 15 years, commenced in July 2009. To enable delivery of this new supply, the drilling of five further development wells in the Dolphin field was completed in April 2009.
BG Group initially had a 30% working interest in the Block 5(c) Production Sharing Contract (PSC), and under the terms of its 2007 farm-in agreement, assumed operatorship in April 2009. BG Group exercised its pre-emption rights under the Joint Operating Agreement and increased its stake in the block to 75% in September 2009. Each of the three wells drilled on Block 5(c) sincemid-2007 has encountered hydrocarbons and each has been successfully tested. Drilling and testing on the third well, Endeavour-1, was completed in first quarter 2009. The data from all three exploration wells is being evaluated.
As part of the development of the Poinsettia field, the North Coast Marine Area (NCMA) phased development continued with Phase 3c – first gas being achieved in January 2009 from the Poinsettia D well on the recently installed Poinsettia platform. Work recommenced in July with the drilling of six additional wells as part of the combined Phase 3c/d programme. Three wells were completed in 2009 and all six wells are anticipated to be producing by mid-2010, thereby increasing NCMA deliverability.
 In 2009, the Panna/Mukta and Tapti fields (BG Group 30%) produced 13.7mmboe net. Panna K started production in August 2009. Future work will focus on development of Panna L in 2010/2011 and the next phase of the Mukta reservoir (Mukta B). The first of the three development wells in Tapti to improve recovery has been completed and the remaining two are planned to be completed in 2010.
BG Group has been expanding its position in India via licence rounds and farm-ins. BG Group farmed-in to two exploration blocks in the east coast of India; one in the Krishna Godavari (KG) Basin and the other in the Mahanadi Basin. Under India’s New Exploration Licensing Policy (NELP), BG Group acquired a 45% participating interest in an exploration block in the KG Basin (KG-OSN-2004/1) in the NELP VI licensing round. In October, following a successful bid in the NELP VIII licensing round, a consortium led by BG Group (30% and operator),was provisionally awarded an exploration block (KG-DWN-2009/1) in deepwater in the KG Basin.
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BG Group net production in Tunisia during 2009 was 12.7mmboe. In 2009, the Group’s production was gas and condensate from the Miskar field (BG Group 100%) and gas from Hasdrubal (BG Group 50%).
BG Group drilled five successful wells as part of the Miskar infill drilling campaign between 2007 and 2009. These wells further extend the field production plateau and contributed to the increased production levels in 2009. Hasdrubal (BG Group 50%) came onstream in December, later than anticipated due to the commissioning of onshore plant systems taking longer than expected. Net production in Tunisia is expected to increase from 32 000 boed to 56 000 boed as wells are progressively brought onstream. BG Group is already the largest producer of natural gas in the country, and with new production from Hasdrubal, it is estimated that the Group will supply more than half of Tunisia’s natural gas demand and also become the country’s largest producer of liquefied petroleum gas (LPG).
In 2009, BG Group produced 8.7mmboe net from the Bongkot field (BG Group 22.22%). Output was impacted by lower domestic demand caused by economic conditions. During 2009, work continued on the expansion of the Greater Bongkot North (GBN) facilities. Production benefited from the development of two new structures (Phase 3G) and was supported by well intervention and infill drilling programmes targeted to improve liquids recovery. Progress on Phase 3H continues which will deliver production from three new GBN structures, commencing in 2010.
In July 2009, the partners in the Bongkot Joint Venture signed a gas sales agreement with PTT Public Company Limited covering all gas production from the Greater Bongkot South (GBS) field in the Gulf of Thailand. First production from GBS is expected in 2012 and, at plateau, it is anticipated that GBS will contribute 13 000 boed, net to BG Group.
In March 2009, BG Group acquired a further 16.67% in Blocks 7, 8 and 9 Concession and a further 16.67% in an Overriding Royalty Agreement covering production from Block 9a in the Gulf of Thailand.
BG Group produced 5.8 mmboe net in 2009. The Group supplied more than 20% of Queensland’s gas demand. The development of the Queensland Curtis LNG (QCLNG) project will expand production significantly.
In May 2009, BG Group completed the acquisition of Pure Energy Resources Limited (“Pure Energy”). The acquisition of Pure Energy brings additional coal seamgas (CSG) reserves and resources to BG Group at a low cost, located adjacent to key QGC licences in the Surat Basin. In addition, the acquisition brings large tracts of prospective CSG acreage in Queensland’s Bowen Basin. In total, BG Group now owns interests in onshore concessions in Australia covering more than 120 000 square kilometres. To date, only a fraction of the total ground under lease has been explored or developed.
QGC’s total reserves and resources, including those acquired with Pure Energy, amount to date to some 17.3 tcf(a).
2009 saw excellent progress with upstream appraisal, field development planning, engineering and procurement activities all gaining significant momentum.
Upstream development will comprise around 1 800 wells by the end of 2014, rising to more than 6 000 wells over the life of the two trains. BG Group has drilled more than 150 CSG wells in 2009. The Group is on track to sanction QCLNG in 2010.
(a) BG Group net reserves and resources are as at end 2009, pre-CNOOC farm-out (5%).
BG Group net production volumes in Bolivia were 4.7mmboe in 2009. Production was affected by economic conditions.
In 2009, a commercial declaration was made in respect of the Itau gas field by BG Group and partner.
BG Group and partners are making progress towards development of the Margarita field. A development plan for the field has been submitted to the national oil company (YPFB). BG Group is building on this progress and working towards a possible final investment decision for a first phase development.
Two new production wells (Escondido 8 and La Vertiente 12) were drilled in 2009 (BG Group 100%). Production from these wells is anticipated to account for approximately 30% of the installed capacity at the La Vertiente plant.
BG Group net production in the USA was 2.0mmboe in 2009. In June, BG Group announced an alliance with EXCO Resources, Inc. (“EXCO”), a US oil and natural gas exploration and production company.
Under the terms of the alliance, BG Group:
- acquired a 50% interest in 120 000 net acres in EXCO's upstream leases in a defined area of east Texas and north Louisiana, which encompasses the Haynesville shale, the prospective Bossier shale and the Cotton Valley tight gas sands formations;
- added 2.6 tcf to BG Group's net potential resources, with net production of 78mmscfd, anticipated to increase to some 600mmscfd, net to BG Group, by the middle of the decade;
- acquired a 50% interest in a company that will hold related and complementary EXCO gas-gathering assets and entered into agreements to support the joint development and growth of these assets; and
- entered into a joint development agreement with EXCO to cooperate in the development and production of onshore shale and tight gas resources across 14 counties and parishes in east Texas and north Louisiana.
The alliance brings material new resources and supply to BG Group’s existing US business at a competitive price and in a prime location at the heart of the world’s largest gas market. These domestic exploration and production activities yield synergies with the Group’s established LNG import and 3.5 bcfd US gas marketing business. Furthermore, the transaction increases BG Group’s exposure to long-term unconventional gas resources and skills.
The alliance is performing well, with industry-leading initial production rates across the Haynesville Shale and progressive reductions in drilling days per well. Drilling activities are being ramped up. The partners will be operating 16 rigs this year. BG Group and EXCO have also purchased further acreage for the alliance.
BG Group net potential resources now stand at 3.2 tcf(b). BG Group has acquired transportation to support current production and is evaluating additional transportation to match production growth.
BG Group’s Canadian net production was 1.7mmboe. During 2009, drilling and seismic activities continued in BG Group’s acreage in Canada and Alaska. In Canada, three wells were brought onstream during 2009 and a further four wells were drilled. All four wells were unsuccessful. Three successful prospect evaluation wells were drilled in Alaska and one well remains to be flow tested.
 BG Group produced 0.7mmboe net in 2009 and had further material exploration and appraisal success in the Santos Basin pre-salt. BG Group currently estimates its net share of total reserves and resources at over 3 billion boe and anticipates that its net production will ramp-up to more than 400 000 boed by 2020.
During 2009, BG Group made considerable progress with development activities in the Santos Basin. In May, BG Group announced that first commercial oil production had commenced from the Extended Well Test (EWT) on the Tupi field in the BM-S-11 concession. The EWT on Tupi has to date produced in excess of 3.5 mmboe gross. Results exceed pre-test expectations, showing excellent reservoir performance, with good flow rates and sustained deliverability.
The Floating Production, Storage and Offloading (FPSO) module to deliver the first 100 000 bopd phase on Tupi remains on schedule for first production at the end of 2010. In parallel, BG Group is working on the development plans for Tupi North East and Iracema. These will be the next phases in the Tupi-Iracema development. The Group expects these developments to utilise 120 000 bopd FPSOs, with the first targeted to come onstream by 2013.
In November 2009, BG Group announced the signing of a Joint Venture Agreement with Petrobras, to study a Floating Liquefied Natural Gas (FLNG) vessel as an additional option to commercialise the material associated natural gas reserves in the Santos Basin pre-salt.
Significant appraisal work was undertaken during 2009. In November, BG Group announced that the Iracema appraisal well on BM-S-11 confirmed the presence of an excellent quality light oil bearing reservoir. The well in-flow performance recorded during the Drill Stem Tests (DSTs) was the highest so far achieved in BG Group's Santos Basin interests. Ultimately, development well flow rates of up to 50 000 bopd are anticipated, these rates being constrained by production facilities. Further evaluation of the well data is on-going and work on field development options has been initiated.
In September 2009, BG Group announced that the Guará discovery (BM-S-9, BG Group 30%) is estimated to contain total reserves and resources of 1.1-2.0 billion boe. DST data indicated that a permanent production well would be capable of producing initial rates of up to 50 000 bopd. To prioritise the development of Guará, the partners have agreed that it will receive the second FPSO available for the pre-salt developments, with a capacity of 120 000 bopd. First production is targeted for 2013.
The Tupi North East appraisal well on BM-S-11 encountered hydrocarbons in November 2009 and reinforces the partners’ estimates that the Tupi accumulation holds 5-8 billion boe of reserves and resources. Also on BM-S-11, formation tests on the Iara well confirmed the presence of producible light oil and that the estimated reserves and resources for Iara are in the order of 3-4 billion boe.
Further discoveries were made during 2009. On BM-S-9, BG Group announced two new discoveries known as Iguaçu and Abaré West. On BM-S-52 (BG Group 40%), BG Group completed a two-well campaign, Corcovado 1 and 2. The two-well campaign successfully proved the presence of moveable hydrocarbons and identified additional prospectivity on the flanks of the prospect.
The extensive work programme undertaken in 2009 has provided significant new information, advancing substantially BG Group’s understanding of the Santos Basin, and supporting the Group’s earlier assessments and forward development plans. The Group has established its ability to produce the oil and gas efficiently and economically, having now tested the technology and observed the excellent reservoir characteristics across a number of locations.
DISCOVERIES AND EXPLORATION ACREAGE: next page
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