The Group's E&P production volumes were 604 000 boed in 2007
2007 Highlights
- Successful exploration and appraisal wells were drilled in 2007 in Bolivia (1), Brazil (2), Canada (1), Norway (1), Thailand (6) and the UK (1)
- Start-up of Buzzard, West Franklin and Maria fields in the UK
- Terms agreed for new Karachaganak Gas Sales Agreement, Kazakhstan, which sets out commercial terms for the sale of gas for 15 years from 2007
- Further domestic gas sales of 220 mmscfd from ECMA (Trinidad and Tobago) contracted for up to 15 years from 2009
- Completion of next phase of development of the mid-Tapti gas field in India, enabling the supply of an additional 200 mmscfd of gas
- Exploration acreage acquired in Canada, India, Norway, Trinidad and Tobago and the UK
- Three year organic proved reserve replacement rate at constant prices of 103%. Three year proved reserve replacement rate of 83% at year end prices
Production was 220.3 mmboe in 2007 (2006 219.2 mmboe). The main contribution to this increase was the Buzzard oil field in the UK Continental Shelf which started production in January 2007. Production was adversely impacted by asset disposals (Canada and Mauritania) and the shutdown of the Central Area Transmission System (CATS) pipeline following damage by a third-party vessel. Excluding the impact of disposals and the CATS pipeline closure, 2007 production grew by 5% compared to 2006. Production in 2006 rose by 19% (35.4 mmboe) compared to 2005, mainly due to increased contributions from Egypt and Trinidad and Tobago. The daily production in 2007 was equivalent to 604 000 boed.
In 2007, proved reserves(b) were 2 039 mmboe (2006 2 149 mmboe) after net additions and revisions of 110 mmboe and production of 220 mmboe. Full details can be found in Supplementary Information.
Total reserves and resources(b) have increased by around 2 billion boe during 2007 and now exceed 10 billion boe, amounting to 46 years of production at 2007 levels (see chart to the right).
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PRODUCING COUNTRIES |
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(In order of production volumes) |
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| UK |
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BG Group net production in the UK totalled 59.2 mmboe in 2007 and accounted for around 27% of the Group’s production. The principal operating assets are the Buzzard field, the J-Block (Joanne and Judy) and Jade fields, the Elgin/Franklin fields, the Everest and Lomond fields, the Easington Catchment Area (ECA) fields, the Atlantic/Cromarty fields, the Armada and Seymour fields and the Blake field. BG Group also has a 51.18% interest in the CATS pipeline. Damage to the CATS pipeline in July caused by a third-party vessel resulted in production from the Everest, Lomond, Jade and J-Block fields being shut in for around two months. This reduced BG Group’s expected production by 5.5 mmboe in total. The pipeline was returned to full service in September.
New production from the Buzzard field (BG Group 21.73%) came onstream in January 2007 and peak production reached 220 000 bopd gross. The West Franklin field (BG Group 14.11%) in the central North Sea commenced production in September and should assist in maintaining plateau production from the Elgin/Franklin facilities. First production from the Maria field (BG Group 36% and operator) was achieved in December 2007.
In 2005 and 2006, BG Group announced two discoveries, Jackdaw and Jasmine, in the central North Sea. Jackdaw is close to the Jade field and straddles blocks 30/2a (BG Group stake increased in December 2007 from 34.4% to 43.1%) and 30/2c (BG Group 36%). BG Group is operator of these two blocks. The Jasmine discovery straddles blocks 30/6 and 30/7a (BG Group 30.5%). BG Group and partners announced a successful well in the Jasmine North Terrace in February 2008 and an appraisal well on Jackdaw is expected to complete drilling in first quarter 2008.
In February 2007, BG Group was awarded three licences in the UK’s 24th licensing round.
BG Group is the operator of two gas–producing areas offshore the Nile Delta – the Rosetta concession and the West Delta Deep Marine (WDDM) concession (comprising the producing Scarab, Saffron, Simian, Sienna and Sapphire fields, and the Serpent, Saurus, Sequoia, Solar, Sienna Up, Mina and Silva discoveries).
BG Group net production from Egypt was 56.6 mmboe in 2007 (2006 62.4 mmboe).
BG Group continues to be a key supplier to the domestic market through its Rosetta, Scarab and Saffron fields. The Scarab and Saffron development is one of the longest sub-sea tie-backs in the world and the first deep water development in Egypt.
BG Group also supplies Egyptian LNG from its Simian and Sienna fields, which supply Train 1, and the Sapphire field, which supplies Train 2.
Since 2005, BG Group and partners have been tolling 225 mmscfd of gas (reducing to approximately 150 mmscfd from 2009) from Scarab and Saffron through the SEGAS LNG plant located at Damietta. BG Group has agreed to purchase 0.7 mtpa (reducing to 0.5 mtpa) of the related LNG output.
During 2006, the Rosetta Phase III (BG Group 80%) and WDDM Phase IV (BG Group 50%) projects were sanctioned. In 2007, these projects were reaching completion, with first gas delivered from Rosetta Phase III and WDDM Phase IV in first quarter 2008. In addition, two infill wells were drilled in fourth quarter 2007 as part of a programme to maximise hydrocarbon recovery from WDDM.
BG Group also has interests in three other offshore concession agreements – El Manzala (BG Group 100%), El Burg (BG Group 70%) and the North Sidi Kerir Deep blocks (BG Group 50%). During 2007, processing of 3D seismic acquired in 2006 was completed, and environmental and site surveys were undertaken on El Burg and El Manzala in order to start drilling in 2008.
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BG Kazakhstan |
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BG Group is joint operator of the giant Karachaganak field (BG Group 32.5%) in north-west Kazakhstan, which is one of the largest gas and condensate fields in the world. In November 2007, the Karachaganak partners celebrated the tenth anniversary of the signing of the Final Production Sharing Agreement.
BG Group net production from Kazakhstan was 39.6 mmboe in 2007, an increase of 9% compared with 2006. Over 61 mmbbl (around 73%) of total gross liquids were exported through the Caspian Pipeline Consortium pipeline (BG Group 2%) and via the Atyrau Samara pipeline, in which BG Group has had capacity since mid-2006, into the Transneft system. These exports are sold at international prices.
The facility was de-bottlenecked at the end of 2006, and throughput is expected to increase western exports to 7.7 mtpa. The Phase IIM drilling programme, incorporating an additional 16 production wells, was sanctioned in 2005 and six wells were drilled in 2007. A fourth stabilisation train project, sanctioned in December 2006, has been expanded to include 13 additional wells and a rail export facility with initial capacity of 3.8 mtpa. This is expected to increase western export volumes to more than 10 mtpa and develop gross reserves of 250 mmboe. It is planned to be onstream in 2009.
In November 2006, pre-FEED work for the Phase III development of the Karachaganak field was completed. FEED commenced in 2007 and further work is ongoing. Phase III is targeted to come onstream in 2012, and is expected to increase liquids sales to 16.5 mtpa and gas sales to 16 bcma. In June 2007, BG Group and partners agreed a new Karachaganak Gas Sales Agreement with KazRosGas, a joint venture between Gazprom and KazMunaiGaz. The agreement sets out the commercial terms governing the sale of gas over a 15 year period and became effective in September 2007.
BG Group produced 23.0 mmboe of gas in Trinidad and Tobago during 2007. This was an increase of 0.4 mmboe compared with 2006 due to a more steady supply to Atlantic LNG Train 4 over the year and the start-up of the onshore Central Block development. The BG Group-operated Dolphin and Dolphin Deep fields in the East Coast Marine Area (ECMA) supply gas into the domestic market and Atlantic LNG Trains 3 and 4, and the BG Group-operated North Coast Marine Area (NCMA) supplies gas into Atlantic LNG Trains 2, 3 and 4.
In May 2007, BG Group and partners signed an agreement for further domestic gas sales of 220 mmscfd from ECMA to The National Gas Company of Trinidad and Tobago Limited for up to 15 years, starting in 2009.
During 2007, BG Group and partners signed major contracts for a total of US$493 million for the Poinsettia field project, part of the planned phased development of the NCMA. The project comprises a new drilling and production platform in 160 metres of water, the drilling of six wells from the platform, a 20 inch gas export line and a single sub-sea well tie-back that commenced drilling in October 2007. Construction of the platform is expected to be completed towards the end of 2008 and the drilling of the platform wells is then expected to commence.
In August 2007, BG Group signed a farm-in agreement with Canadian Superior Energy Inc. for Block 5(c), 85 miles off the east coast of Trinidad. Under the terms of the agreement, BG Group has taken a 30% working interest in the Production Sharing Contract. The first well of the current three well programme completed drilling on the Victory prospect in January 2008 and is under evaluation after successful tests.
At Central Block, a new gas plant with a capacity of 65 mmscfd was commissioned in September 2007, near the existing production site at Carapal Ridge. The increased capacity of the new facility can supply up to 45 mmscfd of BG Group’s capacity in Atlantic LNG Train 4 and up to 20 mmscfd to the domestic market. Also during the year, 3D seismic was acquired over 85 square kilometres of Central Block area.
In 2007, BG Group’s expanded Panna/Mukta and Tapti (PMT) fields (BG Group 30%) produced 13.7 mmboe net.
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BG India |
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Gas production at the PMT fields has almost doubled since their acquisition in 2002. The Group is working with partners and the government to progress expansion projects that are planned to further increase the production rate. The increased production will be sold into the domestic market.
In the first phase of Panna expansion, two wellhead platforms were installed and development wells drilled. First production from the Panna expansion was achieved in February 2007. In total, 15 wells have been drilled so far, and a further six are planned.
In August 2007, the next phase of development of the mid-Tapti gas field was completed and first gas produced. The new facilities should enable the supply of an additional 200 mmscfd of gas to markets in the western region, which would increase gas production to 450 mmscfd gross.
The overall production for PMT fields is expected to grow by 75% between 2006 and 2009.
BG Group was successful in the 2006 NELP VI licensing round and, in March 2007, executed a production sharing contract with the Government of India for a 45% interest in exploration block KG-OSN-2004/1 in the Krishna Godavari Basin. A joint operating agreement is being finalised with Oil and Natural Gas Corporation Ltd.
BG Group net production in Tunisia during 2007 was 11.9 mmboe gas and condensate from its Miskar field (BG Group 100%). This satisfies approximately 41% of Tunisia’s domestic gas demand.
Miskar gas is processed at the Group’s onshore Hannibal terminal and sold under long–term contract to the Tunisian state electricity and gas company. A six well infill drilling programme is underway, with completion scheduled for 2009. The first well entered production in December 2007 and three more are planned to enter production in 2008. De-bottlenecking work is also ongoing at Hannibal. A new 60 kilometre condensate pipeline from Hannibal was commissioned in 2007. This has improved safety by removing the need to transport condensate by road.
Progress has been made on the development of the Hasdrubal field (BG Group 50%) and gross production of around 30 000 boed is expected onstream from 2009. All major infrastructure contracts have been awarded. Construction is underway and was around 45% complete as at February 2008.
In 2007, BG Group produced 9.9 mmboe from its Bongkot field (BG Group 22.22%), a new record for the asset.
BG Group continues to invest in the Bongkot field which supplies approximately 20% of Thailand’s domestic gas demand. Further development phases are designed to extend the life of the field into the next decade. Bongkot South is an important part of that development plan. In October 2006, the first exploration well drilled in the Bongkot concession for eight years, Ton Chan IX, encountered gas-bearing sands. This was followed by two further successful exploration wells, Ton Rang 2X and Ton Chan 2X. Drilling continued in 2007, with a further five successful exploration wells drilled in the Bongkot South area and one in Bongkot North.
In 2007, the Thai Government granted an extension of Bongkot’s Petroleum Production Periods, covering blocks B15, B16 and B17, for a further ten years from the current expiry dates in 2012 and 2013. This should allow continued exploration and development activities within the field.
BG Group and its partners signed new Operations Contracts (replacing contracts previously in place for their interests) with the Government of Bolivia in October 2006. Following congressional approval and subsequent notarisation in May 2007, these contracts became effective.
Gas continued to be delivered during 2007 into the Bolivian, Brazilian and Argentine markets from BG Group’s fields in Bolivia, including from the Margarita Early Production Facilities (BG Group 37.5%), which came onstream at the end of 2004.
BG Group net production from Bolivia was 5.5 mmboe in 2007 (2006 5.3 mmboe).
In December 2007, BG Group and partners successfully drilled the Huacaya X-1 well, on the northern part of the Caipipendi block where the Margarita field is also located. The discovery will now require full technical and economic evaluation.
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Lyndon Volney at Elba Island |
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In 2007, BG Group sold most of its Canadian producing assets, specifically those known as Bubbles, Ojay and Copton/Lynx, for a final consideration of £228 million. The sale was completed in April 2007. Following the sale, BG Group’s Canadian production declined to 0.9 mmboe in 2007, from 3.5 mmboe in 2006. Current production is sold into the Canadian grid for sale into the Canadian and US markets.
BG Group retains exploration prospects in Canada. This includes a 75% interest in Blocks EL 429/432 in the Northwest Territories, acquired in 2005, which covers 146 928 hectares in the Central Mackenzie Valley. In May 2007, BG Group acquired two further licences, EL 444 (BG Group 100%) and EL 445 (BG Group 75% and operator) in the Colville Lake area of the Northwest Territories. Further acreage has also been acquired in Alberta and British Columbia.
In Alaska, BG Alaska has interests in over 2.3 million gross acres in the Eastern North Slope (ENS) and the foothills of the North Slope areas. In February 2007, BG Group and partners began drilling a well on the Jacob’s Ladder oil prospect, in the ENS area, 20 miles south-east of the giant Prudhoe Bay field on the North Slope.
The sale of BG Group’s interests in Mauritania to Kuwait Foreign Petroleum Exploration Co. k.s.c. for a total consideration of £68 million, completed in January 2007. As a result, the Chinguetti field (BG Group 10.23%) contributed 0.03 mmboe in 2007 compared with 1.0 mmboe net to BG Group in 2006. |