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Drilling operations on the exploration well Nieuwendijk-1. This new Dutch design rig was built in the Czech Republic. Every section is limited to container size for easy transportation and harmony with the population. In addition, Northern Petroleum has introduced casing drilling to the Netherlands, which greatly reduces the difficulties of drilling through under consolidated formations and swelling clays. The strategy for the Netherlands was embarked upon following the announcement of “De-regulation” of the gas and electricity generation markets in 2004 recognising the opportunity that this would offer. In 2004 Northern applied for a licence over the Papekop field, an onshore undeveloped oil and gas discovery. Next in 2005, Northern acquired from Nederlandse Aardolie Maatschappij (“NAM”), the joint Shell and ExxonMobil company, five undeveloped discoveries and a number of exploration prospects. This portfolio provided the materiality threshold for a new Northern core area and will be the production base from which to build further in the near term. The process of gaining the necessary approvals to first production has been slow and much longer than anticipated at the outset. However, improvements in the regulatory system have taken place, in part instigated by Northern, and as our business grows in the Netherlands timelines should shorten. During the approval process economic criteria changed and presented the opportunity to reconsider the development options for the fields. This has enabled improvements to be instigated to increase initial production, specifically replacing gas to power generation projects by gas export and sales. Northern has also taken the opportunity to increase well productivity through a programme of hydraulic fracturing of the reservoirs. To date successful fracture programmes have been conducted at Brakel, Wijk en Aalburg and Ottoland. Similar programmes are planned for Papekop, Geesbrug and Grolloo. The onshore Netherlands was considered by some a mature petroleum province. Northern is showing the region to have further exploration and development potential. Northern plans to work towards realising further opportunities with NAM and others to grow the business and intends to be a long term producer in the country. OverviewBuilding on the production cash flow generated from the onshore Waalwijk and the offshore P12 gas fields, the work towards placing six fields into production is progressing well with nearly all the necessary approvals in place. Plant and pipeline construction are ongoing and on schedule. It is expected that the four gas fields will be on stream before the end of 2009. Furthermore it is anticipated that improved initial production rates will be achieved as a result of the hydraulic fracturing programmes. Improvements in operating practices at the Waalwijk gas field have increased profitability and the P12 gas field continues to provide commercial gas sales revenue. Both fields are exceeding their respective production forecasts at the time of acquisition. Exploration forms an important part of the agreement with NAM, and Northern’s business strategy. Two wells are budgeted for 2009. The Nieuwendijk well was drilled between April and June 2009 and the Tiendeveen well will be drilled by the same rig following workover operations on the Geesbrug gas discovery to prepare for hydraulic fracturing of the gas bearing reservoirs. Under arrangements with NAM full cost recovery by Northern on all unsuccessful exploration wells drilled under the NAM agreement will be recovered before the sharing of profits from future production derived from any exploration success.
ProductionWaalwijkSince acquiring the Operatorship of the Waalwijk field in 2007 Northern has concentrated its efforts on improving the performance of the field; the facilities were not designed for the current lower production volumes and required some modifications to perform optimally. Furthermore improvements have been made to the commercial arrangements for services and product sales. In 2008 net production was 0.3 bcf of gas with net production revenues of €3.06 million. In October 2008, Northern sold its entire interests in the Waalwijk underground gas storage (“UGS”) projects to Star Energy Group Plc for £7 million. Further payments of £2 million and £1 million will be payable to Northern upon the Final Investment Decisions (“FID”) being taken on the projects in the northern and southern parts of the Waalwijk licence. The deal also released Northern from a €4.5 million contingent consideration due to Wintershall Noordzee B.V. under the terms of an agreement in the event of FID being made before August 2012 on a UGS project within the Waalwijk licence area. P12The P12 field was acquired by Northern as part of an asset exchange with Dyas B.V. in 2007. This offshore field is operated by Wintershall. In 2008 net production was 0.36 bcf of gas with gas sales revenues of €3.33 million. Field Development ProjectsBrakel, Geesbrug, Grolloo, Ottoland, Papekop and Wijk en AalburgProduction Licences are held for all the fields and EBN, the state company has opted to participate in the Andel III licence. EBN has paid its 40% proportional share of back costs for expenditure on the licence which includes the drilling of the Ottoland sidetrack well. Northern has ordered the field production facilities and pipeline equipment, much being from Canada which has offered considerable cost savings to quotes obtained in Europe. Construction is on schedule and the few remaining outstanding planning approvals are not expected to delay first production for these fields. It is expected that the gas fields will be on production prior to the oil fields and enhanced production rates will compensate for the delayed oil production. With the changes in field development design, the hydraulic fracturing programme was implemented following workovers initially at Brakel and Wijk en Aalburg. These have been successful, with results exceeding the model forecasts. Combined flow rates of 21.8 mmcfd were obtained for the two wells giving a realistic expectation that production could be initiated and sustained at much higher rates than previously considered. The Ottoland post frac flow rates also exceeded expectations and plans are advanced to perform a longer term test utilising a downhole pump to fully evaluate reservoir performance ahead of sustained production. Frac programmes are also to be carried out at Geesbrug and Grolloo in 2009 to enhance the full potential to increase production rates from these wells. Additional drilling at the fields to further enhance productivity will be considered once field performance has been evaluated after an initial period of production. The forecast production from all six fields is for an initial 4,670 barrels of oil equivalent per day (2,100 boepd net to Northern) with first production planned for late 2009. Administrative delays have impacted previous projections but it is anticipated that at year end 2009 this target initial production will be met or exceeded based on the enhanced flow rates expected from the gas developments as a result of the hydraulic fracture programme. Andel III & Drenthe III Licences – Exploration and AppraisalThe first two wells of a three well exploration programme under the NAM agreement in the Andel and Drenthe licences commenced with the Nieuwendijk well in April 2009. The Tiendeveen well will be drilled thereafter. The prospects were selected for drilling as part of the NAM agreement and are located in proven hydrocarbon fairways. Northern has benefited from high quality 3D seismic data coverage over this acreage to define the drilling prospects. The Nieuwendijk well drilled in the Andel III licence is located in the West Netherlands Basin and targeted a prospect interpreted to contain 56 million barrels of oil in place. The primary objective was for oil trapped in the Bunter reservoirs and although strong oil shows were encountered during drilling the results of log evaluation and pressure tests indicated the probability that the levels of oil saturations were not sufficient to warrant testing. The result of the well will be integrated into our work on the remaining prospects in the licence. The Tiendeveen location in the Drenthe III licence is located 5 kilometres northwest of Northern’s Geesbrug gas field development in the Lower Saxony Basin. The prospect is considered to be of lower exploration risk being only fault separated from the Geesbrug field and having equivalent reservoir targets. The prospect has potential for gas in Permian Rotliegend and Carboniferous Westphalian sandstones, totalling some 67 billion cubic feet of gas and condensates in place. With success a discovery would easily be integrated with the long term Geesbrug field development. A second exploration prospect Lhee in the Drenthe III licence will be the fourth well to be drilled under the NAM agreement and is planned for 2010 targeting 122 bcf gas in place. A reinterpretation of the 3D seismic coverage of the Kerkwijk discovery in the southeast of the Andel III licence has indicated this structure may have significantly larger volumes of hydrocarbons than previously interpreted and may be an extension of the Wijk en Aalburg field. The gas in place assessment gives a mean of 22 bcf and work will continue to evaluate the discovery for appraisal and future development. Utrecht LicenceAn integrated interpretation of the licence has been conducted across the Andel III and Utrecht licences utilising the entire available well and seismic data for the region in order to better define the prospectivity. The results of this work indicate that significant hydrocarbon potential exists on the Utrecht licence including three wells that have proven gas in the primary Bunter reservoir. A large structure named North Ottoland has been mapped to the north of the Ottoland field and south of the Papekop field. Ottoland North lies updip from the Ottoland field and is separated from the latter by a structural saddle or low. A complex of fault terraces on the flank of the structure have been drilled by the Haastrecht-1, 2A and 2B wells located down dip off the main structure. The wells predate the acquisition of the 3D seismic. Northern’s interpretation of the 3D seismic data indicates the wells were not optimally located and missed the main structure; however a sidetrack Haastrecht-2B is interpreted as being gas bearing from log analysis. A hydrocarbon contact interpreted in this well if in continuity with the North Ottoland structure would give around 142 bcf gas in place. The upside would be to use the oil water contact in the Ottoland field, the spill point to the North Ottoland structure, which gives oil in place estimate of 485 million barrels, assuming no gas cap. This prospect will be considered as part of the planned drilling programme for 2010. On trend with the Papekop field is a structure drilled by the Willeskop well which is interpreted to be gas bearing based on log analysis with a gross hydrocarbon column of 160 metres and mean gas in place of 53 bcf. Further to the southwest of Willeskop on the same fault trend is the Meerkerk gas discovery which is currently interpreted to be too small for economic development. Further to the southeast is the Meerkerk South prospect interpreted to contain 28 bcf gas in place. Opposite this structure across a syncline a larger prospect is interpreted, Everdingen South with gas in place estimated at 145 bcf. Shallower secondary reservoir objectives have been identified within the Jurassic sequence in the basal Delfland, Brabant and Werkendam intervals. Production history from the 1950– 60’s indicates that many of the old Andel wells produced hydrocarbons from these reservoirs at modest rates of a few 10’s to 100 bbls per day. An opportunity to test one of these shallow structures either as part of a deeper Bunter test or on a stand – alone basis may arise as work on the combined Andel III – Utrecht area progresses towards further drilling. Oosterwolde LicenceWork continues to integrate recently purchased 3D seismic data into to a regional interpretation, which includes the Drenthe III licence. The results of this work should improve Northern’s understanding of the petroleum systems and prospectivity in order to high grade prospects as future drilling candidates. Further information |
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