A joint venture between Canadian Natural Resources Ltd. (CNRL) and a partner has seen the probing in search of crude in deep water 175 km off the coast of South Africa, according to chief executive of CNRL Steve Laut.
“The project carries a lot of risk, but also lots of rewards. It has a 30% chance of success and is a high-impact exploration well.”
A unit of French energy giant Total SA last year paid Calgary-based Canadian Natural $250-million (U.S.) for a 50% working interest in exploration block 11B/12B in the region’s Outeniqua Basin. The tract covers roughly 19,000 square kilometres off South Africa’s southern coast with water depths of between 200 to 1,800 meters. As part of the deal, Total E&P South Africa BV agreed to cover up to $150-million of gross drilling costs on the well, which the companies estimate will take 120 days to complete. Drilling began July 21 and Total is the operator.
The partners are drilling in one of five subsea structures each with prospective resource of up to one billion barrels of oil, Laut said. The first well could easily be a dry hole, but interest in the prospect was strong before Canadian Natural teamed up with Total last September.
Canadian Natural, which operates assets from Alberta’s oil sands to the North Sea, has long maintained a foothold off the coast of Ivory Coast in West Africa. It pumped an average of roughly 13,000 barrels of oil a day in the three months ended June 30 from the region, down from an average of about 18,000 bpd in the year-ago period.
The joint exploration program with Total holds potential to open a new frontier for the company on the continent.
“If this first well is successful it will be a potential growth area,” Canaccord Genuity analyst Phil Skolnick said. “There’s five structures there, each a billion-barrel-type size, so it’s pretty material.”