Union Texas hopes to reproduce its Pakistan Badin experience

Parker Drilling Co. Rig 247 is expected to reach TD at 17,000 ft this month at Union Texas Pakistan's Marvi 1 wildcat on the Eastern Sindh block. Photo courtesy UTP.

Union Texas Petroleum Holdings Inc. has resolved to transplant elsewhere in the world the success of its 20 year old grassroots exploration effort on the Badin block in Pakistan.

Union Texas Pakistan Inc. (UTP) is actively seeking exploration concessions in Pakistan, and the parent company is on an international bent aimed at finding other areas where it might reproduce its performance in Pakistan.

Among the measures of that performance:

• Discovery of proved and probable reserves of 320 million bbl of oil equivalent since 1977.
• Cumulative production of 152 million BOE to Jan. 1, 1997, with the drilling of 187 wells.
• Total government revenue of $1.12 billion, including royalty, taxes, and sales revenue.
• Capital investment of $458 million to yearend 1996.

The company has shifted the past 2 years from an inward to an outward looking philosophy in the country. Growth of the Badin block from a nearly roadless area to the company's largest operation with 42 producing fields has fed that transition.

Among the areas the company is evaluating are Kazakstan/Caspian Sea, Yemen, Jordan, Greece, Italy, Tunisia, Venezuela, Bolivia, Papua New Guinea, and Bangla- desh.

The countries of Central Asia and Bangladesh could be considered potential spots where the company, given equal opportunities for exploration programs, would hope to repeat UTP's record in Pakistan.

Badin exploration

The UTP group began exploring in Pakistan in 1977 on the 8,637 sq km Badin block (Fig. 1 [134,828 bytes]).

The 104 exploratory wells drilled through Apr. 1, 1997, resulted in 47 discoveries (Fig. 2 [68,301 bytes]) and 57 dry holes for a 45% success rate.

Seismic data quality was poor in early years, but acquisition and interpretation give excellent results today, said Charles W. Latch, UTP president until late in the third quarter, when he took over Union Texas' Venezuela operations. Arne Hoffman succeeded Latch in Pakistan.

Large percentages of the reserves and production are from the Upper Sand units of the Lower Cretaceous Lower Goru formation (Table 1 [28,395 bytes]). Some oil and gas are produced from the Middle Sand units, and some gas is produced from the Basal Sand units.

The Upper Sands average 150 ft gross and 100 ft net thickness, and the reservoirs range from 1 million to 25 million bbl of oil reserves. Initial production is typically from the high end of the 500-2,000 b/d/well range.

Upper Sands gas reservoirs hold 5 bcf to 160 bcf of gas reserves. IPs are 5-40 MMcfd/well.

Middle and Basal Sands average 700 ft gross and 600 ft net thickness. Typical Middle and Basal reservoirs are gas pools with about 20 bcf of reserves.

The 1997 Badin exploration plan called for 11 exploratory wells, including one, Tarai Deep-3, that would test a new play concept in Jurassic Chiltan. It also called for Badin's first 3D seismic surveys, at South Buzdar and Tangri fields on the northern part of the block, and 146 km of 2D seismic acquisition. Latch called the 3D seismic results "encouraging." Drilling 3D prospects is still to come.

UTP has drilled three wildcats in far southern Badin. This area, called the keyhole, is an infrastructureless flood plain where migratory birds stop between Russia and India.

One well is a Goru discovery undergoing tests. One of the dry holes geologically set up another wildcat, Keyhole G, an 8,500 ft Goru prospect to be drilled in 1998.

"We feel that by the end of this year we will have done a reasonably adequate job of defining the reserve potential of this block," Latch said.

The group consists of UTP and Occidental Petroleum (Pakistan) Inc. each 30% and Pakistan state Oil & Gas Development Corp. 40% on the Badin I concession.

The group has drilled 29% of Pakistan's exploratory wells and made 37% of its discoveries.

Badin development

As of the end of second quarter 1997, UTP had 42 producing fields on Badin with 64 flowing wells, 18 wells on artificial lift, and 17 injection/disposal wells.

Gross production averaged 24,930 b/d of oil, 156.1 MMcfd of gas, and 49,500 b/d of water (Table 2 [13,518 bytes]). The oil rate is a block record.

The first Lower Indus basin oil discovery, Khaskeli 1, reached TD at 8,529 ft on June 16, 1981. It flowed 996 b/d of 38.3° gravity oil from 3,387-97 ft in the Upper Sand interval, opening a new play for oil exploration in Pakistan.

Khaskeli was the first UTP group field to be put on production, in February 1982.

The Badin block's first gas discovery, Golarchi 1, reached TD at 6,400 ft on Jan. 10, 1984. It flowed 10.77 MMcfd of gas with 12 b/d of condensate from the Lower Goru Upper Sand at 6,052-90 ft. Golarchi was the first Badin gas field the UTP group placed on production. Gas sales to Sui Southern Gas Co. began in March 1989.

Seven development wells were to have been drilled during 1997. UTP brought on production earlier this year four small gas discoveries drilled in earlier years that were remote from existing infrastructure.

South Mazari, Mazari, and Laghari fields are under secondary recovery and responding well. Most oil reservoirs are water drive with around 50% recovery expected, and most gas fields are depletion drive with close to 70% recovery expected.

The company calculated finding and development costs during 1992-96 at $3.25/bbl of oil equivalent.

Pakistan's 1996 oil production averaged 58,216 b/d in 1996, including 24,000 b/d from Badin. The country produced 1.913 bcfd of gas, including 150 MMcfd from Badin. UTP had 34 fields producing at yearend 1996.

Eastern Sindh block

UTP's only other Pakistan acreage at this writing is the 2,700 sq mile Eastern Sindh block, granted Apr. 17, 1994 (Fig. 1).

Interests are UTP 70%, Edison Gas SpA, Milan, 25%, and Pakistan Government Holdings a carried 5%. The government can back into a 25% working interest in the event of a commercial discovery.

After acquiring 572 line km of seismic, the group on May 21 spudded the Marvi 1 wildcat (Fig. 3 [140,624 bytes]). At 17,000 ft it will be Sind Province's deepest penetration. Marvi 1 objectives are several stacked Paleozoic reservoirs, including the Infra-Cambrian.

The block is on the Thar platform, an area with stabilized sand dunes as tall as 300 ft and adjacent to India. It is on trend with a shallow Infracambrian-Cambrian heavy oil play discovered by Oil India Ltd. in the Bikaner basin of northwestern India.

Paleogeographic and plate tectonic reconstructions show the exploration area to be related to and strikingly analogous with the South Oman salt basin, which contains more than 12 billion bbl of oil in Infracambrian, Cambrian, Ordovician, and younger strata.

Primary Eastern Sindh objectives are in the Infracambrian and Cambrian sequence with secondary potential in younger Ordovician and Permian strata.

UTP said, "The structures identified thus far are broad anticlinal basement structures that have been influenced by compressional tectonics and possibly Infracambrian salt. Infracambrian salt, which is indicated from the seismic and gravity/magnetics, is known to have been deposited within the sequence.

"Dissolution and movement of the salt appears to have influenced both structuration and deposition of younger strata. Remnant salt pods and pillows may also be present. These structural influences have resulted in a number of large prospects within the Eastern Sindh exploration license with the potential of hundreds of millions of barrels of recoverable oil."

If UTP asks for an extension of Eastern Sindh beyond yearend, another wildcat would be required.

Drilling status

UTP uses three rotaries and a small workover rig on Badin, where well depths range from 2,500-11,000 ft.

The rigs Union Texas uses have the capacity to drill wells of less than 3,000 ft to the 17,000 ft level.

Formations on Badin are normally pressured and have unusually high fracture gradients due to regional tectonics. The stratigraphic column contains volcanic stringers and abrasive sandstones that cause bits and drilling tools to wear out quickly.

Lost circulation and serious drilling problems are rare, but routine difficulties include formation ledging, key seating, elliptical hole, and formation sloughing, said Latch, formerly UTP's worldwide director of drilling.

Attractiveness of Pakistan's 1994 Petroleum Policy led to a tight rig market the past 2 years. Only 12 rigs in the country meet international standards. An expected pick-up in drilling demand will strain the available fleet.

Operating challenges

With relatively low oil and gas exploration activity in Pakistan, service and supply support is meager.

UTP depends on foreign resources for nearly all equipment and specialized services for its E&P operations. It also has to maintain higher levels of inventory for equipment and spare parts.

The company maintains its own drilling/workover support services, equipment inspection capability, services for hazardous operations, special equipment maintenance, construction project services, emergency medical services, and air transport.

It has the services of dedicated personnel and equipment from several contractors. Halliburton maintains cementing, coiled tubing, and acid trucks, Schlumberger keeps logging trucks, and Anadrill provides rental tools.

On the Badin block UTP has constructed 445 km of roads, 36 bridges, and 851 culverts and has maintained communications, potable water, sewer, and power facilities. Total cost has been $1.8 million during 20 years.

The 42 producing oil and gas fields are spread out and produce at relatively low rates. Many are mature with high water production that requires artificial lift.

The oil production of about 30,000 b/d is moved to Karachi on road tankers called bowzers. As many as 350 of these trucks can make the 24 hr round trip on a given day. Each carries 150-250 bbl of oil.

Oil price, sales

Pakistan's 1994 Petroleum Policy instituted oil pricing at 100% parity with international prices. Before that prices were discounted across the board or on a sliding scale.

National Refinery Ltd. and Pakistan Refinery Ltd. near Karachi process about 65% of Badin crude and condensate, and 35% is exported via Port Qasim at Karachi to China, Singapore, and Fujairah.

Exports occur-even though Pakistan is a net oil importer-because the Karachi refineries are designed to process Middle Eastern crudes. The Badin blend is light and can be processed by the local refineries up to a certain blend ratio with Middle East crude.

Gas markets

The price of gas used to be discounted against the price of high sulfur fuel oil. The 1994 policy divided the country into three geographic zones, each of which receives 67.5-77.5% of the imported crude parity price. UTP fields are in the 67.5% bracket.

The Badin concession has the capacity to sustain more than 200 MMcfd of gas. Sui Southern purchases the gas.

UTP, Occidental, and SSGC are designing an LPG/NGL recovery plant to extract liquids from the sales stream. It is to start up in January 1999. Capacity is 450 tonnes/day of LPG and 1,200 b/d of NGL.

The Badin gas stream is transported via pipeline to four central processing plants spread across the concession (Fig. 4 [84,421 bytes]). SSGC takes custody of the gas at the plants and ships it via a 138 km, 12-18 in. transmission line to its liquids handling facility at Hyderabad.

Approximate gas consumption is 70 MMcfd in Karachi, 50 MMcfd at the Jamshoro power plant at Hyderabad, and 30 MMcfd in Hyderabad itself.

Local effects

Through 1996, Badin block revenue has totaled $1.879 billion. Of that, 60% has accrued to the government, which has reinvested more than one quarter into the Badin Joint Venture. The foreign co-venturers have retained about $234 million or 12% while reinvesting $525 million.

The Badin partners by yearend 1997 will have spent about $3 million on community development programs in this remote area. This includes construction of seven primary schools, addition of classrooms at eight schools, and a college, hostel, and sports complex at Badin, a girls college and computer center at Matli, clinic at Kario, X-ray machine for a hospital at Golarchi, financial support to ten madrassas and mosques in Badin, and flood and monsoon relief programs.

Towns such as Badin and Matli after which many of the oil fields are named are the two main population centers in the district. Most of the agriculture-based population resides in smaller villages.

Mid-1997 UTP employment was 601 Pakistanis and 15 expatriates. Pakistanis hold key positions including vice-presidents, division managers, senior managers, materials managers, geophysicists, accounting managers, project managers, petroleum engineers, safety engineers, geologists, Landmark system manager, and senior manager of loss management.

Employee training programs have been afforded to 400-600 employees/year since 1990.

"We feel that we have built a work force here that can work anyplace in the world," Latch said.

The future

Pakistan's energy future seems bright.

The country earlier this year invited offers for a 23 block bid round and has awarded some concessions from the last bid round. This will be followed by seismic acquisition and possibly by more sustained drilling activity, Latch said.

The country has hosted about 50 oil and gas wells/year in recent years.

Badin joint venture investment in 1997 is pegged at more than $60 million each of capital and operating expenditures.

UTP is conducting a pipeline feasibility study. Badin reserves have continued to grow, and an oil discovery in Eastern Sindh could provide the impetus for a pipeline. Karachi is the nearest refining center to Eastern Sindh.

Pakistan's energy consumption growth has exceeded 7.5%/year the past 4 years in Pakistan, and imports have grown more than 16%/year.

With the incentives offered to the Pakistan industry, the energy demand growth rate is likely to climb. Availability of electricity from several planned private sector power plants is likely to boost the growth rate.

Future upstream growth opportunities for UTP include new petroleum concession blocks in Sulaiman fold belt, Kirthar fold belt, and the central gas basin.

Future downstream growth projects include LPG marketing, LNG, opportunities for integrated power projects, pipelining, and refining.

Copyright 1997 Oil & Gas Journal. All Rights Reserved.