International activities on a broad footingRussia: Production increased in Siberia / Norway and the UK: Important oil discoveries in 2010 / Gulf Region: Activities strengthened in Qatar & Abu Dhabi
Kassel. As Germany’s largest crude oil and natural gas producer, Wintershall is active internationally in selected core regions where the company has built up a high level of regional and technological expertise. These are Europe, North Africa, South America, as well as Russia and the Caspian Sea region. In addition, these operations are complemented by the company's growing exploration activities in the Middle East.
Production has grown considerably since 2000. Following the substantial rises in production in recent years, in 2010 production of crude oil and natural gas was kept at a high level with 1331 million barrels of oil equivalent - an increase of about 70 percent on the figure for 2000 of 80 million barrels of oil equivalent.
Although crude oil and condensate production decreased by 14 percent in 2010 to 5.8 million tons compared to 2009 (2009: 6.8), natural gas production increased by 5 percent in 2010 to 14.3 (2009: 13.6) billion cubic meters. The decrease in oil and condensate production was primarily caused by the OPEC restrictions in Libya, while the increase in gas production is this year attributable to activities in Argentina and the first entire year of plateau production from the west Siberian field Yuzhno Russkoye.
The total reserve-to-production ratio, which is based on Wintershall’s share of production in 2010 and refers to the reserves at year end, is 10 years (2009: 10 years). 89 %2 of the quantities produced in 2010 were replenished.
Investments in exploration and development of new fields
In 2010 Wintershall’s Exploration and Production segment invested a total of 571 million euros (2009: 740) in exploration, capital expenditure and acquisitions in the search for and development of new oil and gas deposits. 363 million euros of this figure (2009: 409) were invested in Europe, 157 million euros (2009: 167) in North Africa including the Middle East, 36 million euros (2009: 49) in South America and 15 million euros in the core region Russia and the Caspian Sea 15 (2009: 115).
12 wells identify new deposits
Overall 23 (2009: 29) exploration and appraisal wells were conducted in 2010 in the search for new crude oil and natural gas deposits. Wintershall discovered new resources with twelve of these wells (2009:17); five in Norway and three in the UK. Wintershall is planning to continue the search for new reservoirs in its core regions in 2011 and to push ahead with the development of known deposits, especially in the North Sea and Norway, in the coming years.
In addition to our investments in finding, developing, and producing hydrocarbons, expanding our technological know-how secures the future success of our company. Wintershall conducts its own research and development projects in selected technological fields. These activities focus on reducing the risks involved in exploration methods, attaining a higher yield from deposits that are already producing, and developing technologies for deposits in which the development and production conditions are difficult. Overall, technological development focuses on harnessing the synergies with the research expertise of the BASF Group. In so doing, Wintershall can position itself in the race for access to crude oil and natural gas resources as a partner with excellent technological expertise.
We operate in ecologically sensitive areas. Therefore, before our activities start, we carefully examine potential effects on the environment, such as on water and biodiversity. Together with experts, our contractors and relevant stakeholders, we establish measures to minimize the impact on humans and the environment. In so doing, we are committed to the adherence to international conventions, local regulations and our own standards.
Wintershall continued to invest in crude oil production in Germany last year. For example, in summer 2010 a new oil pipeline connected the successful exploration well Schwabmünchen 5 with the production operations at Aitingen near Augsburg. Now up to 22,000 tons of crude oil a year can be transported through this pipeline. Wintershall is also drilling 16 new wells at its operations in Emlichheim in Lower Saxony. The company plans to drill twelve horizontal and four vertical wells in the next five years. The wells will be supplemented with 13 extended reach wells at existing production stations. The investments earmarked for these activities amount to more than 60 million euros. This will extend production from the Emlichheim oil field by more than 20 years. The BASF subsidiary uses steam-flooding technology in Emlichheim in order to produce the very viscous oil there. Wintershall has been producing crude oil there at a constant level for more than 60 years.
The Mittelplate offshore field, in which Wintershall and RWE Dea AG each hold a 50 percent share, is the cornerstone of oil production in Germany. With proven initial reserves of over 200 million barrels, the Mittelplate oil field is Germany's largest known oil deposit. The development of this field was continued in recent years with extended reach drilling from land. In 2010 the production license was extended to 2041.
In addition to our production sites in North Germany, Rhineland-Palatinate and Bavaria, we focus on expanding our exploration and production of crude oil and natural gas in the North Sea. The Wintershall platform A6-A in the far north-west of the German North Sea – the so-called “Entenschnabel” (‘Duck’s Bill’) – is the only offshore gas production platform in Germany.
Wintershall is also involved in the exploration process for unconventional gas reserves in Germany. The company received permission from the relevant mining authorities in August 2010 to conduct geological investigations in two license areas. The Wintershall concessions “Rhineland” and “Ruhr” cover an area of 3,900 km² and stretch from the German-Dutch border in the West to the Sauerland region in the East. Our activities in the next three years are limited to preliminary geological surveys to assess the resource potential of possible unconventional deposits. Deep drilling and fracing activities are not planned.
Around half of the natural gas currently consumed in Europe still comes from the countries bordering the North Sea – Norway, the Netherlands, Denmark, the UK and Germany. Wintershall has been active in the North Sea since 1965. Norway is one of the most important suppliers for Europe, alongside Russia, because of its major oil and gas deposits and the good connections to the West European markets.
With over 40 licenses and more than 20 operatorships, Wintershall is one of the largest license holders in Norway. Wintershall is planning to invest more than a billion euros in this region by 2015 and is aiming for a production level of 50,000 BOE per day in the Norwegian and British sectors of the North Sea.
Wintershall already discovered promising deposits in July 2009 off the coast of Norway with its first operated exploration well “Grosbeak”. The company also successfully drilled another five wells in the Norwegian North Sea last year thus further expanding the reserves base in Norway. The “Maria discovery” is considered one of the largest oil discoveries in Norway in 2010 with an estimated 60-120 million barrels of oil. Wintershall’s activities in Norway were also boosted by the allocation of ten new production licenses from the Norwegian energy ministry as part of the APA 2010 licensing round. The allocation of three new licenses in Wintershall’s license portfolio in the areas round “Maria”, “Grosbeak” and “Beta” is particularly important for the rapid development of the discoveries.
Wintershall’s activities in the UK were also increased. Wintershall holds shares in 20 licenses in the British North Sea and has the operatorship in 10 of these. Wintershall achieved some impressive successes in exploration last year, especially with its share in the “Catcher” and “Cladhan” discoveries. In 2008 Wintershall drilled an exploration well in part block 44/24b (Dimple) where the company has the majority shareholding of 49.5 percent. The discovery, known as “Wingate”, is set to contribute to production before the end of 2011 following another appraisal well. “Wingate” will then be controlled via the Center for Remote Controlled Operations (RCO) in Den Helder.
In Denmark Wintershall is planning the “Hibonite” appraisal well in 2011 in the western section of the Danish North Sea after the Ravn-3 exploration well confirmed the presence of hydrocarbons at a depth at 4,469 meters below sea level in 2009.
Wintershall is one of the largest producers of natural gas in the Netherlands and operates at total of 25 offshore platforms there. To improve the efficiency of its operations Wintershall controls 19 of these platforms from Den Helder with a cutting-edge radio surveillance and control system. This reduces the number of transportation and provisions flights to the platforms by a third. The Centre for Remote Controlled Operations (RCO) is a key requirement for the commercial production of smaller reserves in the southern section of the North Sea. Rijswijk, near The Hague, is home to the company-wide Competence Center for Offshore Technology. Here Wintershall is also working on developing its shallow-water expertise.
Production platform E18-A in the Dutch North Sea shows that environmental protection and profitability are not mutually exclusive when it comes to gas production. A large part of this platform is made up of the former gas production platform P14-A, which was dismantled from its home in the Dutch North Sea, fully converted and re-deployed in Block E18-A in 2009. Wintershall started a new project in 2010 with the development of the natural as reservoir K18 Golf in the Dutch North Sea. Production is set to begin this year.
The joint field development projects with Gazprom in West Siberia were continued successfully in 2010 and made a key contribution to Wintershall’s success. Production from the deposits Yuzhno Russkoye and Achimgaz make a key contribution to Europe’s supply of natural gas. The gas will also be delivered to Europe via the planned Nord Stream Baltic Sea pipeline, which will provide a direct link between the Siberian gas reserves and Germany.
The natural gas field Yuzhno Russkoye in west Siberia has been producing at plateau – of 25 billion cubic meters of natural gas per year – since the middle of 2009. Wintershall has a 35 percent share in the commercial success of the field via Severneftegazprom. This reservoir in western Siberia has recoverable reserves of more than 600 billion cubic meters of natural gas.
The second joint project, the development of sub-section IA of the deeplying Achimov horizon in the Urengoy field, is also operating successfully: the six pilot wells in the technically difficult deposit of the Achimgaz joint venture, in which Wintershall has a 50 percent share, are currently producing 3.5 million cubic meters of gas and 1,600 tons of condensate every day. The technical concept for the further development of the field is currently being drawn up.
The two partners intend to build on this positive experience: in the middle of March 2011 Wintershall and Gazprom signed a Memorandum of Understanding to develop two additional blocks of the Achimov formation in the Urengoy field in western Siberia together. Based on initial analyses it is presumed that gas production from the new blocks can reach the plateau level of Block IA of eight billion cubic meters of natural gas a year at least. This would mean that Wintershall would produce pro rata as much from the three Achimov blocks as from the Yuzhno Russkoye gas field; which would represent a significant increase in gas production. According to the Memorandum of Understanding, Gazprom will receive shares of equal value in Wintershall exploration and production projects in the North Sea in return.
Wintershall has been active in Argentina since 1978, especially in the production of natural gas. Wintershall Energía S.A., a wholly owned subsidiary of Kassel-based Wintershall, has working interests in 15 oil and gas fields and is one of the largest natural producers in the country with an annual production of 25 million barrels of oil equivalent.
Wintershall focuses its attention here on searching for new deposits, whereby it is concentrating its efforts on crude oil. Consequently, exploration activities in Argentina have been stepped up. The company explores both in regions that have not yet been developed geologically, such as the Cañadón Asfalto Basin, and in regions where hydrocarbons are already being produced, such as the Neuquén Basin. Here the company explores for new resources primarily in deeper-lying rock strata in the foothills of the Andes. We are the operator in two exploration licenses in the Cañadón-Asfalto Basin. The tight-gas development of the field Aguada Pichana Central West in the Neuquén Basin continued.
Off the coast of Tierra del Fuego Wintershall produces natural gas from the Carina and Aries natural gas fields, so far the largest natural gas production project offshore Argentina, together with the French company TOTAL and PanAmerican Energy (PAE). The consortium aims to produce a total of 56 billion cubic meters of natural gas, 3.4 million tons of condensate and 2.4 million tons of LPG (Liquefied Petroleum Gas) from the two natural gas fields by 2027. The subsidiary Wintershall Energía has a 37.5 percent working interest in this project.
Since March 2010 Wintershall has also held a 25 percent share in the 6,000-square-kilometer Otway block and a 25 percent share in the Tranquilo Block in the Magellan basin in Chile. Tranquilo and Otway cover an area of 12,000 square kilometers in total and are situated near our existing production operations at Tierra del Fuego. Here we developed our exploration activities with seismic surveys.
Wintershall has been engaged in exploration and production in Libya since 1958. Since then more than 2 billion US dollars have been invested in Libya and more than 150 wells drilled overall. Wintershall currently operates eight onshore oil fields in the concessions 96 and 97. Gazprom has a 49 percent working interest in these projects. Wintershall also produces from the Al Jurf3 offshore field in the Mediterranean Sea off the Libyan coast as part of a consortium with the Libyan National Oil Corporation (NOC) and French oil producer TOTAL.
Wintershall suspended and sealed off its crude oil production operations in the Libyan desert at the end of February 2011 for safety reasons.
In addition to its activities in North Africa, Wintershall continues to expand its operations in the Arabian Peninsula: in 2010 the first exploration well was sunk in the so-called Khuff formation in the western section of the exploration block 4N in Qatar. This block is located close to the so-called North Field, the largest natural gas field in the world, and covers an area of 544 square kilometres in water depths of around 70 meters. In Qatar we also hold a working interest in Block 3, which covers an area of around 1,666 square kilometers. The first 3-D seismic surveys have been carried out and exploration wells are now planned for the coming years. We did not renew the concession for Block 11 once the second exploration phase had expired. With around 26 trillion cubic meters of natural gas, Qatar has the third-largest natural gas reserves in the world after Russia and Iran.
In May 2010 a Memorandum of Understanding was signed with the Abu Dhabi National Oil Company (ADNOC) in Abu Dhabi which paved the way for the long-term exploration and development of a deposit in the western region of the emirate for Wintershall. Wintershall’s strategy here, just as in other core regions, focuses on a combination of innovative production techniques and the latest exploration technologies. In addition, Wintershall opened its own offices in Abu Dhabi – the first of a German E&P company in the emirate. Abu Dhabi is considered one of the most important centers of the oil and gas industry in the Gulf Region.
1 This includes the shares of third parties which are attributable to Gazprom’s interest in the German Wintershall company which holds the Libyan concessions 96 and 97. The volumes from the Achimgaz project are not included here for legal and contractual reasons. The Achimgaz joint venture produced 12.2 million BOE (100%) in 2010.
2 These figures do not include the quantities from the Achimgaz project.
3 The negotiations with the Libyan state oil company on converting the existing concession agreements for concessions 96 & 97 into Exploration and Production Sharing Agreements (EPSAs) have not been completed yet. An EPSA-IV Agreement for the offshore oil field Al Jurf was already signed in 2009.
Forward-looking statements and forecasts
This report contains forward-looking statements based on current expectations, assumptions and forecasts by the board of executive directors, as well as on the information currently available to that board. Forward-looking statements are not deemed to be guarantees of the future developments and results set out therein. Future developments and results are in fact dependent on a large number of factors; they contain different risks and imponderables and are based on assumptions that may not be accurate. We do not assume any obligation to update the forward-looking statements made in this document.
Wintershall Holding GmbH, based in Kassel, Germany, is a wholly-owned subsidiary of BASF in Ludwigshafen. The company has been active in the exploration and production of crude oil and natural gas for over 75 years. Wintershall focuses on selected core regions, where the company has built up a high level of regional and technological expertise. These are Europe, North Africa, South America, as well as Russia and the Caspian Sea region. Today, the company is Germany’s largest crude oil and natural gas producer and with its subsidiaries, WINGAS and WINGAS TRANSPORT, it is also an important gas supplier on the German and European market.
Wintershall. Shaping the future.
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