Production at new high
Siberia: rapid expansion of natural gas production
Norway: now operator in 21 exploration blocks
Worldwide: flaring to be stopped at all locations
Kassel. As Germany’s largest producer of crude oil and natural gas, Wintershall focuses on selected core regions round the world where the company possesses a wealth of regional and technological expertise. These regions are Europe, North Africa, South America as well as Russia and the Caspian Sea region. In addition, these operations are comple-mented by the company’s growing exploration activities in the Arabian Gulf.
Production has grown considerably since 2000. At 130 million barrels of oil equivalent1, Wintershall has reached the Exploration and Production target set in 2000 for 2010 two years earlier than expected: production was sup-posed to be increased to 120 million barrels of oil equivalent by 2010. As such, last year a new and challenging target for oil and gas production was announced: now the target for oil and gas production in 2010 is 140 million barrels oil equivalent.
Investments in E&P in new fields
In 2008 Wintershall’s Exploration and Production segment invested a total of 1.465 billion euros (2007: 2.274) on exploration, capital expenditure and acquisitions (including the acquisition of Revus Energy ASA) in the search for and development of new oil and gas deposits2. 1,208 million euros (2007: 250) of this were invested in Europe, 164 million euros (2007: 142) on North Africa including the Middle East, 52 million euros (2007: 48) on South America and 41 (2007: 1,834) million euros on the core region Rus-sia and the Caspian Sea. The key areas of investment were the Mittelplate field development, the offshore field Al Jurf and the water injection project in Libya, the development of the Rincon Chico field and the Aguada Pichana concession as well as the continued development of the Achimov Formation in a section of the Urengoy field in Western Siberia.
Five wells identify new deposits
Overall, Wintershall completed 16 exploration and production wells in 2008, five of which identified new deposits, one each in the British and Dutch sectors of the North Sea and the other three in Germany, Libya and Romania. Another seven exploration wells had not yet been completed, or the results were not available, at the end of the year. The relatively small number of new deposits discovered compared to previous years’ discover-ies is due to the fact that Wintershall widened its focus to include the so-called greenfield sector, which generally has lower rates of success than the nearfield sector – exploration near know deposits. The greenfield sec-tor includes areas where the existence of oil and gas has already been established, though not in the vicinity of known deposits.
Wintershall conducts its own research and development in selected tech-nological fields. Its activities focus on improving the quality of exploration methods, attaining a higher yield from existing deposits and developing technologies for deposits with difficult production conditions. Special em-phasis is placed on exploiting the synergies arising from the research ex-pertise of the BASF Group. In so doing, Wintershall can strengthen its po-sition in the competition for access to crude oil and natural gas reserves as a partner with excellent technological competence.
Wintershall continued to invest in crude oil production in Germany in 2008. In Emlichheim in Lower Saxony three new wells were drilled and one exist-ing well was drilled horizontally to develop the known deposits more effec-tively. Crude oil is already being produced from all the wells. In November Wintershall successfully drilled the “Schwabmünchen 5” well at the Aitin-gen site in Bavaria. The aim of this exploration well was to explore the eastern subfield at Schwabmünchen with a view to tapping into additional reserves. The wholly owned BASF subsidiary has been producing from the Lechfield plain south of Augsburg for more than 30 years now and is cur-rently producing around 32,000 tonnes of crude oil a year in this region. Overall, production in the largest oil production operation in the pre-Alp region has increased by ten percent since 2005.
The development of the “tight gas” field in Leer in Lower Saxony which began in 2007 continued in 2008 and was supplemented with the drilling of a new well. It reached its primary target at the end of the year and is scheduled to start production in 2009. Tight gas reservoirs typically contain gas that is embedded in highly compact, almost impermeable rock. With so-called multiple-frac technology, the rock of the deposit is fractured un-derground in several places to make it easier for the gas to enter the well. Wintershall works together with Gaz de France Produktion Exploration Deutschland GmbH (operator) in Leer.
The Mittelplate offshore field, in which Wintershall and RWE Dea AG each hold a 50 percent share, is the cornerstone of Wintershall’s oil production in Germany. The two companies have been developing the most signifi-cant German oil deposit off the coast of Schleswig-Holstein together since October 1987. With proven initial reserves of around 200 million barrels, the Mittelplate oil field is Germany's largest known oil deposit. The devel-opment of this field continued in 2008 with two successful production wells.
Wintershall operates the only offshore gas production platform in Germany in the so-called “Entenschnabel” (Duck’s Bill). It is currently producing around 500 million cubic meters of natural gas a year. The BASF subsidi-ary has a 49.95 percent interest in and is operator of the A6-A platform.
Around half of the natural gas currently consumed in Europe still originates from the countries bordering the North Sea – Norway, the Netherlands, Denmark, the UK and Germany. Wintershall has been operating in the North Sea since 1965. Since the summer of 2006 Wintershall has acquired additional exploration rights for more than 40 blocks and part blocks in the German, British, Norwegian, Danish and Dutch sectors of the North Sea, which it is exploring for new oil and gas deposits.
In 2008 Wintershall stepped up its activities in Norway significantly and positioned itself as an active company in the E&P industry. With the acqui-sition of the Norwegian E&P company Revus Energy ASA, Wintershall has secured the potential for further growth in north-west Europe. The two companies complement each other perfectly: Revus has outstanding ex-pertise in the exploration of the Norwegian and British North Sea continen-tal shelf and Wintershall has extensive know-how and many years’ experi-ence in the development and production of technically difficult deposits. In 2009 the headquarters of the joint operation, Wintershall Norge ASA, will move to Stavanger, the heart of the offshore industry in Norway.
The company acquisition, Revus, and the Wintershall subsidiary operating in Norway, Wintershall Norge AS, were each rewarded three licences for exploration areas in the Norwegian North Sea by the Norwegian Ministry of Petroleum and Energy in the 2008 licensing round. Wintershall will be the operator in five of the six new licence blocks. Wintershall Norge AS had already been awarded five new exploration licences from the 2007 licens-ing round in February 2008. The BASF subsidiary now has more than 60 licences – and is operator in about a third of them – and is thus one of the biggest licence holders on the Norwegian continental shelf.
The integration of Revus also strengthens operations of Wintershall Nordzee B.V. in the United Kingdom because the Norwegian firm focuses on the British continental shelf, amongst other things. In 2008 Wintershall drilled an exploration well in part block 44/24b where the company has the majority shareholding of 49.5 percent. Overall, Wintershall has interests in more than 30 blocks and part blocks in the British sector of the North Sea.
In Denmark the seismic surveys carried out in the exploration blocks 4/06 to 6/06 are being evaluated. These blocks cover an area of around 1,600 square kilometers in total and are near Germany’s territorial waters. Win-tershall is the operator and has a 35 percent interest in each block.
Wintershall is one of the largest natural gas producers in the Netherlands. The southern North Sea traditionally belongs to Wintershall’s core regions. The BASF subsidiary operates at total of 26 offshore platforms in the territorial waters. Overall, Wintershall has an annual production volume of 7.7 billion cubic meters in about 50 joint ventures in the Netherlands, which makes it one of the biggest operators in the country.
Rijswijk, near The Hague, is home to the company-wide competence cen-ter for offshore technology. Here Wintershall is working on developing its shallow-water expertise. The development of offshore expertise is gener-ally gaining importance in the exploration and production of oil and gas, and the company applies this expertise to its activities in other regions of the world.
In order to further improve its efficiency as operator in the southern section of the North Sea, since last August Wintershall has been monitoring 18 of its 26 offshore platforms from Den Helder with an state-of-the-art radio surveillance system. This newly built Centre for Remote Controlled Opera-tions (RCO) was awarded the 2008 BASF Innovation Award last year. The new system secures the future commercial production of smaller and me-dium-sized reserves in the southern section of the North Sea.
Last year Wintershall once again managed to cater to the demands of en-vironmental protection and economic performance at the same time. In 2008, for the second time, a natural gas production platform was disman-tled and refurbished – so that it could produce natural gas again under a new name and in a new location. The P14-A gas production platform was dismantled from its location in the Dutch North Sea, taken apart and trans-ported to the shipyards in Rotterdam, Ridderkerk and Vlissingen. A large part of the platform is being reused for a new platform E18-A, which will begin operations in 2009 in field E18 in the North Sea.
Russia and the Caspian Sea region
In 2008, BASF subsidiary Wintershall and Russia’s OAO Gazprom officially launched the start of natural gas production by the joint venture ZOA Achimgaz in Siberia. The German-Russian joint venture produces natural gas and condensate from the formation where it also gets its name, the Achimov Formation in the Urengoy deposit. The Achimgaz natural gas field was the first major natural gas production project of BASF and Gazprom in Siberia. The deposit, which lies about 3,500 kilometers north-east of Mos-cow, is expected to produce up to 200 billion cubic meters of natural gas and 40 million tonnes of condensate over a period of 40 years. Annual natural gas production alone is expected to amount to about 7.5 billion cubic meters(RSC) during the latter plateau phase.
The second joint natural gas production project, the Yuzhno Russkoye natural gas field commissioned in 2007, is operating very successfully. It has recoverable reserves of more than 600 billion cubic meters of natural gas, which makes it about three times as big as Achimgaz. The field is already delivering more than 50 million cubic meters of natural gas a day. The maximum production of 25 billion cubic meters(RSC) of gas per year is already expected to be reached in the middle of 2009 – two years earlier than planned. By the end of 2008, 106 production wells had already been drilled – in the final stages of the field’s development this figure will reach 142.
Wolgodeminoil, another German-Russian joint venture of Wintershall and the largest Russian producer of crude oil, OAO Lukoil, operates in three licence areas in the Volgograd region covering a total surface area of about 13,600 square kilometers. The joint venture is carrying out an inten-sive exploration campaign there to locate new deposits.
An exploration well was drilled in Turkmenistan in 2008 in block 11/12 off the coast of the Caspian Sea. Thus, in 2008 the BASF subsidiary contin-ued its exploration activities in the offshore blocks. Wintershall has a 34 percent shareholding in and is the operator of each of the blocks. Other exploration projects in the Caspian Sea Region are being pursued in Rus-sia, Kazakhstan and Azerbaijan.
Wintershall has been engaged in exploration and production in Libya, one of the largest oil producers in Africa, since 1958. The company operates eight onshore oil fields there. Wintershall also produces from the Al Jurf 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.
The company also operates a gas conditioning facility near Jakhira which conditions the associated gas and transports the resulting products, gas and condensate, for sale on the coast. Wintershall has already invested more than 1.3 billion U.S. dollars in Libya and drilled a total of over 120 wells. Wintershall is the leading foreign oil producer in Libya where it is also regarded a pioneer in cutting-edge technology. It is one of only a few firms that no longer flares the gas associated with crude oil production but continues treating the gas instead, thus making a significant contribution to reducing CO2 emissions. Wintershall has set itself the goal of ceasing the flaring of associated gas in routine production by 2012 at all production sites where crude oil is produced.
The expansion of existing onshore fields continued in 2008, and Winter-shall also started developing new oil discoveries. In order to enhance re-covery in the oil fields, a 142-km-long pipeline network is being built in concession 97 through the Libyan desert as part of a parallel development phase of four fields, and will connect concessions C96 and C97. The pipe-line network will be used to transport water from the deposits. The planned water injection maintains the deposit pressure of the associated fields N, P, Q and A. For this purpose a total of 22 wells, eleven of them injection wells, will be drilled by 2011. The deposit and process water arising in the central processing facilities in Nakhla is transported back to the water processing facility in C96 via pipeline. With the commissioning of this pipe-line, Wintershall is increasing the disposal of deposit water from 97.3 per-cent to 100 percent. This will make it the first operator in Libya to fully dis-continue waste disposal via open evaporation basins.
Once repairs to an offshore production well in the part concession C137N in the Mediterranean Al Jurf field have been completed successfully, the second development phase will begin with the drilling of further production wells and two gas injectors.
Following seismic reconnaissance by air, the first 2D seismic measure-ments took place in 2008 in the 11,500-square-kilometre onshore exploration area in the Kufra Basin in south-east Libya. Wintershall took over as operator with a 65 percent interest following a successful bidding round at the end of 2006.
Geologists began conducting preliminary analyses in the Taoudeni blocks Ta5 and Ta6 in Mauritania on the border between Mali and Algeria. Soil samples were also gathered from wells up to 200 meters deep, the blocks were analysed with geological surveys and are now being evaluated.
The Middle East
In 2008 Wintershall stepped up its activities in the Arabian Peninsula as well. It was awarded another exploration licence in Qatar’s territorial waters and will take over as operator with a 100 percent stake in the exploration of Block 4N (Khuff) off the coast of the Arabian Peninsula. This block is lo-cated close to the so-called ‘North Field’, the largest natural gas field in the world. Block 4N (Khuff) covers an area of 544 square kilometers in water depths of around 70 meters. In addition to the appraisal of existing seismic data, Wintershall plans to gather and interpret additional data in the next two years and drill the first exploration well in 2009. Depending on the re-sults of the exploration activities, additional wells may be drilled which would later produce natural gas and condensate. The Block 4N (Khuff) Exploration and Production Sharing Agreement has a 25-year-term.
Wintershall already won the licence for offshore Block 3, which covers an area of around 1,900 square kilometers, together with Japanese company Cosmo Oil and Indonesia’s Pertamina in 2007. 3D seismic surveys as well as an exploration well are planned for 2011. Wintershall is already the op-erator in the adjacent offshore Block 11 in Qatar. Together with the US company Anadarki and the Japanese company Cosmo Energy, it has con-ducted several exploration wells in the last few years which identified hy-drocarbon deposits, and followed these up with closer examination of the deposits. In 2009 another appraisal well will be conducted.
Since November 2008 Wintershall has held a 20 percent interest in Block 51 in northern Oman. The first exploration well Al Nab’a-1 will be drilled together with the operator, Hunt Oil, and SK Korea. In 2008 a coop-eration agreement was signed with the International Petroleum Investment Company (IPIC), which is wholly owned by the United Arab Emirates gov-ernment, with the goal of pursuing new business options in the Middle East more vigorously in future. Wintershall will also be opening its own repre-sentation in Abu Dhabi in 2009.
In Argentina, Wintershall has interests in oil and gas fields off the coast of Tierra del Fuego and in the Neuquén Basin. Both areas rank among the most promising hydrocarbon reserves in Argentina. Off the coast of Tierra del Fuego, Wintershall produces from the Carina and Aries natural gas fields together with the French company TOTAL and PanAmerican Energy (PAE). This is the largest Argentinean offshore gas production project to date. By 2027 these two fields are expected to produce a total of 56 billion cubic meters of natural gas, 3.4 million tons of condensate and 2.4 million tones of LPG (Liquefied Petroleum Gas). Wintershall’s subsidiary Winter-shall Energía has a 37.5 percent interest in this project.
In 2008 Wintershall took over as operator in two exploration areas in the Canadón Asfalto Basin which cover an area of about 20,000 square kilometers altogether. Wintershall, which has been active in Argentina since 1978, is planning to invest 250 million US dollars there in the next five years. It has interests in 15 oil and gas fields there, making it one of the country's biggest natural gas producers. In addition, it is also involved in the Cruz del Sur pipeline project, which delivers Argentinean gas from Buenos Aires to Montevideo in Uruguay.
In 2008 Wintershall was awarded an exploration licence in Chile for the first time. Together with South American company GeoPark and Canada’s Methanex, Wintershall will commence exploration activities in the Magellan Basin in the south of Chile. The exploration of the 6,000-kilometer block, which is being searched for hydrocarbons using 2D and 3D seismic sur-veys, is part of Wintershall’s strategy to expand its portfolio in the core region of South America.
1 This includes the shares of third parties which are attributable to Gazprom’s interest in a German subsidiary which holds the Libyan concessions 96 and 97. The volumes from the Achimgaz project on the other hand are not included here due to contractual and statutory provisions.
2 Including property, plant and equipment and intangible assets.
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 fac-tors; they contain different risks and imponderables and are based on assump-tions that may not be accurate. We do not assume any obligation to update the forward-looking statements made in this document.
Wintershall, based in Kassel, Germany, is a wholly-owned subsidiary of BASF Aktiengesellschaft in Ludwigshafen. The company has been active in the exploration and production of crude oil and natural gas for over 75 years. Wintershall deliberately 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. The company is now Germany’s largest producer of crude oil and natural gas and with its subsidiary, WINGAS, it is also an important gas supplier on the German and European market.
Wintershall. Shaping the future.
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