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Total makes 'game-changing' gas condensate find off South Africa

Highlights

Brulpadda find opens 'new' province offshore South Africa

Well encountered 57 meters of net gas condensate pay

To drill up to four more exploration wells at block

London β€” Total has made a "significant" gas condensate discovery offshore South Africa, opening up a new natural gas and oil play off the southern tip of Africa expected to spark a new round of drilling in the region, the French company said Thursday.

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The closely-watched Brulpadda-1 well in South Africa?s frontier Outeniqua Basin encountered 57 meters of net gas condensate pay after drilling to a target depth of 3,633 meters, Total said in statement. Total gave no official estimate on the potential resources at the find, but it is targeting resources of around 1 billion boe with the well.

"With this discovery, Total has opened a new world-class gas and oil play and is well positioned to test several follow-on prospects on the same block," Kevin McLachlan, senior vice president for exploration, said in a statement.

One of Total's biggest exploration targets this year, Brulpadda, or Bullfrog in Afrikaans, has been on the upstream sector's global watch list for years as a key wildcat with frontier opening potential. Although not a crude find, its gas resources could feed South Africa's flagship gas-to-liquids facility at nearby Mossel Bay, which lies about 180 km northwest of the find.

Total's play opening Brulpadda find

"Even though the well isn't an oil discovery, if Brulpadda proves to be anywhere near as big as the estimates of up to 1 billion barrels of oil equivalent resources, it will still be a gamechanger for South Africa," energy consultancy Wood Mackenzie said in note.

FRONTIER OPENER

Drilled in 1,432 meters of water in Block 11B/12B, some 175 km off the southern coast of South Africa, the exploration well on the prospect has been a long time coming.

Total first began drilling the Brulpadda wildcat in late 2014 but was forced to abandon the well before reaching target depth due to rig limitations and bad weather.

The subsequent attempt to test the play with a new rig suited to harsh, deepwater environments began in December. Rig owner Odfjell Drilling describes the semi-submersible Deepsea Stavanger as a state-of-the-art unit able to drill water depths of up to 3,000 meters.

Total said it plans further exploratory drilling to establish the full extent of the discovery and to establish whether commercial deposits of oil exist alongside the gas.

Following confirmation of the play potential, Total and its partners plan to acquire 3-D seismic this year, followed by up to four exploration wells on the license to test four separate prospects of a similar scale.

Total operates block 11B/12B with a 45% working interest, alongside Qatar Petroleum (25%), CNR international (20%) and Main Street, a South African consortium (10%). Canadian minnow Africa Energy holds a 4.9% effective interest in the block via its 49% stake in Main Street. The French major also operates the adjacent, even larger Outeniqua South block which has yet to be drilled and extends out to water depths of more than 4,000 meters.

GAS OR LIQUIDS?

Energy-hungry South Africa has long hoped for bigger offshore developments, but relatively little exploration has been carried out to date. The potential for new homegrown source of oil and gas would be major boon for the country.

South Africa imports about 70% of its oil needs from the Middle East and Africa. If a commercial development is successful, it could have a seismic impact on the economy. Power generation would be stabilized, and the bleeding of the balance of payments account to pay for imported oil would stop.

"The find is guaranteed to spark a new wave of interest in acquiring acreage in the country's deep offshore waters, and should bring major benefits for South Africa's ailing economy," Ben Payton, Verisk Maplecroft's African head, said in a note. "...the process of revising the country's hydrocarbon legislation will now be catapulted onto the political frontline."

If the gas part of the find is substantial, Brulpadda could also prove a catalyst to restart South Africa's gas-to-power program and help replenish gas supply to the Mossel Bay gas-to-liquids plant, Wood Mac noted. The South African government has voiced concerns that the PetroSA GTL plant at Mossel Bay could run out of natural gas within two years when the existing offshore reserves dry up.

But if the production from Brulpadda is used as a feedstock for gas-to-power plants, that reduces or eliminates the need for South Africa to import LNG or construct additional pipelines from Mozambique, Payton said.

-- Robert Perkins, robert.perkins@spglobal.com

-- Stuart Elliot, stuart.elliot@spglobal.com

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