Directors' Report: Business review
The demand for energy in Asian economies remains strong and this region offers Tullow excellent growth potential through exploration, particularly in Pakistan where the Group has a significant non-operated position.
Production from the Bangora field increased from 100 to 120 mmscfd, the maximum capacity of the gas processing facility, following a successful workover and tie-in of the Bangora-3 well in October 2009. In addition, a Hydrocarbon Dewpoint Control system is being installed at the Bangora Processing Facility which will enhance condensate recovery from the gas stream and deliver full specification gas to the export pipeline. The system is due to be commissioned during the first half of 2010.
Elsewhere in Bangladesh, Tullow was awarded offshore Block SS-08-05 as part of the Third Licensing Round. Contract negotiations are expected to be completed in early 2010, thereby enabling the acquisition of a 2D seismic programme during the 2010/2011 weather window.
As part of a restructuring of the Groupís business in Pakistan Tullow reached agreement, during 2009, to dispose of its producing assets and focus on non-operated exploration activities. In January 2009, a sale and purchase agreement was signed for the Chachar field and the field interest was transferred to Pakistan Petroleum Ltd. In November 2009, a sale and purchase agreement was signed for our interests in the Sara/Suri gas fields and completion of that transaction is subject to approval from the Government of Pakistan.
The Mesozoic and Tertiary aged Tethys Basin between Kurdistan and Pakistan forms one of the richest petroleum provinces in the world and provides Tullow with access to significant upside potential. Existing hydrocarbon infrastructure provides a ready link to a growing regional energy market and creates lucrative opportunities to quickly monetise discoveries.
Shekhan-1, the first exploration well since the restructuring of our Pakistan business, commenced drilling in the Kohat block in November 2009. The well is designed to test a large thrust anticline and is expected to reach total depth in late-March 2010. Based on several significant analogous discoveries made in the surrounding areas in recent years, multiple sandstone and limestone reservoir intervals are being targeted.
Elsewhere in Pakistan, seismic operations are planned to recommence in the Kalchas block. Results to date enhance the prospectivity of this block with confirmation that the surface anticline continues into the subsurface forming a valid trap at depth.
Bangora field producing at maximum capacity
Following a successful workover and tie-in carried out during 2009, production from the Bangora gas field has increased to the maximum capacity of the gas processing facility.