Apache Egypt To Drill 130 Wells In Western Desert During 2005

As Egypt strives to maintain declining crude production, the Houston-based Apache Corporation has embarked on an aggressive drilling program with the aim of keeping crude output in its Western Desert concessions growing. In an exclusive interview with MEES, Apache Egypt’s General Manager Rodney J Eichler discusses Apache’s operations. Gary Lakes reports from Cairo.

Before the end of summer, Apache Egypt Companies will employ 25 drilling and completion rigs – nearly half of the land rigs in Egypt – on its concessions in the Western Desert, where it has set a drilling target of 130 wells for 2005. “Apache is an aggressive driller,” Rodney J Eichler, Executive Vice President and General Manager told MEES. “We drill more wells in the Western Desert than all the other companies combined in any given year. In fact, we would probably drill more wells if we were not constrained by rig availability.” Since 1995, 945 wells have been drilled in the Western Desert and Apache has drilled 566 of these.

Apache’s aggressive approach to the Western Desert has resulted in the company’s crude production growing year-by-year over the last decade. “Over the last several years, Apache is the only company in the Western Desert whose production has consistently grown,” Mr Eichler said. “If you look at all the other companies combined, their production has stayed flat to declining. Ours has actually increased. Since 2001, we have increased our gross daily hydrocarbon liquids production by 50% and our gas production by 40%.”

Half Western Desert Output

Apache’s operative crude production is around 105,000 b/d, which is about half of total crude output in the Western Desert, where the current average is near 220,000 b/d. Apache’s natural gas production amounts to 325mn cfd, all of which is fed into Egypt’s national grid. The company participates in 14 concessions covering a total area of 14.4mn acres, all of which is located in the Western Desert with the exception of the offshore West Mediterranean Deep Water block. In July the company is slated to begin production at a rate of 150mn cfd from its Qasr gasfield discovery on the Khalda concession.

Apache Corporation is the biggest US investor in Egypt, having injected some $2.5bn into its oil and gas exploration operations since it first entered the country in the early 1990s. According to Mr Eichler, Egypt has proven to be an excellent place to explore for and produce oil and gas. “The $2.5bn that Apache has invested in Egypt has happened over the course of a decade, starting with our first prospects in 1993-94. That investment has been warranted because Egypt is a fruitful place to work,” he said. “One success begets additional investment, which begets additional success, and so on and so forth in a cycle, year on year.”

Despite its aggressive approach, Apache, like other operators in Egypt, is finding that it is a chase to maintain crude production levels in the face of the country’s declining crude output. “Egypt has been successful for the last three years or so at holding national decline for total hydrocarbon liquids relatively flat,” Mr Eichler said. “It was coming down at a pretty steep rate for a while – mostly because of the substantial decline of the Gulf of Suez fields, which produce 75-78% of Egypt’s oil,” adding that it was improbable that the Western Desert would be able to make up for the 50,000 b/d per year decline that the Gulf of Suez was experiencing. “Those mature fields are declining at a rate that is greater than we can find oil in the Western Desert, and even their decline is significant – 30-35% – so it takes a lot to replace that decline every year; plus Apache wants to grow on top of that.”

Apache’s holdings in Egyptare the following concessions: