Loader relishing low oil

WOODSIDE Petroleum's global head of exploration Phil Loader has told Energy News he's relishing the more constrained spending habits that historic low oil prices have forced industry to embrace, particularly in the oiler's offshore Ireland acreage, an area that's close to his heart.

Loader relishing low oil

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Loader cut his teeth in the UK North Sea as Neste Oy's exploration manager for nine years before heading up exploration for Sasol Petroleum, Triton Energy, Anadarko Petroleum, and then Mubadala Oil & Gas before chairing West African explorer Chariot Oil & Gas (Woodside's partner offshore Morocco), his final gig before landing at Woodside in July 2013.

Woodside operates four permits covering 3139sq.km of offshore acreage in Ireland's Porcupine Basin, ranging from 60% to 90% ownership, and was offered one of 14 licenses in the rather risky and expensive Atlantic waters recently.

However, Loader believes there is potential aplenty, and says low oil prices could actually benefit the company's ambitions despite companies the world over pulling back on exploration.

"I look back at the Irish acreage, particularly the Porcupine Basin, and the last time it was explored with any focus was more than 25 years ago, when the industry was looking at it through a North Sea organisation set of glasses," he said.

"In the interim there has been an awful lot of exploration and significant success along the Atlantic Margin, so we view Porcupine an under-explored but proven petroleum province, though it remains to be seen whether it's predominantly oil or gas.

"We think there's potential for oil certainly, but it may well be gas."

Bearing in mind that over the last 12 months the oil price has gone from $US100/bbl to as low as $27/bbl and is currently hovering just above $40, Loader said the fact that there were 43 license applications in Ireland recently spoke volumes for the area's potential.

It was by far the largest number of applications received in any licensing round held in the Irish offshore.

Norwegian state oiler Statoil was awarded six licensing options in Ireland's 2015 Atlantic Margin licencing round, including partnering in two operated by US supermajor ExxonMobil.

Scotia Oil & Gas, Woodside and Europa Oil & Gas all took one licence each, while Italian major Eni will operate one with UK supermajor BP as its partner.

Loader believes that all this simply validates Woodside's intentions to get in early with large equities - and they're all seismic options.

Woodside will shoot some seismic this year, see how it looks then make a decision late next year as to whether to enter drill phase with a partner.

Now that Woodside has built an inventory that captures all elements of the petroleum system, all on a seismic option basis, Loader confirmed to Energy News that "one particular company" was looking at taking a strategic interest across Woodside's entire portfolio offshore Ireland.

He said Woodside's equity in the Irish acreage, which ranges from 60% to 90%, gives it scope to retain operatorship and a material share, bring a strategic partner in through the seismic program and be ready to get into a drilling program if the seismic illuminates prospectivity as the company expects it to.

"Rather than enter into a license when the seismic has been shot, processed and interpreted, I'd rather be party to the inventory at an early stage and involve the partners to decide what the scope of the inventory can deliver to make decisions on the appetite for drilling," Loader said.

"So a strategic partner is someone who has the appetite to explore, the culture to explore and if we decide that we see an inventory that can compete with the rest of our inventory, have the wherewithal to explore financially."

While this could prove difficult in the current oil price environment, Loader is adamant this is a "good thing" because it "forces the right decisions about what are the projects we want to invest in".

"When the oil price has gone from $100 to $45, companies are cutting back in exploration and some of the projects they might have funded in a higher price environment they're probably not prepared to fund," Loader conceded.

"It forces some technical discipline around those assets you believe are viable and commercial at lower oil prices.

"In Ireland the fiscal regime encourages companies invest and explore, and with 43 license applications the industry has spoken with its feet."

Loving London

With two recent gas discoveries in Myanmar, exploration assets in Morocco and having just entered the area of cooperation between Senegal and Guinea-Bissau, which is the first the first opportunity Woodside has captured in the last three years in Africa as operator, Loader says it made perfect sense to open a base in London.

While some criticised the company for such an expensive move, Loader said it was essential given Perth is one of the most isolated cities in the world.

"Every time we need to have a conversation with someone it's a 20-hour flight," Loader said.

"Bearing in mind one of our three core areas is Africa and the Atlantic Margin, and London still represents the basis for a lot of the deal flow and operators are based out of London, to have an office there helps our exploration growth."

Data rooms for new ventures will also be hosted out of London.

Its UK team will also take responsibility for any business which is captured like Peru or any new ventures in Latin America where there is clearly a geographic proximity.

"Of all the other offices we have, it's the only one that represents an extension of the corporate hub, so we have a facility for other functions as business dictates," London said of the London office.

"In an organisation of some 3500 people, we have nine permanent staff, only two of whom are expats, so it's very cost-effective and a very logical place to be."

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