Europe
Tullow’s initial European offshore production interests were acquired in 2000 through the acquisition of two gas infrastructure hubs in the UK Southern North Sea. Over the last eight years, while benefiting from strong gas pricing, Tullow has grown this asset base through successful cost control, exploration, marginal field development and further acquisitions. Europe remains an important core area, generating revenues of £205 million in 2008 and a high-quality exploration portfolio in the Netherlands and Portugal.
Lorna Greig, geologist in the Europe asset team on a geological field trip in County Clare, Ireland.
UK
During 2008, while Tullow benefited from a 40% rise in UK gas prices, average net UK production was down to 20,095 boepd, some 29% lower than in 2007. This reduction, which was in line with expectations, was primarily due to the predicted natural decline in mature fields and deferral of development activities.
In the Thames Area, the Wissey field was successfully brought on stream in August 2008 at a rate of 70 mmscfd and is currently producing at a rate of 25 mmscfd. The Bure North subsea development was also sanctioned with first gas targeted towards the end of 2009. Both developments improve the economics of the infrastructure and extend the life of all user fields.
In the Hewett Area, Tullow continued to seek opportunities to extract value from these mature facilities. As part of these initiatives, the Hewett field was fully de-manned in the first half of 2008, yielding significant cost savings and a major technical study to investigate the viability of gas storage was completed. Subsequently, in November 2008, Tullow concluded the sale of its entire interest in the Hewett-Bacton producing assets and terminal to Eni for a headline consideration of £210 million. Tullow has, however, retained an interest in the Carbon Capture and Storage opportunity associated with the main Hewett field and is a member of a consortium which is leading a government-sponsored project. In January 2008, the Doris prospect was drilled but was unsuccessful and was plugged and abandoned.
The CMS Area fields continue to produce strongly. Technical work has identified the potential to access undepleted reservoir compartments in the Ketch field by drilling further infill wells. These wells will most likely be drilled in 2010. Two infill wells are currently drilling on the Murdoch and Boulton fields and these are expected to start producing in the second and third quarters of 2009. Detailed design work has also been carried out for the Harrison development. Sanction of the project is expected in the first half of 2009 and tendering for the platform and pipeline materials is ongoing. In June 2008, Tullow completed the sale of non-core CMS exploration and development assets to Venture Production for a consideration of £35 million.
Netherlands
Recognising the maturity and future limits in materiality to Tullow of the CMS Area, but leveraging our highly successful exploration campaigns in this region, Tullow has extended its exploration portfolio into the adjacent, relatively unexplored area of the Dutch sector. In 2008, Tullow added five blocks to its portfolio, taking the total to seven. In 2009, Tullow will focus on seismic reprocessing and interpretation to refine the prospect portfolio in preparation for a drilling campaign in 2010.
Portugal
Tullow has interests in three blocks in the frontier Alentejo Basin off the southwest coast of Portugal. Regional geological studies and seismic acquisition and interpretation are nearing completion and will assist in evaluating the prospectivity of this Atlantic margin basin. If the evaluation proves encouraging, the forward work programme could include additional 3D seismic acquisition and an exploration well by 2011.
CGG Venturer vessel prior to the start of a 2D seismic survey, offshore Portugal.
