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Pohokura Discovery : Mean Reserves Double

Pohokura Discovery : Mean Reserves Double Earlier Estimates

Auckland – 27 June: - Fletcher Challenge Energy has completed its preliminary assessment of the results of the successful Pohokura-2 appraisal well.

“We have completed our initial reserves estimation and are very pleased to announce that our current mean estimate of the recoverable reserves in the field is 750 billion cubic feet (bcf) plus 40 million barrels of condensate. Combined these add to 165 million barrels of oil equivalent (mmboe) . This is more than double our pre-drill estimates." said Mr Greig Gailey, Chief Executive Officer, Fletcher Challenge Energy.

Reserve estimates are best characterised using statistical descriptions. At this early stage the Mean reserve is the most representative single number in the broad range of possible outcomes. The range is summarised using industry definitions in the table below. The “P90” category defines reserve quantities that Fletcher Challenge Energy consider have a 90 per cent chance of ultimately being met or exceeded. This category is often referred to as Proven reserves. The “P10” category represents a reserve level that is considered to only have a 10 percent chance of ultimately being exceeded, and is often referred to as the Possible reserves. The Mean category represents the average of all expected outcomes.

The range of Pohokura field reserves is currently estimated as follows:

P90 P50 Mean P10
Sales Gas (bcf) 392 685 750 1195
Condensate (mmb) 17 36 40 76
Total (mmboe) 82 150 165 275




Fletcher Challenge Energy’s Chief Operating Officer, Lloyd Taylor, noted that "The field is still in the early appraisal stage. However, it is clearly a commercial discovery by virtue of the reserves established to date, high condensate yield, relatively low potential development cost and proximity to market. Testing of the Pohokura-2 well achieved a flow-rate of 30.7 mmscf per day of gas, plus 2670 bbl per day condensate. This result was constrained by surface equipment capacity and was attained with only 228 psi draw down against a reservoir pressure of 6253 psi, thus confirming the presence of exceptional quality sands within the reservoir.”

The upside to the currently estimated mean reserves is predominantly to the north of Pohokura-2, an area of structural uncertainty. Subject to Joint Venture consideration and approval, this uncertainty will be addressed by a 3D seismic survey over the field in the coming summer. Following this it is possible that, in time, another appraisal well may be drilled to the north of Pohokura-2 in order to confirm the northern most extent of the field".

Although volumetrically less significant, another area of uncertainty is that of the reservoir continuity to the south of Pohokura-1 towards the coast. Subject to Joint Venture consideration, it is probable that an extended reach well will be drilled from the coast targeting an offshore bottom-hole location with the objective of confirming southern reservoir development and continuity. Once the Joint Venture has considered the requirements for further appraisal of the discovery, a comprehensive program of community consultation will commence. This is likely to start late in the third quarter of this year.

"The results to date are outstanding and a tribute to the teams involved. We look forward to including Fletcher Challenge Energy’s share of reserves in our year-end numbers", said Greig Gailey.

In drilling the discovery and subsequent appraisal well the Joint Venture has spent approximately $42 million. A further $35 million may be spent in further appraisal and development studies in advance of development sanction. The latter is targeted within two years. Development expenditure could range from $350 million in the Mean case to more than $500 million in the upside (P10) reserves case. First gas deliveries are targeted for as early as 2004.

Lloyd Taylor noted that “The Pohokura gas/condensate discovery has all the elements of a major petroleum development, with all the attendant benefits for the regional community and the nation. It will extend gas supply beyond Maui field life and generate significant foreign earnings from condensate export.”

The PEP 38459 (Pohokura) Joint Venture comprises Fletcher Challenge Energy (Operator with 33.33% interest), Preussag Energie (33.33%), Shell Petroleum Mining (18.33%) and Todd Petroleum Mining (15%).

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