Burlington Drops Algerian Exploration Block

Burlington Resources Inc has ceased activity on Algeria block 215 because of low potential returns and is devoting its attention to a more lucrative prospect. John Gailey, commercial coordinator North Africa Group, reported that Burlington was pushing ahead with Menzel Ledjmat North (MLN), or Block 405, in the southeastern Hassi Berkine area, Algeria's second-biggest oil and gas province.

"We drilled a well on 215 and subsequent technology evaluation led us to believe that it wasn't as prospective as we had first imagined,'' stated Gailey. "We have been in discussions with Sonatrach regarding our obligations and plans on 215 but they have not been resolved yet. But there is no activity on 215,'' he said, adding that the company had fulfilled its obligations.

Despite apparently disappointing results on Block 215, Burlington was on track with MLN, applying last week for an exploitation license for phase two of the project from Sonatrach, the Algerian state oil and gas company.

Burlington operates the block with 65 percent, with Talisman Energy holding the remaining share. Earlier this month, Burlington awarded a $120 million contract to French engineering and construction firm Entrepos to build a hydrocarbon processing unit for MLN's first phase, which is expected to flow initially at around 15,000 barrels per day. Gailey said four companies had also tendered for the engineering and procurement contract and an award was imminent.

MLN is a five-phase development project costing a total of $600 million that would take liquids production to 80,000 bpd by 2005. First gas is planned to appear during phase five.

Burlington Resources is seeking to expand its presence in Algeria and was actively looking at a licensing exploration of 10 blocks that closes Sept. 30. In addition, the round includes three gas development and two enhanced oil recovery blocks. Awards will be made on Oct. 1, according to Sonatrach. Burlington hopes to have a second shot at Hassi Berkine Block 406B, which it narrowly missed getting during Algeria's first public licensing round earlier in the year. Sonatrach initially awarded the block to Anadarko Petroleum Corp of the United States but later withdrew it after the U.S. firm apparently tried to modify terms in the agreement. It is now part of the current licensing round, which Sonatrach expects will attract more interest than the earlier one.