ExxonMobil Comes Up Dry in Angola

ExxonMobil's well, drilled in Block 33, offshore northern Angola has come up dry. ExxonMobil was awarded the license for the block in 1999 and this is the second deepwater well to come up dry in the area. The first well, drilled further north late last year by BP, was also a dry hole. The well was drilled by the semisubmersible Leiv Eiriksson.

Because of big discoveries since 1996 in a neighboring string of licenses, oil companies had joined a bidding frenzy for blocks 31 to 34, operated respectively by BP, TotalFinaElf, ExxonMobil and state oil company Sonangol, and ultimately paid $1.2 billion in non-recoverable signature bonuses to Angola.

An oil industry official said companies would now have to reconsider their exploration strategies. He said the first two failed wells had been drilled on geological targets that were very large, but with a relatively low chance of finding oil. However, the licenses also contain geological structures whose seismic images show "flat spots", indicating a high chance of finding oil. Unfortunately, these structures tend to be small, which means it may be costly to develop them, given the water depths involved. "Everyone is going to start drilling the flat spots now," said the official. "Perhaps they can develop them as clusters, though they are also quite far apart."

Partners in Block 33 are ExxonMobil as operator with a 45% interest, Sonangol holds 20%, TotalFinaElf holds 15%, Falcon Oil holds 10%, Petrogal 5% and NIR Angola holds the remaining 5%.