Woodside & Hardman Finalizing Development Plans for Tiof

During the first quarter of 2006 Woodside and Hardman have carried out further geoscience, reservoir engineering and facilities studies, in order to develop a commercially and technically robust phased development plan for Tiof, which lies in water approximately 950-1,400 meters of water.

The concept being optimized by the field operator, Woodside, is based on a dry tree unit, either a tension leg platform (TLP) or possibly a spar platform, with a light-weight integral drilling facility. Under this scenario, initial development would cover the central area of the Tiof field, with subsequent further development to be determined once production history has been obtained.

The key advantage of this proposed route, rather than an FPSO-based development with sub-sea wellheads similar to Chinguetti, is that drilling and subsea equipment costs would be significantly reduced, thus bringing down the economic threshold of recoverable reserves per well. However, this concept does carry a higher initial facilities capital cost than a leased FPSO, with project capex indicatively in the range US$650-700 million. Given the complexity of the Tiof reservoir, and particularly concerns about the connectivity within the reservoir, reducing costs per well may be a key determinant of ultimate economic recovery.

The next step would be a joint venture decision anticipated in the current quarter to take the selected concept forward.

At this stage the concept is provisionally for six initial production wells which would access reserves in the region of 40-60 mmbbls and first oil should be by 2009. With the facility having some 15 to 18 well slots to allow for future expansion, there would be considerable potential for additional reserves to be accessed from further development drilling. Potential reserves could be further enhanced by better-than-assumed reservoir parameters. Indicatively, the first phase would be designed to handle oil production of approximately 50 mbopd. The Chinguetti FPSO could be used for final processing and storage prior to export, at least for the initial phase of development, although a dedicated floating storage and offtake vessel is also an option.

Hardman estimates oil in place for the Tiof field at around 1 billion barrels, comprising c.600mmbbls from the Miocene horizon (with P10 upside of some 900 mmbbls) and additional contingent resources from the Oligocene horizon discovered in Tiof-4. Since not all oil-in-place would be accessible from such an initial development, further outlying volumes could be developed in subsequent phases, either via long reach wells or subsea wells. Ultimately, a phased development will optimize and enhance recoverable reserves whilst managing risk and capital exposure.

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