Noble expands into power in Ecuador

HOUSTON, Sept. 20, 2000 à‚– Utilizing gas from its exploration and production operations in Ecuador, Noble Affiliates Inc. will develop a 200 MW combined-cycle, natural gas-fired electric generating plant in Machala, its initial venture into the power generation business, Noble Chairman Robert Kelley said in Houston.

The Ardmore, Okla.-based company expects to bring the $140 million power plant on line during 2002, Kelley told analysts attending the Dain Rauscher Wessels conference.

It also intends to build a 40-mile pipeline to transport gas from the Amistad field in the Gulf of Guayaquil to the power generation facility. Kelley said Noble expects the power plant to bring in $32 million of annual cash flow and $534 million project net cash flow over the plant’s life.

Noble also on Tuesday announced the results of its first well in Ecuador. That well, drilled from a platform in 130 ft of water off Ecuador in the Gulf of Guayaquil, encountered 341 ft of gas pay after being drilled to 10,900 ft. Noble will drill three additional wells from the same platform. Noble’s wholly owned indirect subsidiary EDC Ecuador Ltd. holds 100% of the working interest in the 864,000-acre license. Noble will drill four development wells at Amistad at a cost of $78 million.

While Ecuador hasn’t been the most stable country politically or economically, the situation there has improved from a year ago and the dollarization of its currency has proven successful, said Kelley.

The company has also been negotiating with an Israeli electric generating company to purchase gas from prospects there. Gas demand has grown considerably in Israel, displacing demand for the diesel and bunker used in Israel for power generation. Kelley expects gas demand in Israel to start at 200-250 Mcfd and rise to 550 Mcfd by 2005.

In Israel, Noble recently tested two wells at the Noa field and two at the Mari-B field. Mari-B’s two wells tested at a combined rate of 33 Mcfd and logged on average more than 586 ft of net pay. Mari-B could hold net reserves of 350 bcf.

Meanwhile, the Noa field wells tested at more than 30 Mcfd and logged on average more than 91 ft of net pay, and are expected to yield 52.6 bcf net of gas reserves. Noble also plans to test the Andromeda prospect, which lies at a water depth of 3200 ft and is believed to hold as much as 2 Tcf of gas reserves.

While Israel lacks storage for large quantities of gas, Kelley said gas could be produced quickly from the Noa and Mari-B reservoirs. Noble plans to bring all four wells on line sometime in 2003.

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