March Sfienty April 1984 In 1979, Union Oil made the first dis- The Helm field, the first discovered, covery of oil offshore the Netherlands. is now producing from flve wells with IIri'i When this was followed by a second a sixth nearing completion. The discovery in 1980, commercial pro- Helder field produces from 12 wells. duction became a possibility-but And the Hoorn fleld, discovered in IVETHERLAIVDS only if the costs of development could 1982, produces from six wells. Costs be tightly controlled. incurred so far in the development The target date for production of of the Q/1 fields are in excess of one ll[[Sllm[ first oil was set for October 1982. Computer projections rated the 3lalil:n,gTud:d:xr:I:Cncgoer:i:egatvoe:aaguegsh- chances for such rapid completion of development very low, but this was to i`oTl::t,threegullderstooneus alongtime be no ordinary development process. The fields are all on the Q/I block, Working in close cooperation with its where Union has an 80 percent inter- C0mln joint-venture partner Nedlloyd, the est. The block covers about 75,000 Dutch government and Dutch contrac- acres and still has potential for new tors, Union beat the odds. discoveries, according to H. D. Max- wllHH First oil was produced in Septem- well, Union's regional vice president ber 1982 from the Helm and Helder headquartered in London. 'tsince 1967 Union and Nedlloyd fields, slightly ahead of schedule. The wail Hoom field began producing in August 1983, more than a month }9a,`;eo3C#:)do°fv;:oLp5fpe°ca°ryh::,i:::rs ahead of a very ambidous schedule. data and drilled 35 exploratory and Union's 23 producing wells on appraisal wells:' Laughbaum says. "These activities have incurred an three platforms are now running above projections, averaging 32,000 expenditure of 300 million guilders barrels a day. through 1983, substantially in excess tRecently, the 10 millionth barrel of the work obligations we must fulfill was produced, a significant milestone;' in order to hold our interest" says Graydon H. Laughbaum, vice h early 1984, the joint venture part- president and general manager of ners made their initial entry into the Union Oil Company of the Nether- onshore area with seismic surveys. Clt lands. ''This has more than doubled is expected that this work will lead to the total crude oil production from an application for a drilling permit:' the Netherlands, where onshore pro- Laughbaum adds. duction is 27,000 barrels a day:' And, in 1985 gas production is scheduled to begin from the Union operated L/ llb gas field, located some 45 miles north of the oil fields. Development costs are estimated to be in excess of 125 million guilders. The company also has an interest in another oil and gas field which should be producing by 1987. It is operated b}r NAM, a Shell-Esso company. Union's involvement offshore the Netherlands began in 1968 just two years after the International Division \vas formed for the purpose of con- centrating on exploration and produc- tion activities outside the U.S. In 1967 Ray Burke, senior vice presi- dent of Energy Resources who was then newly assigned as president of the International Oil Division, and Sam Snyder` associate legal counsel, tra\'cled to the Netherlands to inter- \Jiew potential partners. Cwe chose Nedlloyd, then the Nederlanden Steamship Company, because \ve believed their long and successful his- tory in the shipping business reflected an understanding of risk and a willing- ness to take risk. We wanted a compat- ible partner. When contacted, they \vere interested and joined us in the risky business of exploring for oil and gas in the Netherlands offshore. It has been a good combinationr Burke says. tc|n our very first well offshore we found some gas, although not in com- mercial quantities. But that did give us some encouragement right from the beginning:' says William Sax. vice pres- ident of exploration for the Interna- tional Division. "And we needed the encouragement. The first commercial discovery was 11 years away. CCThrough it all, Nedlloyd has been an uncomplaining partner:' Sax says. twe in the oil business understand Only 28 months elapsed between the deci- that it can take 10 or 15 years of look- sio72 to Proceed with derlelopment Of the ing to meet with success. But Nedlloyd offihore fields and Production Of fast oil is a transportation company involved in Septeml)er 1982. In this remarkably in shipping, trucking-if it moves, §hol¢ time frune, tlie organization wac Nedlloyd probably has an interest. created, plans were made, clearances were Despite the early disappointments, our obtained. and |}laiforms, I)i|)Cline and joint-venture partners have displayed terminal were designed, built and trust in us, and we both have stayed brought into o|)Oration. with the effort to find oil and gas. "We had several reasons for staying:' This pipeline carries the crude from Sax recalls. "We knew there were pros- the offshore Q/I producing areas to a pects with potential, because we kept terminal in the Amerikahaven, one of getting shows of oil and gas. We knew several industrial sections with "conti- \ve \vere working in a geologically nental" names in the Port of Amster- complex area, in which there were a dam, according to Arun Metre, large number of different types of pos- manager of union Oil Transportation sibilities. A few wells would not begin B.V. CCThe pipeline was deliberately to exhaust the possibilities. And we oversized, so that it could accommo- could proceed knowing that the date more production than that antici- Dutch government would not change pated from Union's discoveries:' he their terms on existing agreements:' says. CCThis has provided a vital infra- "Union drilled a gas well which structure that makes producdon of turned out not to be successful," smaller finds in these waters economi- Maxwell recalls. CBut a couple of our cally feasible:' people had done some investigative B-ut, in the beginning, Union had work and identified a setting for oil only two small fields. The decision to similar to producing onshore fields:' proceed, taken in May 1980, was a That turned out to be the key to daring one. The key to success would success. Union took the lead in inno- be in cost control and tight construc- vatlve exploration thinking, develop- tion scheduling. To make the proposi- ing ideas about looking for oil in a tlon of offshore Dutch oil work Cretaceous geologic zone. tcNo one required careful planning, persistence else had really pursued these zones, in pursuit of a goal, and a phenomenal Amerikahaven, an industrial secti(Jn Of even though NAM had found oil in Amsterdam.§ harbor, i§ the Site Of umo72`s similar structures:' says John Baincs, t)tltreattngund§toragefucilities(ah:hove exploration manager. "But the struc- aiid top of ()ppositc page). tures are offset at different geological ;:!iu:siea::rr:o:;rs;egjiidga]S;;§ir:e:#htvyew;:e i horizons-that is, they don't line up one's part to expedite it:' Maxwcll says. | CThe Dutch recognized that indige- one on top of another-so you have to drill for a specific target. I think nous oil production would be very wc've probably drilled more wells important to the country's future, and than anyone else here, except NAM. there were very few dissenters to that "Now` as a result of our success, point of view in the Netherlands:' e\'erybod}r is chasing these Cretaceous Union opened its offices in The structures:' he continues. Ctconoco, Hague` Holland's third largest city, Mobil and Amoco have all found oil. because it is the seat of government If conoco stays on schedule, it will and most of the ministries are head- be producing by the end of 1984- quartered there. The government is a through the Union/Nedlloyd parliamentary democracy. The Dutch pipeline:' monarchy agreed to constitudonal rule in 1814. In The Hague, headquarters city Of Union Oil Company Of the Netherlands, the government buildings overlook the water-the element the Dutch have fottght for their land, a§ well as the "l]igbway" that has made the country a major shipper. •:ii=._-ii-`=_ .-rs--i i_Tf+_. - = The Helder plaif erin (left) is identical to the Helm and Hoorn Plaiferi'n§, a fact that allowed the unusually rapid ccm§trmction Of all three. "We were very direct and open with C{Thc reason for the protest was off- Once the landfall for the pipeline the Dutch? says John Imle, president shore loading: Imle says. CCSo we met was established, an onshore storage of the International Oil Division, who with the environmentalists, who said terminal had to be planned. The ques- `vas the local manager during the 1980 they would support a pipeline. What tion was where to build it, and the start-up of union Oil Company of the we needed was a place to cross the most obvious answer was in Ijmuiden. Netherlands. twe told them what we beach. They said they would not com- Union at firs[ gained the support of wanted to do and that we wanted to plain if we would land the pipeline the municipality but ran into opposi- do it correctly. They said it would take between certain points, so we picked a tion from the local flshing industry. Years. We said that to make it feasible spot in the middle at Ijmuiden:' The alternative was to extend the pipe- ttl remember that John and Tim ire needed to do it in months, not line to the port in Amsterdam.