By Elias Hazou
NOBLE Energy, operators of the Block 12 offshore license, have conceded that additional discoveries of natural gas are probably needed to justify a mooted LNG plant in Cyprus.
“We think it is probably going to take more and we are working with the teams to develop additional sourcing there both from Block 12 as well as working with other co-ventures in the region offshore Cyprus,” Keith Elliott, Noble Energy Senior Vice Chairman for the Eastern Mediterranean, said.
He was speaking to newsmen coming out of a meeting at the Palace with President Nicos Anastasiades and energy minister George Lakkotrypis, during which a Noble team briefed the government on its plans on the Block 12 concession.
“We gave an update on the activities that have been going on in Block 12 since the drilling of the appraisal well. I put forward plans and so we continue to work our exploration processes and look at further opportunities, we continue to evaluate the results of the A2 well and look at further opportunities for need for further appraisal activities and working through the process of fully evaluating the block, this is our priority,” Elliott said.
Exploratory drilling carried out by Noble in late 2011 at the Aphrodite well revealed an estimated gross resource range of 5 to 8 trillion cubic feet (tcf), with a gross mean of 7 Tcf; follow-up or appraisal drilling in October this year lowered the estimates to a range from 3.6 tcf to 6 tcf, with a mean of approximately 5 tcf.
More recently, Noble’s Israeli partners in the concession – Delek Drilling and Avner Oil Exploration – reported an average of 4.1 tcf of gas – closer to the lower end of that range. Although the Israelis employ different probabilistic methodologies to the Americans, Noble has not disputed this latest estimate.
It’s generally acknowledged that at least 5 to 5.5 tcf are required to make an LNG terminal – with a price tag of several billions – commercially viable.
This suggests further discoveries at other wells in Block 12 may be necessary to reach that critical mass.
Noble’s Elliott told reporters the company was looking at the need for further appraisal activity and other exploration opportunities.
“We are in the process now of evaluating what type of prospects there are in the block. We look for oil and gas but primarily we are looking for gas,” he said.
The company is also conducting talks with the Cypriot government on possible participation in a liquefied natural gas (LNG) plant.
“We continue to evaluate the results of the A2 well and look at further opportunities for the need for further appraisal activities and working through the process of fully evaluating the block, this is our priority,” he said.
“We are working with the teams to develop additional sourcing there … as well as working with other co-ventures in the region offshore Cyprus,” added Elliott.
Responding to a follow-up question, the Noble official said he was referring to Israeli reserves as well.
The Houston-based company has found vast quantities of natural gas off neighbouring Israel.
Asked about Noble’s participation in a possible LNG plant in Cyprus, Elliot said the Americans continue to work closely with the government negotiating team toward developing a project framework agreement.”
For his part, the energy minister said Noble plans further exploratory drilling towards the end of 2014.
The Houston-based company should be ready to demonstrate the next site or sites of exploratory drilling by April next year, as well as show whether an additional appraisal well for Aphrodite is needed, Lakkotrypis told reporters.
Asked about the development timeframe, Lakkotrypis said the President asked Noble whether it could expedite exploration drilling, adding however that based on ongoing evaluation work and depending on rig availability “it is difficult to achieve this target sooner than October 2014.”
So far Cyprus has granted six concessions after two licensing rounds: blocks 2,3 9 to the ENI-KOGAS consortium, and blocks 10 and 11 to France’s Total.
There are currently no plans for a third licensing round, the energy minister said, adding that the government is awaiting new seismographic surveys.
“This is something we are trying to determine within the next few days, that is, when [new] surveys will be carried out, according to the contracts signed,” said Lakkotrypis.