By Elias Hazou
NOBLE Energy sought yesterday to manage expectations on news that its Block 12 concession might hold up to 1.5 billion barrels of oil, reiterating that as things stand development of natural gas takes precedence.
“Only if we were putting together a multi-well programme [for oil] would this impact our natural gas plans,” Keith Elliott, Noble Energy Senior Vice Chairman for the Eastern Mediterranean, said during a conference call hosted by the Texas-based company.
On Tuesday, Noble had said that, based on ongoing evaluation of 3d seismic surveys, they have found ‘evidence’ of approximately 3 billion barrels of ‘gross unrisked oil potential’ in the eastern Mediterranean, with half that amount believed to lie in Cypriot waters (Block 12).
“As far as prospectivity from a geologic standpoint goes, it looks more likely to be oil rather than gas,” said Elliott.
But both he and Barry Shelden, Noble’s Cyprus Business Unit Manager, stressed that the data gleaned so far is raw, and that therefore the company isn’t yet in a position to assign any probability to the discovery of oil.
“At this time we don’t have enough information on a number of key characteristics, such as the likelihood of a reservoir, the nature of the hydrocarbons or the presence of an oil trap keeping the reserves in place,” the Noble exec said, responding to a question from the Mail.
“Failure of any of these features to occur can cause the prospects of discovery to disappear,” he added.
The remark indicates that Noble have traced something; but due to the rawness of the data they’re as yet unsure if it’s gas or oil, but are ‘guessing’ it’s more likely to be the latter.
This also explains why the company on Tuesday expressed the quantities in barrels of oil equivalent – ‘equivalent’ being the operative word.
Processing of the 3D seismic data – terabytes of it – would take anywhere from four to six months, and should be completed by April or May next year. Only by then should matters clear up, enabling Noble to assign a probability on the presence or not of oil reserves.
A 20 per cent chance of success would be the bare minimum for Noble to go ahead with oil prospecting, Elliott noted.
Late 2014 or beginning of 2015 is the earliest the energy outfit could presumably go ahead with exploratory drilling for oil.
Asked why Noble wasn’t plunging headfirst into oil prospecting in Cyprus, Elliott said oil prospects take longer to ‘mature’, due to the fact that oil lies in structures that are deeper and more complex than natural gas.
What’s more, the lead time for oil drilling is typically between one and one-and-a-half years – taking into account the time needed to obtain specialised equipment such as well casings.
The Americans conceded that additional reserves of natural gas are needed to justify the construction of an LNG plant on the island.
These additional reserves might come from three sources, said Elliott: additional wells within Block 12, discoveries in other offshore licenses by other operators, and gas from Israel’s Leviathan field.
The latter was a reference to the notion that Israeli and Cypriot reserves can be pooled and processed at an LNG terminal on the island – but for which an intergovernmental agreement would have to be in place.
Still, developing Cypriot gas was ‘feasible’, Elliott insisted.
Though Noble says it remains committed to an LNG project here, it’s becoming evident that the company is keeping its options open on developing Cypriot gas.
A day earlier, during the course of a presentation in Houston, the company explicitly talked for the first time about the possibility of developing Cypriot gas via a pipeline connecting to onshore LNG facilities in Egypt. This was again brought up by Elliott yesterday during the conference call. Yet another option would be to build a floating LNG vessel to process the gas.
Noble has so far discovered about four trillion cubic feet gross of natural gas at the Aphrodite prospect in Block 12 – nowhere near enough for an LNG plant.
Asked to define the threshold that would make an LNG facility commercially viable, Elliott said: “It’d have to be well north of 5.5 tcf…preferably between 6 and 7 tcf.”
One also had to keep in mind, he added, that out of the reserves a little under 1 tcf would be reserved for domestic consumption in Cyprus.