Cyprus Mail

Gas finds always ‘hit and miss’

By Elias Hazou

Recent remarks by energy minister Giorgos Lakkotrypis have given rise to conjecture that offshore Block 12 may not hold additional exploitable gas reserves other than the Aphrodite well.

After announcing last Friday that drilling at the Onasagoras play in Block 9 came up dry, the minister was asked by journalists about Noble Energy’s plans for their block 12 concession.

Lakkotrypis said the Texas-based company has yet to plan out either additional appraisal drilling at Aphrodite or exploratory drilling at another site.

Citing its sources, daily Politis reports that latest data available to the Americans have shown that two other earmarked targets within block 12 do not hold commercially exploitable gas reserves.

The company could not be reached for comment.

But gas expert Charles Ellinas told the Mail it is possible that the company has seen fresh 3D seismic data pointing to little gas reserves at other sites.

The amount of gas that makes a play commercially exploitable is not set in stone, but varies depending on factors like the distance from the shore or the nearest infrastructure.

As such, Ellinas said, a potential well in Block 12 might contain as much as 1 trillion cubic feet (tcf) of natural gas, but that amount would still not render it exploitable, due to high drilling costs.

Drilling – whether exploratory or appraisal – can cost anywhere from $100m to $150m.

Previous drills by Noble Energy at Aphrodite well have yielded 3.6 to 6 tcf of natural gas. It’s understood, however, that privately the Americans subsequently narrowed down the quantities to around 3.1 tcf, based on a 90 per cent probability, or P90 in industry jargon.

Drilling a second appraisal well at Aphrodite might therefore not be worth it, since all the follow-up operation would achieve is narrow down a bit more the gas quantities. This would be unnecessary, given that the reservoir already has proven reserves that are commercially exploitable.

As it stands, the gas at Aphrodite is more than enough to justify a pipeline linking up with BG’s Egyptian operations, a potential buyer of Noble’s Cyprus gas.

Alternatively, anywhere from 2 tcf to 3 tcf is sufficient to monetise a find using compressed natural gas (CNG) solutions. Floating LNG, as a rule of thumb, requires between 3 tcf and 4 tcf.

Earlier this year, Noble officials in Cyprus stated they are now looking at pipelines as their top option, with FLNG and CNG as alternatives.

On the other hand, Ellinas said, an additional gas find by Noble in Block 12 could be usable provided it’s in close proximity to Aphrodite. A smaller reservoir with enough gas – perhaps on the order of 0.5 tcf to 1 tcf – could be linked to Aphrodite via sub-sea infrastructure.

This could likewise apply to the Onasagoras prospect in block 9, explained Ellinas.

The government has not said how much gas ENI-KOGAS discovered there, only that the quantities are not exploitable. Although the amount might be as high as 1 tcf, as a standalone prospect it is not commercially useful.

But assuming that drilling at the Amathusa field –ENI’s next target – comes up with a usable quantity, that could then bring back into play the Onasagoras well were the two reservoirs to be linked. The two prospects are separated by just 55km.

Preliminary data for Amathusa suggest that, although the geological probability for gas is lower than it was for Onasagoras, due to its sheer size the prospect could hold substantial gas.

Ellinas stressed also that, although the Onasagoras results were disappointing, this should be put into context.

“Globally, the success rate ranges from 40 to 45 per cent, so roughly one out of two drills comes up dry,” he said.

“It’s not an exact science, there’s always a hit-and-miss element. You can’t know for sure if there’s any gas, or how much, until you’ve drilled.”

The expert said also that a 2010 report by the US Geological Survey – which estimated a mean of 122 tcf of recoverable gas in the Levant Basin – still holds up.

So far, about a third of the basin area has been explored. Combined, the finds at Israel’s Leviathan, Tamar and a couple of smaller plays, plus the Aphrodite reservoir, come to approximately 40 tcf –about a third of the quantities mentioned by the US Geological Survey.

“So there are good indications that the Cyprus prospects in the Levant Basin – blocks 2, 3, 9 and 12 – hold considerable gas. You just need to drill at the right spot,” noted Ellinas.

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