Archives for posts with tag: gas field

Plagued by constant blackouts and power shortages, Egypt appears to be facing its worst energy crisis in decades. However, following the historic discovery of the giant gas field Zohr offshore Egypt in August this year and revived interest from IOCs, it seems that the tables are set to turn. Indeed, after a period of gas production decline, Egypt’s energy outlook is getting increasingly bright.

Slide Down The Gas Pyramid

Until recently, Egypt’s gas production story had been one of growth: production climbed from 1.68 to 5.76 bn cfd between 2000-2009 and in 2003, it was sufficient to kick-start LNG exports. However, a combination of political unrest (notably the Arab Spring of 2011) and rising population has resulted in natural gas supply shortages over the last 5 years. Domestic gas demand has on average grown by 8% y-o-y, eventually outstripping supply. As a result, Egypt has been forced to re-route LNG destined for exports to domestic consumption. Indeed, at the start of 2014, BG announced it was breaking its contracts because it was unable to export enough gas. This year, Egypt resorted to importing LNG from Qatar – a bitter moment for the previous exporter.

Enter Zohr

They say that when you hit bottom, the only way is up and for Egypt, this seems to be the case. Earlier this year, ENI made what is believed to be the largest ever gas discovery in the Mediterranean, named Zohr. The field is part of the Levantine Basin, home to other prolific gas finds such as the Israeli Leviathan field. ENI puts the find down to different use of sequencing models, concentrating on carbonate rather than classical sand reservoirs. The gas giant (estimated to hold 30 tcf of lean gas) is located in water depths of 1,450m, providing an exciting departure from typical shallow exploration of mature basins in the region. Additionally, BP announced a $12 billion investment in Egypt’s West Nile Delta project: another deepwater discovery with 5 tcf of gas resources. A move to deeper waters creates opportunity for subsea development, the current production solution of choice in all of the country’s active deepwater fields. Out of the 68 active subsea units in Egypt, 40 are operated by ENI and 8 by BP. It is likely that these operators will continue to implement subsea development in their future projects.

Clash Of The Giants

Elsewhere, the discovery of Zohr was not such welcome news. There were plans to import gas via a pipeline from the Tamar field and (once in production) the competing gas giant, Leviathan, in Israel. Plans for the Leviathan field will now have to be redrawn and potentially accelerated if Israel wants a claim of the region’s LNG exports. However, following extensive regulatory and anti-trust objections, its start-up date remains uncertain.

Nevertheless, it is clear that Egypt’s fortunes are turning. The Zohr discovery, alongside other scheduled start-ups, will strengthen Egypt’s energy balance in the long-term. And the story does not end here: it has been reported that there are 7 other deepwater blocks with similar lithology to ENI’s. There is evidently a revived interest in the Levantine basin, as IOCs begin to wonder where the next giant could be hiding.

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E&P offshore India can be divided into two very distinct species of activity: the one species is typified by shallow water exploration using jack-up drilling rigs, and by multi-phase fixed platform developments; the other species by ultra-deepwater exploration using floaters. The first is concentrated off the west coast, the second off the east coast. But when it comes to CAPEX, which species of activity sits at the top of the food chain in these lean times?

Shallow Water Ancestry

Mumbai High is the ancestor and primordial archetype of the vast majority of field developments offshore India today. Discovered in 1974 in the Mumbai Basin off the country’s west coast, the field was brought onstream in 1976 and was initially exploited via 4 fixed platforms in water depths of around 85m. Subsequent expansions have seen this number rise to 159, with 8 more platforms being fabricated for the Ph.3 redevelopment projects at the field. For the first 30 years of Indian offshore E&P, exploration was focused in the Mumbai Basin while development followed the pattern at Mumbai High. Hence, as of July 2015, 94 fields had been discovered off India’s west coast, all in shallow waters, accounting for 48% of Indian offshore discoveries. Of these 94 fields, 39 are active and 11 are under development. The basin also accounts for 301 active fixed platforms, as well as 13% (18 units) of the jack-up fleet in the Middle East/ISC region. With EOR and redevelopment work underway, the Mumbai Basin remains an important area of offshore activity.

Deepwater Diversification

However, since 2002 the Indian offshore sector has bifurcated to produce a very different species of offshore activity. Exploration campaigns in the east coast Krishna Godavari Basin resulted in 50 new discoveries in water depths >500m (and 51 shallow water finds). Amongst these was KG-DWN-2005/1-A, a field in a water depth of 3,166m, making it the deepest find (in terms of water depth) to date globally. At the height of KG Basin exploration, 12 floaters were active in the country. All this being said, Indian deepwater activity is much less advanced than shallow water E&P: just two deepwater fields are in production and none are currently under development. As a corollary, there are almost no subsea installations offshore India and just one active MOPU.

An Evolutionary Hiatus?

There are, however, 25 ‘probable’ deepwater field developments, including some potentially prolific fields. However, development seems to have been inhibited by the example of KG-D6 (Dhirubhai 1&3), a deepwater (850m) gas field which has shown precipitous production decline. India’s offshore sector is also dominated by indigenous companies like the government-controlled ONGC, who seemingly lack the deepwater technological or operational expertise of many IOCs. At the same time, there are still 88 potential shallow water fields, as well as plenty of scope for EOR at older fields – the sort of projects where Indian oil companies have substantial experience.

Opening up of the upstream sector, as is being attempted in Mexico, might be one means to adapt to the challenges of the “P” of deepwater E&P in India. However, this does not appear to be on the cards for the immediate future. So for the time being, given the hostile conditions of the weaker oil price environment, shallow water activity seems set to thrive best.

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