Poor gas drilling results not all doom and gloom - CYPRUS MAIL

IOCs with interests (September 2017) in Cyprus' declared EEZ

September 17, 2017
Elias Hazou

News this week of the outcome at the Onisiphoros well generated all sorts of reaction, but for experts the main takeaway is that the gas find – albeit a small one – holds great promise for the future because it has scientifically confirmed the existence of a carbonate platform around the Eratosthenes Seamount south of the island.

Less gas than expected at Cyprus’ Onisiforos - IN CYPRUS

September 9, 2017

Findings so far at Cyprus’ Onisiforos-West 1 region of Block 11 have reportedly proved to be somewhat disappointing at around one trillion cubic feet [corrected] of natural gas discovered, not enough to be commercially marketable on its own.

As reported by Greek-language daily Phileleftheros on Saturday, this also means that the deposit can only be exploited through the development of neighbouring deposits.

The paper said this was the impression that had emerged from the preliminary data collected by initial drilling, which ended late on Friday.

Results from Block 11 will determine ENI’s next targets - CYPRUS MAIL

AUGUST 10TH, 2017

Italian energy giant ENI expects the results of exploratory drilling in Cyprus’ offshore Block 11, to determine its next drilling target within the island’s exclusive economic zone (EEZ).

Sources told Cyprus News Agency that ENI was preparing for two drillings, which should be completed by the first quarter of 2018, but the targets had not yet been determined. The company wants first to evaluate the results of drilling by Total /ENI Consortium in Block 11.

The company has applied to secure all permits for drilling for three blocks, 8, 6 and 3 which include an environmental study, the offshore protocol and a licence from the department of labour for the safety of the drilling.

Energy giants upbeat over Block 11 prospects - CYPRUS MAIL

Drilling will be conducted by the UDW drillship West Capella

June 11, 2017

Elias Hazou

With the countdown well underway to Total’s first well, a hydrocarbons expert has dubbed the outcome as “make or break” for the gas potential of Cyprus’ offshore carbonate formations next to Egypt’s super-giant Zohr reservoir, just a stone’s throw away to the south.

The first foray for gas in Block 11 is weeks away, as confirmed to the Sunday Mail by Yves Grosjean, country manager for Total E&P Cyprus.

“I can confirm that well preparation is on schedule for a start in mid July,” Grosjean said in an email.

“We are of course optimistic as we will be targeting the same carbonate formations as the Zohr discovery. But it remains an exploration well which means that we have no indication whether or not we will find gas.”

Wildcats drive East Med to world stage - UPSTREAM ONLINE

30 Mar 2017 10:42 GMT
Iain Esau

Hopes Total's Onesiphoros West-1 probe off Cyprus could match Eni's gaint Zohr find off Egypt

The East Mediterranean's status as a key global gas play could be further enhanced this year if a wildcat to be drilled off Cyprus this year fulfils expectations.

France's Total is preparing to spud the Onesiphoros West-1 probe in Block 11, targeting a huge carbonate prospect that is geologically comparable to Eni’s 30 trillion cubic foot Zohr discovery just across the maritime border in Egypt.

For years the area had been dominated by Egypt’s well-known Nile Delta gas play extending from the swamps into ultra-deep waters.

The real prospects of East Med Gas - IN CYPRUS / CYPRUS WEEKLY

March 19, 2017
Charles Ellinas

This was the subject of a very successful conference – EMGC 2017 – held in Nicosia over March 14-15 and attended by leading experts and delegates from 25 countries.

The conference was organised by Gulf-Publishing Company Houston. Its focus was the East Med gas industry and its development, concentrating on markets, project development, gas monetisation, investment and gas trading, avoiding local politics. In other words the conference covered all the key issues that affect the future development of East Med gas resources. I examine and analyse these in this article.

‘Block 11 looks extremely promising’, gas expert says - CYPRUS MAIL

Cyprus' president Nicos Anastasiades (left) w/ European Commission's
president Jean-Claude Juncker

March 9, 2017
Elias Hazou

The partnership between French oil and gas major Total and Italy’s ENI in offshore Block 11 is an extremely significant development as it greatly increases the chances for a natural gas discovery in the licensed acreage, an energy analyst has told the Cyprus Mail.

“We have here a combination of Total’s technical know-how with ENI’s intimate knowledge of the proximate acreage after their discovery of the Zohr gas field in Egyptian waters,” Charles Ellinas said.

The expert confirmed reports that Block 11 is looking extremely promising.

To date, four or five targets have been identified there, he added.

Total to start exploratory drilling in April - CYPRUS MAIL

October 6th, 2016, Elias Hazou

Energy giant Total said on Thursday that it plans to carry out its first exploratory drilling for hydrocarbons offshore Cyprus around April next year.

Total E&P Cyprus and EDT offshore, an oil and gas services company, signed a contract where the latter will provide the former onshore logistics services out of the port of Limassol supporting Total’s drilling programme.

Speaking at the signing ceremony, Yves Grosjean, country manager for Total E&P Cyprus, said the company was looking at an April 2017 timeframe for its first well.

Total has a concession on offshore Block 11.

In early 2015 Total relinquished Block 10, on which it had also held a concession, without drilling any wells. The company was released from its original two-well drilling commitment but maintained exploration rights in Block 11, agreeing to continue to evaluate 3D seismic data in a bid to locate a possible target.

New finds could bring hope for LNG - IN-CYPRUS / CYPRUS WEEKLY

August 28, 2016

By Lefteris Adilinis and Fiona Mullen

The prospect of a land-based liquefied natural gas (LNG) plant could be back on the table if Total finds significant quantities of gas when it drills in Block 11 next year or if the new licensing round comes up with large discoveries, according to energy minister Yiorgos Lakkotrypis.

An LNG plant is not in the government’s current plans and the environment for LNG is currently difficult, with global companies cutting back production. At the same time, however, construction costs have been coming down because of steel prices.
“A lot will depend on the size of the discovery: how big it is, what the prices would be at the time, what other conditions there are,” the minister told the Cyprus Weekly.

When asked what production options would be possible if there were a very big discovery, Lakkotrypis said: “it could make LNG viable too”.

Which companies are likely to win in Cyprus’ third licensing round? - CYPRUS MAIL

JUNE 12TH, 2016Abboud Zahr

In May 2016 Cyprus launched its third offshore licensing round, which will close on July 22. In this round, three blocks (6, 8 and 10) are expected to be awarded by early 2017. Block 10 has been relinquished by Total after the oil major did not find potential prospects in the said block.

Energy Minister Giorgos Lakkotrypis said recently at an energy conference in Brussels, that he is seeing strong interest from international oil companies (IOCs) in the country’s present licensing round.

Cyprus’s geology similar to Zohr area – minister - INTERFAX

By Verity Ratcliffe 18 March 2016 

Cypriot Energy Minister Yiorgos Lakkotrypis is optimistic about his country’s third licensing round. (PA) Cypriot Energy Minister Yiorgos Lakkotrypis is optimistic about his country’s third licensing round. (PA)

Cyprus’s imminent third licensing round will offer offshore acreage with similar geology to the area in which Egypt’s Zohr field was discovered, according to Yiorgos Lakkotrypis, Cyprus’s energy minister.

Lakkotrypis spoke to Natural Gas Daily about the country’s energy potential, developing the Aphrodite field and routes to market for Cypriot gas.

Zohr status confusion - IN CYPRUS / CYPRUS WEEKLY

05/03/2016

Remarks by the Energy Minister, George Lakkotrypis at an energy conference in Nicosia this week have sparked confusion about the status of the massive natural gas find in the Zohr field close to the Cyprus Exclusive Economic Zone (EEZ) but on the Egyptian side.

In August 2015, ENI made a mammoth natural gas find off Egypt’s coast, which was a game-changer in the industry but also renewed interest for the Eastern Mediterranean region.

The gas find is estimated at 30 trillion cubic feet (tcf) or 850 billion cubic metres, compared with around 4.7 tcf estimated for Cyprus’ Aphrodite field in Block 12.

Last Friday the Italian energy company ENI said that the Zohr find was “a single and continuous mega tank of natural gas, fully comprised in the Egyptian Exclusive Economic Zone (EEZ) and within the Shorouk Block”.

Zohr: The sequel - IN CYPRUS / CYPRUS WEEKLY

12/09/2015Charles Ellinas

The discovery of the supergiant gas-field Zohr in Egypt by ENI sparked a lot of interest, much press coverage and introspection here in Cyprus.

Where should Cyprus go to from here in the quest to develop and benefit from its hydrocarbon resources.

What this discovery reinforced is the knowledge that the East Med, with Cyprus at the center of it, has substantial hydrocarbon resource potential, still to be discovered.


A lot of the publicity surrounding the Zohr discovery concentrated on this and played up the potential for Cyprus and no doubt over the next few weeks this may be hyped even more.

It may be hoped that the euphoria created by the promise of future riches from potentially vast quantities of hydrocarbons will lessen any potential disappointment from the plan to sell gas to Egypt.

That Cyprus potentially has substantial quantities of hydrocarbons is well known, starting from the PGS seismic investigations to the 2010 USGS study and findings.

It is hoped that Total’s further study of the data in and around Block 11, expected to be submitted soon, will add to this knowledge and provide further support to this contention.

However, we need to tread with caution, avoiding building expectations, until discoveries are actually made.

The hype that preceded ENI’s and Total’s exploration of Blocks 2, 3, 9, 10 and 11 should be a lesson. There were high hopes that some of these blocks, and especially Block 9, may hold vast quantities of gas only to be thwarted by drilling.

ENI’s negative results in Block 9 were a rude awakening and a reminder that in oil and gas no matter how good indications are nothing exists until you actually find it by drilling.

And it is only by doing more drilling that new discoveries can be confirmed. At this stage and for the foreseeable future all drilling activity in Cyprus’ EEZ has stopped and there are some question marks about its future resumption. Hopefully Total’s report next month on its re-evaluation of exploration data will spurn them to stay and continue with a drilling programme – but will it? As far as ENI is concerned, despite its stated strategy to concentrate its future activities in mature hydrocarbon provinces, such as Egypt and Mozambique, it is hoped that it will resume drilling in Blocks 2 and 3 and perhaps go back to 9, but it remains to be seen. Yesterday ENI’s CEO Claudio Descalzi confirmed to President Anastasiades the interest of ENI in Cyprus. Noble still has an obligation to drill at least one more well in Block 12 – but this has been delayed.

However, with less than half of the declared blocks in Cyprus EEZ leased there is room for more drilling. The discovery of Zohr has created renewed interest in the region. The areas around and west of mount Eratosthenes always showed good prospects. Even though this is an area disputed by Turkey, now is the time to think about a third licensing round.

This needs careful preparation given the negative results by Total and ENI so far and the low oil price, but may have a lot going for it given the two major discoveries in the region: Zohr and Leviathan. Timing is also critical. Right now companies are cutting on spending as a result of the oil price crisis. And there are the ongoing Cyprus problem negotiations which should not be disturbed and must be given priority. With careful preparation now the road-show could be aimed to take place towards the end of 2016 or early 2017.

Re-focus export options

Should Aphrodite gas exports to Egypt not materialise, which now looks to be more and more likely, Noble and Cyprus need to reconsider their options. The more immediate choices are marine CNG and Floating LNG. Both are included in Noble’s Development Plan. Marine CNG can be implemented faster and investment by Noble only involves a floating, FPSO, platform and subsea completion, as the CNG ships will be funded by the shipper. FLNG is more capital intensive and will take longer to implement. As no preparation has been done for either option, the key issue is to determine commercial feasibility which depends on project costs, remembering that Aphrodite lies in deep water and therefore more expensive to develop, markets and gas prices. The latter may prove to be a challenge given the depressed global oil and gas prices.

Israel is in a similar situation given their regulatory problems and the likely loss of the Egyptian market. Israel’s export choices are more limited and include potential exports to Turkey and Europe via a pipeline through Cyprus’ EEZ or return to the option of an LNG plant in Cyprus.

Cyprus can benefit by cooperating with Israel and encouraging Noble and Delek to put both of these options back onto the table for more detailed investigations. Both have their advantages and disadvantages, but will take longer to implement than CNG or FLNG.

Market considerations

In considering the above, it should be noted that global hydrocarbon markets evolve continuously and opportunities available now may not be there later. The world has experienced major market upheavals very vividly since the discovery of Aphrodite in 2011.

With the likely loss of the Egyptian market, the next nearest markets are in Turkey and southeast/central Europe. However, many competing gas, mostly pipeline, projects are now under consideration, materialisation of which will influence future availability of this market. These include:

• The Southern Corridor, with Azerbaijani gas through Turkey to Europe 
• Turk-Stream, with Russian gas to Turkey and possibly Europe 
• Iran gas to Europe through Turkey 
• The Trans-Caspian gas pipeline joining the Southern Corridor 
• Kurdistan gas to Turkey 

And there is also Nord-Stream-2 which is destined to supply central Europe. Obviously not all of these projects will go ahead, but a few will and once they are implemented they may saturate the European gas market.

All these projects are being considered at a time when gas utilisation in Europe is actually declining, being displaced by renewables.

The longer it takes for East Med projects to get off the ground and secure a slice of this gas market the more the risk that when eventually they are ready it may be too late.

That will then leave markets further afield, such as Asian gas markets. The only way to reach these is by LNG. But there are also timing and cost risks and strong competition from North America, Australia, Russia, East Africa, Qatar, Iran.

And on top of this gas demand in China is declining as it adjusts away from a manufacturing/export driven market.

If Cyprus and Israel miss the opportunities they have to develop and export their gas it may take another ten years at least before demand outstrips supply and such opportunities re-appear. They need to act now.

Charles Ellinas is a hydrocarbons business consultant

SOURCE

Total to factor Egypt’s recent gas finding in new survey, Lakkotrypis says - CYPRUS MAIL

SEPTEMBER 4, 2015

Stelios Orphanides

Energy Minister Yiorgos Lakkotrypis said that Total S.A. will deliver in October the results of a geological and geophysical survey it carried out in block 11 of Cyprus’s exclusive economic zone which will take into account Egypt’s 30 trillion cubic feet natural gas discovery.

Following Egypt’s latest discovery, Total, which has the exploration and exploitation license for the block which is close to Zohr, “now knows exactly what they have to look for,” said Lakkotrypis, commenting in an interview to state radio CyBC.