Energy giants upbeat over Block 11 prospects
Article featuring Dr. Constantinos Hadjistassou, appeared in Sunday Mail on June 11, 2017.
By 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.”
Grosjean added that results are expected around October and further drilling “will definitely depend on the outcome of this well”.
With the Zohr prospect in Egypt, ENI back in 2015 took a big gamble on drilling in carbonate formations – all but dismissed in the eastern Med – rather than seeking gas in classical sand reservoirs. The gambit paid off equally massively, and overnight the nearby Cypriot offshore blocks – bearing similar geological characteristics – came into play.
Although ‘Onesiphorus West 1′, as Total have named their target, is in industry speak a wildcat well, this time round the odds for success are significantly higher than previously.
“It cannot be stressed enough that ENI, now partners in Block 11 along with Total, possess loads of geological data from the other side, the Zohr side,” said Constantinos Hadjistassou assistant professor at the University of Nicosia.
Intimate knowledge of the geology increases the chances of a hit.
The expert added: “The results from this well will make or break, if you will, the carbonate formations lying on the periphery of the Eratosthenes Seamount.”
Success here – even if it does not turn out to be the “mother of all reserves” as tentatively suggested by energy minister Giorgos Lakkotrypis – would see the offices of oil companies light up like a Christmas tree.
“You can be sure that ExxonMobil, which has the concession on Block 10, which also borders Zohr, is keeping a very close eye on the goings-on in Block 11 this summer.”
Around 75 per cent of the world’s proven reserves lie in carbonate formations.
Total expect results from the drilling around October.
But in the event the drill proves a dud, that would not necessarily spell disaster for the acreage, Hadjistassou added.
Given the size of the acreage involved, it is entirely possible to miss the sweet spot – assuming there is gas at all.
Although, said Hadjistassou, Total and ENI must have narrowed down the best target after analysing their data.
“Publicly, Total and ENI are both sounding upbeat on their chances. So if you connect the dots…”
Final results are typically expected in three months, although the expert observed that the companies will know what’s what one to two months after commencing drilling.
Inquiries to the energy ministry as to Total’s preparations and schedule were met with a stock response that the licensees’ activities are confidential.
But according to reports, the logistics of the pre-drill are all but taken care of. Total – operators of Block 11 – are soon expected to secure two environmental permits from the agriculture ministry (environment department).
The third and last permit, concerning safety issues, is also expected to be green-lighted by the Labour Inspection Department by month’s end.
Onesiphorus lies some 150km from the coastline. Drilling will be conducted by the ultra-deepwater drillship West Capella, with a safety zone of a 500m radius around the vessel being carved out.
The drill will bore into the bedrock at an estimated depth of 4,250m below sea level. The sea level in the area is about 1,700m.
According to Hadjistassou, the West Capella is a state-of-the-art vessel in terms of technology and capabilities.
And because lease rates for drillships have dropped by approximately 40 per cent – due to several vessels remaining idle – Total have managed to contract the West Capella relatively “cheaply”.
Rates still run in the hundreds of thousands of euros per day.
Onshore, it’s understood that EDT, the firm providing logistical support, is likewise close to obtaining all necessary permits.
EDT are offering their services – equipment storage, resupply – from space at the new Limassol harbour.
Their environmental permit for the facilities, granted by the Cyprus Ports Authority, expires on November 30 of this year.
Once operations get underway, the company will need to furnish authorities with regular reports on conditions at the onshore logistics base, on matters such as pollution and quantities of waste produced.
It’s understood that EDT is in charge of the entire supply chain within the harbour, except for the management of the mud plant, for which responsibility lies with Total Ε&Ρ Cyprus BV and their subcontractor, Halliburton Mediterranean Ltd.
Meantime, another drill should be on the cards later this year. ENI are contractually bound to begin drilling two more wells before February 2018, when their offshore exploration licence expires.
ENI are operators in five offshore blocks (2, 3, 6, 8, 9), so at this time the location of their next target is probably anyone’s guess.
And in an item published in the Cyprus Mail this week, ExxonMobil said they and their Block 10 partners Qatar Petroleum have begun planning for drilling operations “and intend to drill a first exploration well in 2018”.
Beyond that, Hadjistassou said that over the next three to four years Cyprus can expect at least another six wells in the three blocks (6, 8 and 10) awarded in the last licensing round.
If previous production-sharing contracts are anything to go by, the licensees are obligated to drill a minimum of two exploratory wells in each of these blocks.
In the best-case scenario, assuming the results are positive everywhere and appraisal or follow-up drilling takes place, we could be looking at 6 + 6 wells in total, the expert added.
Overall investments by the companies could reach some €600m.
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