Shell Finalizes Algerian Shale Deal

Shell has signed a 12-month deal with Algerian state firm Sonatrach under which the two firms will work together �on the evaluation of the potential of shale gas and shale oil in the Moudire Basin.� This follows a recent similar agreement with Canadian independent Talisman and a deal struck with Italy�s Eni last year (MEES, 30 July). None of the three deals signed with foreign companies involves exclusive exploration rights. The Moudire Basin is deep in the Saharan south of Algeria, southeast of the BP/Statoil-operated In Salah gas fields, the most remote of any currently producing fields (see map on page 16).

Algeria has prioritized plans to exploit its estimated 760 trillion cu ft of recoverable shale gas reserves, raising Sonatrach�s 2012-16 capital budget by $12bn to $80bn to cover the expense of such exploration without cannibalizing its existing budget (MEES, 11 June). The state firm in June spudded the country�s first ever shale gas exploration well in the nearby Ahnet Basin and is planning two further wells later this year. In addition to the study agreements finalized with Eni, Talisman and Shell � and a planned similar deal with ExxonMobil � BP is already involved in unconventional exploration, using hydraulic fracturing to explore for unconventional gas on its Bourarhet permit in the Illizi Basin (MEES, 27 February).

The Talisman deal also focuses on the Illizi and nearby Berkine basins, which are the focus of Algeria�s key recent and upcoming oil and gas production increases, the largest of which is the 130,000 b/d, 6.2bcm/year El Merk project, in which Talisman has a 9% stake through its 35% share of the ConocoPhillips-operated Block 405a. El Merk is set to start up late this or early next year. Block 405a already produces 30,000 b/d from the Menzel Ledjmat North field.

Algeria�s largest single unconventional gas project remains on hold as Total angles for improved terms to justify the expense of exploiting tight gas deposits on its Ahnet concession, where it is targeting 4 bcm/y plateau production. Total submitted a development plan in July 2011, which envisaged 2015 start-up, although this has yet to be approved. Algeria says that planned revisions to the country�s hydrocarbon law � expected before the end of the year � will incentivize unconventional exploration (MEES, 14 May).

Oil/Gas Infrastructure & Areas Earmarked For Shale Oil/Gas Exploration

Source : Sonatrach, MEES.

Note : Oil fields and pipelines in green, gas fields and pipelines in red (electronic format).

© Copyright MEES 2012.