...says Zainul Rahim, Chairman of Shell Companies in Egypt and Managing Director of Shell Egypt. As he speaks, Shell Egypt is starting a new offshore shallow water drilling campaign in its North West Damietta concession using the Egyptian Drilling Company (EDC) jack-up rig 'Sneferu'. 'Shell in the Middle East' flys out to visit the jack-up rig and talks to Marcus Barraclough, Well Engineering Operations Manager, Shell Egypt. Then it's back to Cairo to hear more from Zainul Rahim about Shell Egypt's growing exploration activities and the company's long-term commitment to developing upstream activities in the country, both offshore and onshore, in order to - in his words - "consolidate our partnership with the Government and ensure Shell's status as partner of first choice"...
"Right now is a very exciting time for Shell in Egypt and we all feel very enthusiastic about the current and planned exploration activities," says Zainul Rahim, Chairman of Shell Companies in Egypt and Managing Director Shell Egypt.
"Exploration is the mainstay of Shell Egypt's growth strategy and we are strongly committed to capitalizing on the enormous opportunities for Shell's upstream business in Egypt. We are pursuing very ambitious offshore and onshore exploration programmes in 2006 and will continue to do so in 2007 and beyond.
"As we speak, drilling is going on in our shallow water concession of North West Damietta using the Egyptian Drilling Company [EDC] jack-up rig 'Sneferu'. This is primarily a gas play.
"In our North East Mediterranean Deepwater [NEMED] concession we will embark on a three-well drilling programme with an option for an additional well in the fourth quarter of this year.
"This programme was scheduled for 2005, but a global shortage of deepwater drilling rigs meant that further exploration of this frontier acreage could only start later in 2006.
We have contracted the 'Transocean Expedition' drilling ship for this programme and we will try to expedite the process by drilling wells back to back.
"The last drilling campaign in NEMED in 2004 resulted in two significant gas discoveries and we hope the upcoming campaign will enable us to declare commerciality of the concession.
"Our ambitions for the gas we discover will be to develop a Liquefied Natural Gas [LNG] facility to export the gas to Europe and North America.
"This will entail sub-sea well heads and a sub-sea pipeline, of around 200 kilometres, from the offshore discoveries tied back to an onshore gas production facility which would hopefully be for LNG, if our discussions with the Egyptian Government are fruitful.
"I expect that success in our NEMED exploration activities will confirm Shell's global leadership in deepwater drilling and will also encourage the company to look into more ambitious opportunities in the future to make the best use of discovered hydrocarbons.
"In terms of onshore exploration we have a large commitment to near-field exploration in the Western Desert. Through our joint venture BAPETCO [Badr El-Din Petroleum Company] we will be resuming drilling in the West Sitra concession where we recently concluded acquisition of new 3D seismic.
"We are also drilling more exploration wells in the North East Abu Gharadig [NEAG] extension where we have so far drilled six wells and conducted a regional study.
"Our existing infrastructure of pipelines, gathering stations and production facilities in the Western Desert allows us to quickly monetise exploration investments by bringing new discoveries into production very quickly.
"Shell is also seeking to optimise production from its mature assets in the Badr El-Din [BED] and Obaiyed concessions through the use of advanced oil and gas recovery technologies. We seek to maximise the value of this very rich province by unlocking its complex geology, thereby obtaining the knowledge, which could open new vistas for further exploration activities.
"We have recently signed a Farm-in Agreement with Centurion Energy to acquire a 50 per cent shareholding in two of the company's concessions in the onshore Nile Delta as part of Shell Egypt's portfolio development.
"When these exploration operations are completed we hope to have significantly grown our resource base and increased our reserves in the country. This will consolidate our position as a main player in Egypt's energy industry and underline the partnership which Shell is building with the Government to enable Egypt to access many of the yet untapped potential reserves in the hydrocarbon-rich provinces of the Nile Delta and Western Desert.
"Shell recognises the enormous potential of the upstream business in Egypt and is strongly committed to pursuing its exploration and production business in the country. Shell Egypt has a robust exploration and production business in the Western Desert and Nile Delta and seeks to grow this business organically through its exploration activities.
"We are also growing the business through acquisitions [as was done with the recent Farm-in Agreement with Centurion, see page 17]. Many of our growth activities are exploration-led, which proves our, long-term commitment to exploration and production in Egypt.
"Egypt is a very attractive country for many international oil companies and the competition is quite intense. But this competitive environment is in itself a driver for better performance and we seek to improve on our position as a main player in the industry.
"Our main objective, however, is to consolidate our partnership with the Government and ensure Shell's status as a partner of first choice," concludes Zainul.
Operations onboard the 'Sneferu'
Marcus Baraclough, Well Engineering Operations Manager, Shell Egypt, talks to 'Shell in the Middle East' during drilling operations onboard the 'Sneferu'.
He says, "Shell Egypt is drilling well Jf-65 in the southern part of its North West Damietta concession to explore for hydrocarbons in this predominantly-gas play area.
"The concession covers 450 square kilometres and was awarded to Shell Egypt in 1999. Shell operates this concession with two partners, Kuwait Foreign Exploration Company [with a 25 per cent shareholding] and Gaz de France [with 20 per cent].
"The concession lies some 14 kilometres north of the Egyptian coastline in the Mediterranean Sea in water depths ranging from 20 metres near the shore up to 70 metres in the northern reaches of the concession.
"Since this was the first offshore well ever to be executed by Shell Egypt the team has had to overcome quite a few challenges. These have included the creation and start-up of an operations and logistics base which we implemented using facilities at the Abu Qir Naval Base.
"We also had to establish 70 new commercial agreements for specialist goods and services required to drill the well, and we had to build and develop a new operational team to manage all aspects of the project.
"Furthermore, team building does not stop with Shell but includes contractors and service companies." Reiterating the point, Marcus says, "Shell maintains very high HSE [Health, Safety and Environment] policies in all its activities and insists on contractors mirroring these policies and standards. So far, this has paid off handsomely as we have had no LTIs [Lost Time Incidents] to date.
"Indeed, I am very pleased to report that one of our contractors, the Norwegian company Siem Rovde, which operates Shell's dedicated stand-by vessel the 'Ocean Star', was able to save the lives of 23 people from a Hungarian merchant vessel which sank in the vicinity of our area of operations. This was a very dramatic event which took place in gale force winds at night and the actions taken that night confirmed the professional service provided by our contractors and the owners of the 'Ocean Star'."
Marcus then goes on to say, "The well Jf-65 is being drilled on the basis of a 3D seismic survey and is targeting the channel sands in the Abu Madi formation at a depth of over 3,000 metres. The plan for the well is to drill it in four sections. For the first section we drilled a 26-inch hole down to 400 metres and for the second section we drilled a 17.5-inch hole down to 1,100 metres.
"In these two top sections we suffered some minor mud losses but overall we did not face too many problems and casing was run and cemented according to programme.
"Shell Egypt has switched to a water-based mud system to be used whilst drilling, which is quite new in the drilling industry in the Mediterranean. The practice with most operators in the region is to use oil-based drilling fluids. However, given the environmental circumstances and the sensitivities of our operations, Shell Egypt decided to drill using this new system called Ultra Drill.
" He continues, "The third section of the well, the 12.25-inch hole, took us to around 3,000 metres and to our primary objective, the Abu Madi reservoir. Today we are in the fourth section, which is the 8.5-inch hole, and we are drilling into the reservoir. Of course, we are all very excited as are all explorers when drilling for oil or gas.
"Whilst drilling the 12.25-inch section we were able to achieve a drilling record using a Smith PDC [Polycrystalline Diamond Compact] bit which drilled over 2,000 metres at an ROP [rate of penetration] of 21 metres per hour, which is a record for this region.
"Another first for Shell Egypt is that we are using a Scope LWD [logging while drilling] system whilst drilling the 8.5-inch hole section. This we hope will allow us to examine our progress in real time and may eliminate the need for electric line logging at the end of the well.
"Today we are just a few hundred metres from TD [total depth] and we are hoping for an excellent result, "A cased hole well test may be undertaken in case of success in the primary target. In that case, a seven inch liner will be set over the reservoir section. If hydrocarbons are encountered the well will be tested."concludes Marcus.
Derek Moss is a Well Site operations geologist on contract to Shell Egypt, working on the 'Sneferu'. His role is to act as the Shell representative for the sub-surface team.
He says, "Here on the drilling rig I collect samples of rock cuttings from the mud shakers. These are collected through the mud system during drilling activities. "We always know from what drilled depth the cuttings come from by calculating the time it takes for the cuttings to come to the surface from the bottom of the hole.
"Cuttings are normally collected at regular depth intervals. These rock cuttings samples are examined under a microscope and described by me. I identify the rock type and its properties. The cuttings samples are also examined under ultra-violet light for the presence of hydrocarbon shows in the rock, as oil fluoresces under ultra-violet light. This information is annotated on to a mud log, then correlated with information gleaned from off-set well log data and also matched to the seismic acquisition data of this well location.
"During drilling operations the mud logging data collected enables the drilling and sub-surface teams to compare the results of our findings - in terms of rock strata and the formations drilled - with those predicted by the sub-surface team to make sure that there are no unpleasant surprises," Derek concludes.
© Shell in the Middle East 2006
