Supermajor spuds major exploration wells in deep water and racks up discoveries in Western Desert
Supermajor Shell will soon know if it has struck lucky with a renewed drilling campaign in Egypts promising North-East Mediterranean Deep Water (Nemed) acreage.
Exploration success would bring joy not only to Egypt but to Cyprus, Syria and Lebanon, which are closely watching the campaign for further clues to the prospectivity of the region.
The neighbouring states are following in Egypts footsteps by launching their own offshore Mediterranean Sea licensing rounds.
In January Transocean drillship Deepwater Expedition spudded the first of three wells under Shells new exploration drive aimed at building on the success of an earlier round in 2004 when two wells produced gas.
Those finds were particularly significant since a previous probe in 2000 had turned up disappointing results.
The first two new wells are in the south-west of the Nemed acreage in 2800 metres of water while the third will be spudded in the eastern side where water depths are a shallower 1500 to 1800 metres.
They will be drilled to depths of between 4000 and 4500 metres, setting new deep-water records for offshore Egypt. Industry analysts estimate the cost of each well at about $50 million.
Shell is now scrutinising logs from the first probe to see if it has hit the jackpot.
"If everything goes as planned by the third quarter of this year we should be done with the rig,"says Shell Egypt managing director Zainul Rahim Mohmmad Zain.
The current phase got under way after long delays that actually allowed Shell to conduct focused seismic work The successful 2004 wells, La52-1 and Kg45-1, were drilled in the west of the concession, which covers 41,000 square kilometres.
Shell has shot 6200 kilometres of new 2D seismic as well as 350 square kilometres of 3D to help pinpoint the most promising prospects.
The current exploration round will define the shape of any future development of the Nemed block. First gas is scheduled for 2012 in case commercial discoveries are made and a gas sales price is agreed with the Egyptian government. Development will entail subsea wellheads and a 200-kilometre stretch of pipelines to an onshore gas production facility.
The company is hoping that Nemeds eventual development will give it an LNG export outlet.
"Our ambition is really to find sufficient gas to be able to convince the government to allow us to at least have an LNG position for the Nemed gas,"says Zainul Rahim.
Shell, though, has no plans to build its own greenfield liquefaction plant in Egypt. It would instead be looking to make use of capacity at the existing Idku or Damietta facilities or to add new trains at either site.
Zainul Rahim cautions that it is too early to determine when Shell will be able to join the LNG bandwagon given the time gap between exploration and development phases.
Elsewhere, Shell is stepping up exploration in the Western Desert where it shot 3500 square kilometres of 3D seismic last year.'We are continuing to shoot more. When we finish shooting all the 3D we will cover close to 4200 square kilometres,"says Zainul Rahim.
"We find the Western Desert more and more interesting,"says the affable Malayan, adding that seismic surveys have helped Shell identify an increasing number of drilling prospects in the area.
The supermajor made four discoveries in its Badr El-Din (BED) development leases and West Sitra concession last year. The Badr El-Din leases are operated by Badr El-Din Petroleum Company or Bapetco, a joint venture with state-owned EGPC.
Bapetco made its first find last April in the Abu Gharadig basin. The BED 1-19 development well was spudded to target the main producing Kharita reservoir and the exploration potential of the deeper Lower Cretaceous Alam el-Buieb section below the BED 1 oilfield.
BED 1-19 tested at a rate of about 25 million cubic feet per day of gas and 2050 barrels per day of oil and condensate. It found a net pay interval of 38 metres.
Shell then drilled the exploration well BED 2-C2-1 in November. It encountered gas in the Abu Roash and the Upper and Lower Bahariya formations. A production test on the Abu Roash interval produced 17 MMcfd of gas and 2000 bpd of oil and condensate. The well has been hooked up to the BED 2 facilities.
The company made the first Jurassic find in West Sitra with the exploration well WS-J1-1, which reached a total depth of 5077 metres in the Khatatba formation.
The well, which encountered 39 metres of gas pay in the Upper Safa sandstone, is being tested. Later, Shell also completed the WS C1-3 well at a total depth of 2406 metres in the Bahariya formation. The well encountered 16 metres of net gas pay.
"Shell Egypts exploration activities in 2006 were extremely successful. The encouraging results from untapped formations of the Alam el-Buieb in BED 1-19 and Khatatba in WS-J1-1 confirm our belief in and commitment to the active pursuit of new exploration opportunities in the Western Desert,"says Zainul Rahim.
© Upstream 2007
