Total Sets New Drill Date for First Offshore Cyprus Well

by erpic-manager on February 15, 2017 in Uncategorized with No Comments

Total Sets New Drill Date for First Offshore Cyprus Well
Gary Lakes
February 2017

France’s Total is now expected to drill its first exploration well offshore Cyprus in June or July of this year, a source close to the energy industry on the island told this correspondent recently. Last October, when it signed a service contract to use facilities in Limassol port, the company said it intended to spud the well in April this year. This was some eight months behind Total’s original plan.

Due to complications caused by uncertainty over what port on the island Total might use as an onshore logistics base, the Paris-based firm has had to postpone its first well twice. It had originally planned to drill in Block 11 in September 2016, but that plan was interrupted when a license for access to the port in Larnaca was not renewed by the municipal council there. After taking steps to operate out of the island’s main port in Limassol and launch the well in April 2017, a service agreement signed with a local oil service company was found to be in violation of the government’s contract for management of Limassol port by a consortium headed by Dubai’s DP World and including local partners.

The Cypriot government had signed the contract with DP World and partners earlier in the year, but had apparently overlooked a clause that extended full management of the port to the private contractor, including onshore services used during the course of offshore drilling.

The obstacles with working out of Limassol were overcome through negotiations at the end of December, but the length of negotiations have forced Total to delay hiring a rig and finalizing HSE (health, safety, environment) requirements, the source said.

“A rig contract should be awarded by the end of this week. With the rig secured, Total will award all the other contracts necessary for the drilling campaign,” the source said, adding: “As one might imagine, it was a challenge to keep the tendering process alive and valid during the three months’ interruption.”

Total must now compile the HSE requirements, which must be submitted to the various competent authorities in the Cypriot government three months prior to the start of drilling. Once it gets underway, the well will take about two months to complete, the source said.

Total, which was awarded Blocks 10 and 11 in February 2013, will drill the well, which has been identified by the Cypriot government with the name Onisiforos, in a geological stratum described as a carbonite platform that could be an extension of the geology in which Egypt’s giant Zohr gas field was discovered by Eni in August 2015.

The Zohr field, which has a gas reservoir of 30 trillion cubic feet, lies in the Shorouk Block only 6 kilometers from the Cyprus-Egypt maritime border. Zohr’s discovery prompted the Cypriot government to launch its third licensing round early last year and in December it announced the preferred bidders for the three blocks tendered. ExxonMobil and partner Qatar Petroleum were named for Block 10, Eni was awarded Block 8, and a Total/Eni partnership were awarded Block 6.

Although awarded Block 10 in February 2013, Total relinquished the block in early 2015 before Zohr was discovered because it could not find a low-risk target. Total requested from the Cypriot government after the Zohr discovery that it retrieve the block, but Nicosia decided that the block had to be retendered. In the 2016 bidding round, Total bid on Block 10, but lost out to the US/Qatari partnership.

The second half of 2017 promises to be an interesting time in the Cyprus offshore. Total should finish its well by September and Eni is expected to return during the second half of the year to resume a drilling program that it suspended in the autumn of 2014 after it drilled two dry holes in Block 9, for which it was awarded a license, along with Blocks 2 and 3, in January 2013. Should Eni be awarded Block 8, it will have a sizeable portion of exploration area in the eastern region of the Cyprus Exclusive Economic Zone (EEZ).

Only four wells have been drilled in the Cyprus EEZ: two dry holes by Eni, and the Aphrodite discovery and appraisal wells by US explorer Noble Energy in Block 12. Discovered in December 2011, the Aphrodite fields holds a gas resource estimated at 4.5 trillion cubic feet, but plans to monetize the gas have yet to take shape. Negotiations have been carried out with Egypt to send the gas there by subsea pipeline with the intention of processing it into LNG at Shell’s idle Idku facility for export to foreign markets. Talks on this scheme have been underway for some time, but there appears to be little headway. Some analysts think that Aphrodite’s future is directly linked to that of the nearby giant Leviathan field in the Israeli offshore.

Separately, EU energy officials and representatives of the energy ministries of Cyprus, Greece, Italy and Israel, heard last week in Brussels that a proposed subsea pipeline from the East Mediterranean to Greece and Italy was technically feasible and economically viable at a cost of $6 billion.

The project is being promoted by IGI Poseidon [Interconnector-Greece-Italy], a joint venture between Greece’s natural gas company DEPA and Italy’s Edison. The pipeline, which is targeted for operation in 2025, would transport 16 billion cubic meters of gas per year from the East Mediterranean to Greece and Italy through a combination of subsea and onshore pipelines stretching some 2,000 kilometers. A member of the IGI Poseidon team has told this correspondent that the company hope to see the pipeline in operation in 2025.

The Brussels presentation, carried out by Edison, was in preparation of a meeting that is due to take place in Israel in May that will include EU Commissioner for Energy Miguel Arias Canete and the energy ministers of the four countries briefed at EU headquarters. IGI Poseidon argues that the pipeline would be a practical way to export natural gas from the region directly to the European market. It takes into consideration that more gas would need to be discovered in the East Mediterranean in order to supply adequate gas volumes for the pipeline’s successful operation.

Phase 1 development of Israeli and Cypriot gas resources is expected to target local regional markets as primary customers. Exports beyond the region would be part of Phase 2 development, except in the case of another major discovery on the scale of Egypt’s Zohr field. That is exactly what Total is hoping for.

 

A version of this story was published in Euroil/NewsBase.



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