High potentials reflected in discoveries boom

Since the beginning of 2009, most of speculations revolved around the slowdown of operations in the petroleum sector, not only in Egypt but also worldwide due to the market instability and the international prices fluctuations. Although some of these assumptions turned to be true, the wheel of oil and gas discoveries in Egypt has proved that nothing would stop it

Compared to previous years, the number of discoveries achieved in the Egyptian market has been affected to some extent by the current global economic crisis, which has attained every corner of the earth. However, the degree of its negative effects has been different from one country to another. Fortunately, Egypt is considered as one of the least affected areas, though various major companies had to re-set their annual plan of drilling to cope with the economic conditions and the changing markets. For instance, some operations were postponed, while others were given the priority and budget was re-allocated. Whatever modifications made to each company’s annual plan, the fruits of their operations were summarized in the list of discoveries attained over the year of 2009.
With 2010 just around the corner, new hopes for a near market recovery rejuvenate the optimism for more achievements. Yet, the year of 2009 was filled by recognizable attainments that would bolster these New Year hopes.

First discoveries on stage
UAE- Dana Gas, Apache and Vegas Oil & Gas had the privilege of inaugurating the series of 2009 discoveries in Egypt. The three companies’ hits were made in the Nile Delta, Western Desert and Eastern Desert respectively.
In early January, the Middle East’s first and largest regional private sector natural gas company, Dana Gas announced a significant gas and condensate discovery at its Salma-1 well, which is the company’s second well drilled in the West Qantara Concession. Dr. Hany El Sharkawi, Dana Gas Country Director for Egypt, said, “So far, the first production test has produced 17.2 million cubic feet of gas per day and 415 barrels of condensate per day through a 36/64” choke, giving a total of 3,280 barrels of oil equivalent per day (boepd)… the total volume of the new reserves in the area are estimated to exceed 200 billion cubic feet of gas.”
A month later, Dana Gas added another discovery to its list, which lies in the West Manzala Concession. This second 2009 discovery encountered approximately 20 billion cubic feet (bcf) of dry gas. The West Manzala-2 well (Haggag prospect), which was drilled to a total depth of 1,510 meters in the Kafr El Sheikh formation of Pliocene age, penetrated a total of 13 meters of net gas pay with two separate good quality sandstone zones of 8 and 5 meters thickness respectively. The production test, performed in the lower sand only, flowed 11 million standard cubic feet of dry gas through a 32/64” choke.
With the beginning of Q2, Dana Gas recorded the first gas production from Al Basant discovery in the West Manzala Concession and its first horizontal well El Wastani East. Al Basant field gas reserves are estimated to exceed 123 billion cubic feet BCF. The Al Basant discovery was developed on a fast track project with two pipelines; 6” and 12”, 17.5 kms each, to transport Al Basant production to El Wastani (EW) integrated gas plant which has a design capacity of 160 mmscfd and 7500 bpd of condensate and LPG.
As for the El Wastani East-2 sidetrack well (EWE-2st) is considered as Dana Gas Egypt’s first highly deviated/horizontal well in Egypt. The well was drilled and completed in March 2009 in the East El Wastani development lease in the Nile Delta region. Gas production from EWE-2st started on March 30th, 2009, at an initial rate of 4.5 mmscfd gas, which will increase after the well has been cleaned up.
The fourth achievement in the string of Dana Gas discoveries was attained in the Tulip-1 well, which was estimated to ass up to 30 bcf of gas to the company’s reserves base in Egypt.
Adopting a target to reach a 40,000 boepd, two more discoveries were made in last August, serving the company’s goal. Dana Gas added an estimated 76 bcf of gas to the country’s reserves through its two findings, Sharabas-1 (located in the West El Manzala Concession) and Sama-1 (located in West El Qantara Concession). Ahmed Al Arbeed, Chief Executive Officer declared, “We are very pleased that our Egypt exploration program is continuing to yield discoveries. The Sharabas-1 and Sama-1 discoveries will boost Dana Gas’ production and profitability, and will take us closer to achieving our target that we are already well on the way to achieve. I am confident that the Dana Gas team will also maintain our excellent delivery rates and bring these discoveries on stream soon.”
Reaching the last quarter of 2009, the UAE Company added two more discoveries, Faraskur-1 and Marzouk-2, which together, the two wells are expected to add 86 billion bcf of gas to the company’s Egypt reserves. Although the year of 2009 did not come to an end, Dana Gas succeeded to further strengthen its portfolio of discoveries in Egypt.

Apache, Vegas… among early discoverers
As mentioned earlier, the findings of 2009 were first attained by Apache and Vegas Oil & Gas in addition to Dana Gas.
Apache scored triple play in the Western Desert, which tested a total of 80 micf of natural gas and 5,909 barrels of oil and condensate per day, all from Jurassic formations. “Taken together, these three discoveries highlight the significant exploration potential for both oil and gas remaining in these concessions,” said G. Steven Farris, Apache’s President and Chief Executive Officer.
The Sultan-3x well, a new oil field discovery located in the Khalda Offset concession, 11.5 km south of Apache’s Imhotep field, encountered oil pay in the Jurassic Alam El Buieb (AEB-6) and Safa formations. The Sultan-3X test-flowed 5,021 barrels of oil and 11 MMcf of gas per day from three commingled intervals in the Safa formation. Adam-1x and Maggie-1x discovered new gas-condensate fields on the Matruh development lease north of the Sultan discovery.
This triple opening was not the sole distinguished activity made by Apache. The American company had another two oil and gas findings in the Faghur Basin, in last April. During that time, Apache’s Khalda-area gross liquid hydrocarbon production was estimated to approximately 102 thousands bpd. “These wells contribute about 30 percent of Khalda-area oil output,” said Rod Eichler, Apache’s Co-Chief Operating Officer and President – International.
The flow-test of Phiops-1x, a new oil field discovery located in the South Umbarka concession about 4 km northwest of Apache’s Kalabsha field, showed a total of 2,278 barrels of oil and 5 MMcf of gas per day from the Safa formation. As for the WKAL-A-1x discovery, located 8.3 km west of Phiops-1x in the West Kalabsha Concession, was drilled to test closures at three levels in the AEB and Safa formations. The well logged 202 feet of pay in the Cretaceous AEB-2 and AEB-3 formations and 17 feet of pay in the Jurassic Zahra formation.
During the same month, Apache recorded the first field discovery in the North Tarek Concession along the Mediterranean coast; NTRK-C-1X.Apache has a 100-percent contractor interest in the North Tarek concession.
On July 30, Apache reported the latest in a series of new field discoveries in the Matruh Concession, Western Desert as well as an appraisal well that extended the known pay area of two reservoirs in the Shushan Concession. The Falcon-1x discovery tested 4,400 bopd from the Alam El Buieb (AEB-3D) formation. While in the Shushan Concession, the Hydra-5x appraisal well tested 21 MMcf of gas and 3,744 barrels of condensate per day from the Jurassic Upper Safa Formation.
It is worth mentioning that Apache is considered as the largest producer of liquid hydrocarbons and natural gas in Egypt’s Western Desert and the third largest in the country. The company holds approximately 11.2 million gross acres in 23 separate concessions, 19 of which are producing concessions. Apache’s production is operated under its two Egyptian joint ventures, Khalda and Qarun Petroleum Company.
Moving to the third early discoverer, Vegas Oil & Gas, the Greek company had considerable exploration operations in Egypt. As early as January 2009, it made its first hit in West Gemsa, Al Amir-2, which showed a production estimate of 6000 bpd of crude oil and nearly 6 MMcf of natural gas. The Greek company owns the West Gemsa concession as well as the concession of Alam El Shawish, the Joint Venture Company, (PetroAlam) in partnership with EGPC.
Obtaining the necessary agreements from the Egyptian General Petroleum Corporation (EGPC) and completing the required production engineering facilities, initial production commenced a month later in the Al Amir Development Lease area in the NW Gemsa Permit. This signaled the start up of oil production for Circle Oil in Egypt. It is worth mentioning that the North West Gemsa permit partners include: Vegas Oil and Gas (50 percent interest and operator); Circle Oil plc (40 percent interest); and Premier Oil plc (10 percent interest).
The three partners conducted an intensive exploration and production program for the NW Gemsa concession, which served their plan to boost their activities in the country. The partners announced in last April a new discovery at the Geyad-1X, in the Kareem Formation sandstones with the well testing 40° API oil and gas at a sustained average combined rate from two pay zones of 2,809 bopd and 3.04 MMscfd using a 64/64″ choke.
Despite the promising results attained in this concession, Premier sold its 10 percent interest to Sea Dragon Energy for the sum of $12.5 million. Simon Lockett, Premier’s CEO, commented, “While Premier continues to evaluate potential opportunities in Egypt and the surrounding countries, our low equity interest in NW Gemsa is not material for the Company and this sale releases internal resources which can now be focused elsewhere.”

First gas from Al-Theka
One of the landmarks of 2009 was the first gas production from Al-Theka area, in the Mediterranean Sea. According to Tharwa Petroleum Company, the estimated daily production of this findings counts for 95 MMcf. Eng. Atef Abdel Sadek, Tharwa President, highlighted in his report to the Egyptian Minister of Petroleum Eng. Sameh Fahmy, that this discovery can be added to the Egyptian map of natural gas production and used to satisfy the local demand. The development operations of Al-Theka area started in 2007 in partnership with the Italian IEOC. Throughout 20 months, two marine platforms and 50-km pipelines were constructed in association with Egyptian petroleum companies, such as Enppi, Petrojet, Petrobel and Marine Petroleum Services.
Moreover, Abdel Sadek clarified that the company finalized a 1300-km square of 3D seismic studies in the area of Al-Arish, the Mediterranean Sea in order to start the drilling phase of the 1st exploratory well before the end of this year.

More offshore successes
Although offshore drilling requires large investments as it is costly and necessitates complicated technologies, the promising findings of this techniques plays a vital role in luring the needed investments. Last May, BP and RWE Dea confirmed additional gas pay at offshore Ruby Field, in the West Nile Delta. The Ruby-3 (Ji 50-2) exploration well is located within the offshore West Mediterranean Deep Water concession. RWE Dea has a 20 percent working interest in the concession, whereas the remaining 80 percent is held by Operator BP.
Italian Company Edison had as well an offshore success in Abu Qir Bay in Alexandria, in which first test results proved that the well will increase the gas reserves with half a trillion cubic feet of natural gas production by the rate ate of 70 MMcf per day and 500 barrels of condensates and it is targeted to put the well on production through the production facilities in the region. This discovery represented the company’s first achievement in Egypt after it has signed an agreement to participate in the production of Gas fields in Abu Qir last January with investments of more than three billion dollars.
The third major offshore finding this year was recorded by BG Egypt. The british company announced the delivery of first gas on 08 August 2009 from the Sequoia subsea development located 90 kilometers offshore Egypt in the Mediterranean Sea. Straddling both the West Delta Deep Marine (WDDM) and Rosetta concessions, the Sequoia unitized development which represents a gross $1 billion investment, has been delivered ahead of schedule and under budget. Sequoia is another successful milestone in BG Egypt’s phased development of the gas-producing areas in the offshore Nile Delta. It brings into production six new subsea wells, three located in each of the concessions, which will help maintain overall plateau production.
The Sequoia development was executed by the Burullus Gas Company S.A.E, the WDDM Joint Operating Company (JOC). It included the drilling of six new subsea wells in water depths ranging from 105 to 535 metres. The deepwater subsea facilities all tie into the WDDM concession and were installed using the Saipem-operated multi-purpose vessel “FDS”.
The main Subsea Engineering Procurement Installation and Construction (EPIC) contract was performed by Saipem which sub-contracted Petrojet – the Egyptian General Petroleum Corporation (EGPC) affiliate – to complete the majority of the structures fabrication and all concrete pipe coating.
At the peak of the onshore fabrication phase, Petrojet employed in excess of 220 people at the Maadia yard and Saipem operated five major construction vessels in the field simultaneously.
BG Group holds a 62.99 percent unit interest in Sequoia. PETRONAS and Edison have 28.35 percent and 8.6 percent respectively.
During the same month of August, Italian Eni joined the group of offshore discoverers as it fired up production in North Bardawil field, in the Mediterranean Sea. The expected maximum production rate was estimated at 2.7 million scm per day, approximately 17,000 boepd, of which about 6,000 boepd as Eni equity share. The companies working in this project are Ieoc (Eni’s affiliate in Egypt) 60 percent and KUFPEC (Egypt) Ltd (Kuwait Foreign Petroleum Exploration Co. affiliate in Egypt) 40 percent, whereas the operator is Petrobel, a joint operating company made of Ieoc and EGPC.

Discoveries reviving the petroleum sector
In addition to the offshore hits, the list of discoveries achieved during 2009 in Egypt includes, but not limited to, a number of onshore attainments.
In May, Melrose Resources announced a successful exploration discovery and first production from two new field developments. The South Khilala No.1 exploration well has been successfully drilled with the EDC-9 rig to test a prospect located approximately 10 kilometers to the south of the West Khilala field in the El Mansoura concession. The South Zarqa and North East Abu Zahra field developments in the El Mansoura concession have been completed within budget and ahead of schedule. The fields have been tied back to the South Batra production facilities using a common 35 kilometer flow line and came on production on 20 April 2009. The fields contain total proved plus probable reserves of 58 Bcf of gas and 1.6 MMbbls of condensate and are currently producing at 22 MMcfpd of gas and 710 bpd of condensate.
During the same month, RWE Dea confirmed gas findings off the Messinian formation for the fifth time in the Sidi Salem South East-1X well, in the Disouq Concession, which was awarded to the company as operator in July 2004.
As mentioned earlier, Italian Edison achieved an offshore success in Abu Qir in last June. This was not the only recognizable attainment of the company, as during the same month, Edison found a crude oil discovery in the West of Wadi El-Rayan, in the Western Desert, where test results showed the existence of reserves of crude oil about six million barrels expected to be doubled after drilling new wells and gives production rate of 1500 bpd, a high quality 38 degree. These findings serve the company’s target to strengthen its position among other petroleum companies operating in Egypt.
As a matter of Foreign companies have been competing to dominate the Egyptian petroleum industry, among which we can list the Kuwaiti investments represented by the Kuwait Energy Company (KEC), which found two oilfields in the East Ras Qattara block that boosted production to 5285 bpd of light crude from 900 bpd and estimated proven reserves at 3.46 million barrels. KEC’s share and working interest of the East Ras Qattara field is 49.5 percent, while Chile’s state-run Enap Sipetrol owns the rest. East Ras Qattara was one of the assets acquired by KEC through its $200 million acquisition of Australia’s Oil Search Middle East & North Africa (MENA) last year. KEC had another oil discovery at the same block, specifically at Al-Zahraa oilfield, from which oil flowed at the rate of 2,615 bpd.
In addition to the Kuwaiti investments, Croatia had its shares of discoveries as well. In the field of East Yedma which interests are held by the Croatian company INA, a new well was discovered in segment of Alam Al-Buwaib, with a production rate of 500 bpd. The new discovery is considered the company’s second in Egypt, which has been working for nearly three years in the country, after the first discovery Sidi Rahmani, achieved two years ago.

Would it be the last?
The most recent discovery was achieved by BP last month. The british company has hit oil with the NS 377-3 field development well in the Gulf of Suez, North Shadwan concession. The probe struck a 140-meter oil column, 20 meters more than prognosed, in the Kareem formation reservoir and is being cased as a future oil producer, project partner Beach Petroleum said.
NS 377-3 is the first production well for the field and has been drilled from an onshore site to intersect the offshore oil pool 150 meters north of the GH 377-1 discovery well.
Production from the 377 field is expected to start in the Ras Ghara facility, seven kilometers to the north-west of the 377-3 well site, in early 2010.
Australia’s Beach Petroleum holds a 20 percent stake.
The month of November has also witnessed the first discovery for Naftogaz in Abo Senan. Ukrainian Company Nagtogaz announced its new discovery located in the Western Desert. The primary results showed that the well HG34-3 accommodates approximately 3000 barrels of crude oil and 4 MMcf of gas in Abo Rawash formation.
Naftogaz expects another discovery in another well, HG34-5 in the same field of Abo Senan.
This is considered the first discovery for the Ukrainian company in Egypt, which started its operations in December 2006 after signing a $7 million-agreement with the EGPC. The budget of investments of Naftogaz counts for $3 million, while the company’s drilling budget was set last April to 300 million Egyptian Pounds.

The Naftogaz and BP findings concluded the series of discoveries recorded during 2009, starting January and ending in November. Although not all discoveries were listed in this article, their promising results reflect the high potentials of the Egyptian petroleum industry despite any challenges, whether locally or internationally.

By Yomna Bassiouni


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