New Oil Discoveries: Boost Western Desert Prospects

BY YOUSSRA EL-SHARKAWY

Egypt is both one of the major oil-producing non-OPEC countries and one of the oldest energy producers in the Middle East. According to Oxford Business Group, the country benefits from low production costs, and a relatively large volume of both onshore and offshore oil and gas fields.

Oil companies have given great attention to Egypt’s Western Desert, given that it is the location of around half of Egypt’s oil. In the past few years, the Western Desert witnessed a series of major oil discoveries, including new fields in the Faghur, Shushan, Alamein, and Matruh basins.

Because much of the region has already been explored, some experts stress that many of the Western Desert’s fields are mature fields, and new discoveries can be harder to make. This reality increases the need for investments in oil recovery, as well as in new exploration activities and techniques.

Geology & Production

The Western Desert covers about one million square miles – two-thirds of the whole area of the country. The coastal basins of Matruh, Shushan, Alamein and Natrun are located in the northern half of the Western Desert, 75 km to the southwest of Marsa Matruh, covering an area of about 3,800 km2.

The coastal basins are characterized by their high oil and gas accumulations, and oil productivity of about 45,000 barrels of oil per day (b/d) from 150 producing wells in 16 oil fields. This represents more than one third of the oil production from the northern Western Desert, according to a 2012 research paper published by Alexandria University.

The Western Desert has very rich soil. Data shows that all the oil discoveries have been in marine inner shelf sandstones and carbonates that range from Aptian to Turonian in age. Potential reservoir rocks are known in the Paleozoic to Tertiary sedimentary rocks, according to a research paper entitled Petroleum Potential of Western Desert of Egypt.

Available production data indicates that the far Western Desert basins are capable of contributing about one fifth of Egypt’s annual oil and gas production, according to a 2016 research paper entitled “Egypt Far Western Desert Basins Petroleum Charge System as Defined by Oil Chemistry and Unmixing Analysis”. The research paper suggests that the discoveries have so far been less than expected because of the complex trap geometries, as well as a lack of proper understanding of the regional hydrocarbon charge mechanisms.

According to the Egyptian General Petroleum Corporation (EGPC), Egypt produced an average of 626,000 b/d of crude oil and condensates in fiscal year (FY) 2016/17. Production from the Western Desert comprised 55% of the total production and is projected to rise to 670,000 b/d in FY 2017/18.

Recent Oil Discoveries

EGPC announced the discovery of 41 new oil and gas sites in FY 2016/17. The discoveries consisted of 28 new crude oil sites and 13 new natural gas sites.

In May 2018, the Ministry of Petroleum announced a new discovery located 103 km north of Siwa Oasis. The discovery, SWM A2-X, came after the Italian energy company Eni conducted inspection tests at the Faghur area, 5,100 meters in depth, with an initial production test rate of 2,300 b/d of oil, plus 400,000 cubic feet of associated gas, as Egypt Today reported.

A statement issued by the ministry mentioned that the most important thing in this discovery is the success of testing new geological layers at more than 5,000 meters in depth, which will motivate international companies to intensify their exploration activities in the area.

Earlier in July, Eni announced another oil discovery in the Fagur basin. The SWM B1-X discovery was drilled four miles away from the first discovery (SWM A2-X), to a total depth of 14,839 feet, and encountered 114 feet of light oil in the Paleozoic sandstones of the Dessouky Formation, as well as in the Cretaceous-era Alam El Bueib sandstones. Eni said in a statement that the discovery raised hopes of a “new productive area”.

The well has been opened to production in the Dessouky sandstones and has already delivered 5,130 b/d of light oil with low associated gas, Eni revealed.

Prospects of New Discoveries

Although the new discoveries bring high expectations that more oil can be found in the future, the prospects of future large discoveries cannot be fully predicted. As the Western Desert has been a focus area of oil exploration since the 1960s, especially after the discovery of the Alamein field in 1967, its continuous exploration stirs up the discussion on whether significant findings could still be made.

“We will see further discoveries in the Western Desert over the coming years,” Stephen Fullerton, research analyst of MENA Upstream at Wood Mackenzie, told Egypt Oil and Gas.

“The area is a prolific oil producing region and, over the last 10 years, has boasted a success rate of 47%. However, most of these discoveries are small and the average discovery size over the period is 5.4 million barrels of oil equivalent,” he said.

As reserves closer to the surface have already been roughly explored, Fullerton believes that the biggest prospects of the region lays in its deeper layers. “We will see more companies explore the deeper plays in the region. There is plenty of potential in this play, something that has been confirmed by Eni’s recent Faghur basin discovery. However, there is still oil to be discovered in the shallower plays, and companies like Apache have been successful in tying-in new small near infrastructure pools of oil,” Fullerton added.

Continuation of Exploration

It is undeniable that the Western Desert plays a large role in supporting Egypt’s oil and gas sector and its wider economy. This explains the industry’s concern in maintaining the region’s current level of production. Fullerton states that, in his opinion, the focus of Egypt has to be on the continued exploration of the area. Only time will tell whether the country’s oil sector is successful in finding deposits in the area’s deeper plays, and thus extending its lifespan as one of Egypt’s major oil-producing regions.

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