neo February 5, 2014 No Comments

tomCyprus gas discovery underpins Noble’s long-term profile in region.

Noble Energy’s activity thus far in the Eastern Mediterranean, John Tomich, the company’s Cyprus Country Manager, recently explained that discovery of hydrocarbons in Cyprus’ Exclusive Economic Zone (EEZ) will serve to underpin the gas giant’s long-term profile in the region.

Natural Gas Europe reports how Noble entered Israel in 1998 and made its first discovery offshore in the early 2000s: 1 trillion ft³ (tcf) of natural gas in Mari-B. – “Basically, it started the Israel natural gas industry,” he said, “And led to significant market penetration for natural gas for electric power generation in Israel.”

Noble, he explained, had drilled a number of wells after that and made additional discoveries, but the next major milestone was in 2009, when the company discovered the Tamar gas field, roughly 10tcf of gas; the next year, Noble drilled the Leviathan, which was close to 20tcf.

Together with its partners, Avner Oil & Gas Exploration L.P. (part of the Delek Group) and other Israeli companies, Tomich confirmed that Noble had roughly 30tcf of gas, either producing or of forthcoming production. More activity occurred in 2011, when the company drilled ‘Cyprus A’, in the Aphrodite field and Block 12 of the Cyprus discovery.

“We’re looking at various export options and we’d like to target start-up for late 2018. The Cyprus discovery underpins Noble’s long-term profile in the region,” Tomich explained.  Two wells, he said, have been drilled and Noble is working with the Cypriot Government on an LNG project, which would be expandable. “We could start with Aphrodite and, as further resources are found offshore Cyprus and other blocks, they can be folded into trains and that would all be governed by an umbrella agreement, which is being discussed with the Government of Cyprus,” he said.

However, Tomich added that Noble and the Government are indeed looking at all options (floating LNG and CNG, as well as pipeline projects), although an LNG facility was the means of choice. “It provides greater flexibility than any other means in terms of marketing the project,” said Tomich, who admitted: “It is an expensive option and it does take time. It also provides the basis for bringing benefits to the people of Cyprus, such as more jobs, especially during the construction phase of the plant, and then fewer but more technically advanced jobs later on.”

Noble, he said, is also looking at ways to accelerate bringing gas to the shores of Cyprus to provide fuel for the domestic electric power generation market – due to the island currently having some of the highest prices for electricity – but that market was small and getting smaller in the midst of the economic crisis. He explained: “To underpin the very high capital expenditure costs that are required for development in ultra-deep water in this type of gas field, we need to have a major export project to go with supplying the domestic market – that’s the challenge. We’ve got to ensure sufficient resource, which is the ongoing effort on the technical side.

“We’ve got to select an adequate method for developing and marketing the product and then we’ve got to work within the limits that are set by country and regional politics. “So it’s an exciting time to be a country manager in Cyprus, but it does have its challenges.”

In October, Noble revealed that an appraisal well in the Aphrodite field had flowed with gas at very significant rates.

“We estimate that these kinds of reservoirs could be capable of flowing up to 250,000 cubic feet per day, which is roughly equivalent to what we’ve experienced in Tamar and Leviathan: excellent quality reservoirs, world-class,” Tomich explained, who added that the updated resource estimate was 3.6-6tcf (with a mean of 5).

“At the end of the day, what we’re saying is on the basis of two wells: we’ve got a lot of gas, a lot of uncertainty about how much, but we know that within limits we’re looking at roughly 5tcf. So the challenge is to take that resource base and figure out what the best way to proceed with a commercial project is,” he elaborated.

Now, he said, the Cyprus Aphrodite development remains the target for Noble, which was in the process of appraising the gas field. “We’ve had success on the two wells to date, but additional work is required to narrow the range of uncertainty to the resource size. We are proceeding with the LNG commercial framework with the Government, which forms the base case of our commercialisation and marketing strategy.”

“Based on preliminary feasibility studies, the start of natural gas production in Cyprus would take about 38 months for FID, and the start of LNG exports would be about 48 months. We’re working right now to target an FID date of late 2015, early 2016,” he reported.

According to Tomich, these are ongoing processes, but now is the time to appraise the field. He added that Noble also sees significant upside potential in the block, just beyond Aphrodite, where there were potential targets, where the company had conducted a 3D seismic survey, which was currently being processed.

Of the Eastern Mediterranean, Tomich concluded: “It’s one of our pillars, together with West Africa and unconventional work in North America. With the resource size in Israel and the emerging picture in Cyprus, it’s very exciting for us and has become one of our focus areas with a lot of our capital budget being dedicated toward those areas.”