Nicosia.- By Gregoris Savva/CNA
ExxonMobil will spend the next months analysing the results of Glaucus 1 well to better determine the potential after a discovery of a natural gas resource of approximately 5 to 8 trillion cubic feet in Cyprus’ offshore block 10.
Minister of Energy, Yorgos Lakkotrypis announced on Thursday. in a press conference together with Tristan Aspray, ExxonMobil Vice President of Exploration for Europe, that the resource was the largest discovery so far discovered in Cyprus’ Exclusive Economic Zone (EEZ) and according to official data one of the greatest discoveries in the world in recent years. “The results”, he added, “demonstrate the potential of our EEZ because it is a high-quality reservoir”.
They also add to the Republic of Cyprus reserves and to the original deposits of the EU, highlighting the role of the country as an alternative source of supply for the Union “.
According to information provided by ExxonMobil officials, the discovery is the second largest worldwide in the last 12 months and the third in the last two years. Moreover, the first drilling in block 10, carried out in Delphyne-1, target between November 2018 and January 2019, did not identify exploitable quantities of natural gas.
Answering questions, Aspray said “we will certainly be spending the next period of several months to analyse the results of Glaucus 1 well to better determine that potential as part of the appraisal plan”. To a question if there are any other potential targets in block 10, Apray said they will look at the data gathered from the two wells to look for potential exploration opportunities in the block.
Asked what resource would be sufficient for an LGN plant, Aspray did not give a certain figure, adding that would depend on lot of different factors, such as the actual reservoir, the quality, the resource density, away from any wells they drill and the development solution that they have chosen.
“As I said before, typically if you look at active LNG projects today, they are developing resources likely in excess of 10 or perhaps 15 tcf. That is a very broad average, it varies enormously”. I cannot give you a specific number but obviously the higher the better, he remarked.
On the LNG Plant, Aspray said they “are at the start of a long journey here towards potential development. In general, we are going to spend the next few months analysing all these results before we can get into any specific development plan”.
Typically, LNG projects particularly, he said, require resources likely larger than single deposits but clearly “we are just getting started with our evaluation of what we still regard as a frontier area”. The ExxonMobil official said “there is still potential for more discoveries in our own block and perhaps those of others so early days in terms of determining the total resource potential”.
He reminded that his company always said that “if we were to find sufficient resource preferred option would be to bring that gas ashore in Cyprus to underpin exactly the sort of development you mentioned an LNG plant. That’s still an option for the future, we haven’t discounted that it is still there as a future possibility”.
The Cypriot minister, answering a question about the LNG plant said “we believe we have good grounds to look into the issue in a more holistic manner”.
Surely, he continued, we will need more quantities but the discovery sets us on a foundation where we can work from.
Asked whether in the light of this discovery ExxonMobil will be looking to bid for more blocks in the Cypriot EEZ, Aspray said “we are not limiting our search in block 10, we would be interested in other opportunities offshore Cyprus and indeed the whole Eastern Mediterranean” and recalled that Exxon was awarded an exploration license in Egypt’s block 3.
Replying to a question whether Exxon is concerned over the tension created by a neighbouring country, Aspray said “we obviously have been aware of the geopolitical tensions in this area, they are not new but ultimately we have to be focused as a contractor to the government to evaluate the block that we secured in the last tender, block 10, which we’ve done. We are stressing that block 10 itself is not in disputed waters”, he remarked.
As is reported to the “Cyprus Mail”, the true size of the Glafcos reservoir remains to be determined. The 5-8 tcf range cited by Exxon signifies there’s a 75 per cent probability for the gas to be on the lower end, 25 per cent on the higher end.
Moreover, the 5-8 tcf cited does not specify whether these are recoverable quantities.
But it would still make it the largest find to date in Cyprus’ EEZ. The Aphrodite field holds 4 to 4.5 tcf, while Calypso in Block 6 is believed to hold 3 to 4 tcf, according to industry chatter.
Initial statements last year that Calypso – drilled by ENI – held 6 to 8 tcf, proved to be very premature, energy analyst Charles Ellinas told the Cyprus Mail. An appraisal well at Calypso is still pending.
By comparison, Zohr, a supergiant gas field discovered by ENI in 2015 in adjacent Egyptian waters, holds an estimated 30 tcf of resources in place.
And Israel’s two largest discoveries – Leviathan and Tamar – hold 22 tcf and 10 tcf, respectively.
Being on the same order of magnitude in terms of size, Glafcos and Calypso face similar challenges in terms of their development as standalone projects.
According to Ellinas, ENI may decide to link up Calypso to Zohr itself. Due to their proximity, the two fields need only be connected by pipeline, with the aggregated gas pumped ashore to Egypt’s Damietta LNG plant, in which ENI has a stake.
Depending on what the future has in store in Cyprus’ EEZ, one can’t rule out the possibility of Exxon’s smaller Delphine-1 reservoir likewise being linked up to Zohr.
“Exxon always go for big. So my best guess is that they’ll ‘sit’ on Glafcos until more gas is discovered. They’re not in a rush, and besides they’ve got other projects going on elsewhere,” Ellinas said.
On the value of the Glafcos find, using today’s LNG prices ($6 per mmbtu) and assuming a conservative 5 tcf of gas, the expert said it would be worth close to €30bn.
But, he stressed, that was a theoretical estimate.
Under the same hypothetical scenario, the profits from developing Glafcos with an LNG plant would come to some $5bn, as infrastructure costs would have to be deducted from the $30bn.
The LNG plant alone would cost around $15bn; on top of that, there is the cost of liquefying the gas as well as shipping.
Shipping the gas off to Asia markets alone would shave off $1 per mmbtu.
“The news today is certainly positive and there is good cause for optimism,” summed up Ellinas.
“But we must be patient. It will take the better part of 10 years from now for an LNG facility to go operational. Don’t expect the money to flow in tomorrow.”
Leading oil and gas companies to discuss
regional outlook during conference in Nicosia
Executives from leading oil and gas companies including Eni, ExxonMobil, Hellenic Petroleum, Noble Energy and Total are gathering in Cyprus on March 6-7, to discuss the industry’s future direction in the Eastern Mediterranean.
According to a press release, the 2019 Eastern Mediterranean Gas Conference (EMGC), to be held in Nicosia March 6–7, is the region’s premier energy event and will feature two days of expert discussion.
Conference leader Catherine Watkins said, “EMGC is the only conference in the region with the ability to attract such widespread operator participation. For companies active in the region or looking to make an investment, EMGC is the perfect venue to acquire the latest information on the region’s developing natural gas industry, as well as gain entry to regional markets and seek new business opportunities.”
A highlight of this year’s conference is a panel discussion featuring executives from Eni, Total, ExxonMobil, Hellenic Petroleum and Noble Energy. The operator-only panel will discuss how Cyprus can fulfill its potential as an oil and gas service center, explore the associated advantages and challenges, and present strategies for establishing the island nation in that role.
The panelists will also share their insights on the medium- and long-term benefits of Cyprus achieving its potential and the country’s contribution to the oil and gas industry of the region. Furthermore, the operators will debate where Cyprus sits on the list of possible alternative service centers in the Eastern Mediterranean, and whether a dedicated shore base is necessary for Cyprus to achieve its potential as a regional service center.
The panelists are Alessandro Barberis, Managing Director, Eni Cyprus; Yannis Grigoriou, Chief Executive Officer, Hellenic Petroleum Upstream S.A.; Yves Grosjean, General Manager, Total E&P Cyprus; L. Gene Kornegay, Country Manager and Vice President, Noble Energy International; and Varnavas Theodossiou, Lead Country Manager, ExxonMobil; with Nicos Papakyriacou, Oil & Gas Services Leader, Deloitte Cyprus moderating the session.
The conference will also feature high-level presentations from speakers including H.E. Yiorgos Lakkotrypis, Minister of Energy, Commerce and Industry for the Republic of Cyprus; Carlo Russo, Executive Vice President, Europe and Russia Region, Eni SpA; Elias Kassis, Vice President, North Africa, Total Exploration & Production; and Yannis Bassias, Chief Executive Officer, Hellenic Hydrocarbon Resources Management.
Additionally, Dr. Sun Xiansheng, Secretary General of the International Energy Forum, will explore international and regional energy cooperation and the emerging role of the Eastern Mediterranean.
The conference is hosted by Gulf Energy Information.