NOBLE ENERGY has pushed back the start of appraisal drilling in its Block 12 offshore concession in Cyprus’ Exclusive Economic Zone (EEZ), raising questions as to whether it will get the data it needs on the size and quality of hydrocarbon reserves before its current licence expires in October 2013.
Speaking to the Sunday Mail, Energy Service director Solon Kassinis yesterday appeared confident that not only would the US company get the ball rolling before its licence runs out this October, the subsequent drilling operations will provide a much-needed boost to the local economy.
The daily barrage of speculation about the level of public debt Cyprus will assume has wiped the smile off many faces on the island, but the one area seen as a silver lining in a gloomy indebted future is the burgeoning hydrocarbons industry.
Since negotiations with the troika began for an international bailout, President Demetris Christofias has said on a number of occasions that in the not too distant future Cyprus will be able to pull itself out of economic misery by exploiting the “gift” of its natural resources.
In December 2011, after drilling an exploratory borehole, Noble Energy announced that the ‘Aphrodite’ well in its Block 12 concession held an “estimated gross resource range of 5 to 8 trillion cubic feet (tcf), with a gross mean of 7 tcf”.
However, in recent weeks, commentators have expressed concern at delays in the second ‘appraisal’ well Noble will drill to ascertain the size and quality (and commercial potential) of the Aphrodite discovery, arguing that delays in developing Cyprus’ natural gas industry mean delays in the island’s economic recovery.
Plans were afoot to start a second drilling next month, however this was pushed back to April. In recent days, Noble informed the government that the April deadline also will not be met, with no new date set for work to start on the appraisal well
Kassinis yesterday rejected allegations of unnecessary delays, saying: “I assure you Noble is trying as fast as possible to get started.”
He argued that Noble and the energy service have already evaluated around 20 tenders announced in relation to auxiliary services needed to get the drilling going. Another five are at the stage of evaluation.
“Noble evaluates the tenders under our auspices, because (the costs) are recoverable and we are the main shareholders. Every week we have meetings on this,” he said.
The tender process for the rig that will drill the appraisal well closed three months ago. The rig is currently working in the sizeable Leviathan field in Israel’s EEZ, and due to a series of problems experienced 34 per cent ‘dead time’.
“These things are normal in this industry,” said Kassinis, adding that one had to factor in bad weather, difficulties in deepwater drilling etc.
The energy service chief further argued that as a result of the tenders process, work has already started in Limassol on the various auxiliary services Noble will be looking to buy in connection with the drilling.
“Before, these services were purchased abroad. Now, they’re being offered in Cyprus. Work has already begun on a mud plant in Limassol, to produce mud for the drilling,” he said, adding that other related infrastructural works to host vessels that will be connecting with the rig were also underway in the coastal town.
Kassinis said that he was trying to acquire drilling data from another company that drilled a first well in the Israeli offshore field neighbouring Block 12. The Israeli concession shares the same underwater hydrocarbon structure as the Aphrodite field, meaning that extraction of gas from the same reserve will take place on either side of the line joining the EEZs of Cyprus and Israel.
“We will evaluate their data as well so we are going to have three wells and data and a much more secure picture,” he said.
Commerce Minister Neoclis Sylikiotis said the fact Israel and Cyprus were drilling side by side made the conclusion of a unitisation agreement between the two countries, setting out clearly who does what, imperative.
Asked if he was concerned about the delays in the second well, Sylikiotis said: “I am concerned, and pushing, but they (Noble) do act and work towards that direction. I hope it will happen by June, but I don’t control the weather, or the ‘dead time’ of the rig when problems arise.”
Regarding the prospect of Noble failing to make any progress before its licence expires in October, he said: “I hope it won’t reach that. Nevertheless, if the study is going very well, cabinet could give an extension of one or two months.”
Sylikiotis noted, legally, if the licence expires and Noble hasn’t met its obligations, the state would be within its rights to award the licence elsewhere.
However, the minister expressed confidence that Noble will get the job done in time simply because they had to. He suggested that awarding licences to energy giants Total, ENI and Kogas, for another five blocks in Cyprus’ EEZ (which will likely be signed by the end of the month) would provide competition for Noble regarding who will get natural gas from the underwater reserves and into pipes heading towards Limassol first.
Also, whoever gets the gas out of the well first has a greater say in the construction and operation of the planned liquefaction plant at Vassilikos.
The minister told the Sunday Mail that in the meantime, Cyprus would follow an interim solution of importing natural gas from abroad for three to five years.

Published by: www.cyprus-mail.com