EGYPT - New Geological Concepts For Gas.

Very interesting geological horizons for natural gas have been found since 1990, the year when EGPC and some of its foreign partners like Agip began to focus on areas potentially rich in gas reservoirs. Since then, new geological concepts for natural gas have been established, not only in Egypt but also in the neighbouring North African countries. The following have been the most important:

- Late Tertiary sands, mainly the Pliocene and Plio-Pleistocene horizons in and off the Nile Delta are rich in gas of high quality. These horizons extend far into the deep waters of the Mediterranean Sea to the north, north-east and north-west of the Delta and the Western Desert, including the offshore north of the Sinai Peninsula. This new concept has been proven in the past six years as very big gas discoveries have been made in the deep waters. It is possible that gas-rich areas within these horizons extend as far as the deep waters off Gaza, off Israel, off Lebanon and off Cyprus - though the experience of British Gas so far indicates that the farther the exploration goes to the north of Egypt the smaller the gas reservoirs are likely to be. There may also be the potential for oil reservoirs in these horizons, which are the easy to image, whereas reservoirs in deeper horizons are mostly hidden under salt structures which pose a big barrier to seismic waves.

In the West Delta Deep Marine block, British Gas (BGI) in the late 1990s drilled four wells back-to-back and each of them flowed at a world record of 90 MCF/day in water depth of more than 2,000 feet. BGI, which has since made several gas discoveries, uses the latest techniques in rig positioning, the supply of drilling logistics, site preparation and under-water diverless intervention.

In the West Mediterranean Deep Water B block, off the Nile Delta 60 km north of Alexandria, BP in early November 2003 tested 25.43 MCF/day of gas from a Pliocene Kafr El Shaikh formation at a depth of 2,226 metres. The well, Ruby 2, was the first appraisal to the March 2002 Ruby 1 gas discovery about 7.5 km to the north-west. Now BP is testing the block's deeper horizons, the Late Paleocene and Cretaceous. BP's preliminary data there indicate 3 TCF of gas in place.

Apache of the US in November 2002 made the first deep-water, sub-salt Miocene oil discovery in the West Mediterranean Block 1 in the Nile Delta. It confirmed geo-scientists' speculation that such a system was present in the area. El King 1X in 719 metres of water, Apache's fourth consecutive find on the block, found the oil in a Miocene Abu Madi formation. An 87 metre gross (27m net) gas column in the Pliocene was not tested. Apache made two tests. The first, between 2,358-2,361m, flowed at 2,630 b/d of 32[degrees]API oil and 1.2 MCF/d of gas. The second, between 2,336-2,347m, flowed at 31 MCF/d of gas and 757 b/d of condensate. A fifth well was to be drilled to evaluate the Miocene at depths of about 3,350m. On the same block, Apache in February 2003 successfully appraised a May 2002 Abu Sir 1X find which tested 17.4 MCF/d of gas about 18 km north-west of El King 1X. In 1,028m of water, Abu Sir 2X was drilled to a depth of 4,012m and encountered pay in both Pliocene and Miocene sandstones. Logs indicated a 41m gross (26m net) pay interval in the Pliocene, displaying "excellent characteristics for high rates of deliverability. Gas with no apparent water was encountered between 3,734-4,011m.

- The Cretaceous and Jurassic sandstones have proved to be the most prolific gas-bearing and oil zones in the Western Desert, where large reserves of gas and condensates have been found. Oilfields are smaller.

Apache has made several gas/condensate discoveries in the Jurassic, including the Safa and Kabrit formations. In its Khalda block, Apache's first appraisal and its Qasr 1X discovery in October 2003 exceeded expectations and opened the door to a condensate-rich Jurassic gas play. Qasr 2X established a 215m gross gas/ condensate column with logs indicating 203m net pay, far more than Qasr 1X's 140m net pay. Apache said that was one of the most significant finds in its history, with the two wells having 1-3 TCF of gas and 20-70m barrels of condensates.

A significant Apache discovery in 2003 was Jurassic Ras Qattara. This, it said, was "blanket sand which tends to cover a very large area". Only 90 feet of the least prospective part of Ras Qattara could be tested due to mechanical problems. But this tested of 13.7 MCF/d of gas and 533 b/d of condensate. Apache said: "The lower part that we couldn't test appears to be of even better quality".

- The Triassic rock in the north of the Western Desert, near the Libyan border, has also proved to be rich in gas. Gas in Triassic rock was discovered in September 1992 by Shell. Located at El Obaiyed, north of the Western Desert. Shell said the reserve was 5 TCF, while EGPC experts say the reserve could eventually be as large as 9 TCF. This reserve was found at a depth of 14,000 feet and the pay zone was 250 feet thick.

In November 2003 Shell made a deep-water gas discovery in its North East Mediterranean (Nemed) block. At 3,613m, the KG45-1 well is one of the deepest to be drilled in the Mediterranean. Shell has not given any further details. This is the first of three planned exploration wells on the block. Drilling in 2001 yielded a little.

Egypt, with a territorial area of little over 1m sq km, lies at the north-eastern tip of the African continent and is bordered to the west by Libya and to the south by the Sudan. The country is predominantly desert, bisected by the Nile River which debauches into the 20,000 sq km fertile Nile Delta.

Geologists believe the Delta and its adjacent offshore area are analogous to other petroleum-rich deltas, such as those in Indonesia, the Niger River Delta in West Africa, and the Mississippi River Delta and the Gulf of Mexico.

The oil-rich Gulf of Suez, the western arm of the northerly extensions of the Red Sea, is entirely within Egyptian territory. There are narrow continental shelves on the Red Sea coast, south of the Gulf of Suez, within the Gulf of Aqaba and also along parts of the Mediterranean coast. But the shelf area is considerably broader at the mouths of the Nile, where the delta is built out into the Mediterranean and where very large gas reserves have been discovered.

Until the new concepts for gas were established, the petroleum geology of Egypt was dominated by three elements:

The oil-prone north-west and south-east trending Gulf of Suez Basin.

The gas-prone north-west and south-east trending Nile Delta Basin.

The east-west trending basins of the Western Desert which have been proven to be rich in oil and gas.

EGPC and foreign operators have become convinced that there are no oil giants to be found in Egypt. The known oil fairways have proved to contain limited reserves compared with the geological horizons in Libya or the Persian Gulf.

There is little hope of finding giant oil reserves in the hitherto unexplored parts of Egypt.

Yet the number of discoveries made since 1990 has been fairly impressive. Well over 220 oil and gas discoveries were made in the past 13 years. More would be expected in the years ahead, though mostly natural gas in the newly-established geological horizons to the north of Sinai, the Nile Delta and the Western Desert.

The Gulf of Suez Basin, where exploration dates back more than 130 years, provides most of Egypt's oil. It includes onshore and offshore areas. Oil reservoirs are mainly in the Miocene Rudeis sandstone and the Eocene. There are accumulations in Middle Miocene sands, Cretaceous to Eocene sandstones and carbonates and the Nubian sandstone, which can range in age from Devonian to Cretaceous.

Source rocks occur in the Nubian sequence and also in Eocene to Miocene shales. The offshore area in particular, which is an extension of the East African Rift System, is an area of high heat flow and has been a very efficient zone for the generation of hydrocarbons. Traps are mostly associated with block faulting, as might be expected in a rift area, and reservoirs occur both within the fault blocks and in the drape associated with strata overlying individual blocks. Reefal carbonates which developed over paleotopographic highs are also targets for exploration.

Within the Gulf of Suez there are several evaporitic sequences in the Miocene and these provide efficient seals. However, they also act as a barrier to seismic penetration and can complicate interpretation of older sequences. There are areas where deep salt, by its influence on tectonics, has created complex shapes difficult to process even with 3D seismic.

One example was the Amal field, developed by Total of France in a joint venture with EGPC and KUFPEC of Kuwait. At first 3D seismic reflectivity did not agree with the dipmeter, as "big smiles" hid the information under the salt dome. Eventually Total applied new methods, established the area's prospectivity, and found oil.

The Nile Delta is a petroliferous province. But despite its large size, so far the oil potential has proved disappointing in comparison to the Mississippi or Niger deltas. The Nile Delta's section and its offshore extensions are gas-prone. Geologists say that, within the Nile Delta alone, non-associated gas reserves in place could be as large as 80 TCF. Apache's 2002 discovery of Miocene oil beneath deep waters in the Nile Delta was interesting.

In the adjacent continental shelf of the Mediterranean, which is broad and mostly gas-prone, Egypt is exploiting "commercial areas" beyond it territorial waters to the north - in waters at depths of 700-2,800 metres or more. These areas stretch about 180 km to the north of the Egyptian coast and their southern part is believed to be more prolific than the delta itself.

The main operators in the Nile Delta and its Mediterranean extensions to the north are Agip (IEOC), BP, BGI, Shell and Apache. Mainly as a result of their state-of-the-art 3D seismic imaging of Pliocene formations, these companies have had a 95-100% success rate in their exploration and appraisal drilling in these areas. In its North East Mediterranean Deep Marine block, where water depths range from 800 to 2,800 metres, Shell has drilled two wells and has forecast reserves of about 15 TCF of gas and 4 bn barrels of oil.

The Mediterranean continental shelf and "commercial areas" - to the north-east, north and north-west of the Nile Delta and the Western Desert - are said to contain around 100 TCF of non-associated gas in place. Some of the gas in these areas could be bacterial in origin. Small discoveries of gas with condensates have been made in older Tertiary sequences at the periphery of the Nile Delta. Three major gas-rich trends have been established in the Nile Delta and the adjacent Mediterranean as follows:

Gas fields from the giant offshore Baltim East to the coast, where most of the gas and condensate reserves lie in Miocene Messinian reservoirs at depths of 3,820-4,075m, with some discoveries being onshore and others being of different geology.

Extensive Pliocene shales very rich in gas extending from the Ha'pi field, then south-east through the offshore giant Temsah which has a Miocene reservoir, to offshore North Sinai - where BGI's find of mid-1997, Je80-1, represents an easterly extension of the gas play in the Nile Delta.

Fields in the deep Mediterranean to the north of the Delta, where the main reservoirs are Plio-Pleistocene and Pliocene sands, extend north-east to offshore Gaza and offshore Israel and could potentially be found off Lebanon and off Cyprus. This third trend also features the West Delta Deep Marine (WDDM) block, where BGI is the operator, which is adjacent to and north of its Rosetta block. In these areas BGI has found more than 16 TCF of recoverable gas reserves. The WDDM has over 13 TCF of recoverable gas.

On the eastern side in the offshore east Mediterranean, big gas finds by Amoco (taken over by BP in early 1999) led the US major in mid-1997 to describe the Nile Delta and its northern extensions as an "emerging world class gas basin". BP, the biggest foreign investor in Egypt's petroleum business and the largest oil producer in the country, has shifted to gas in its current exploration effort.

BGI is in the lead in east Mediterranean gas exploration. In the WDDM, it has had 100% success in finding Plio-Pleistocene fields Simian/Sienna, Scarab/Saffron, and Sapphire, and regards this block as "jewel in the crown" of its exploration portfolio in Egypt. Together with the Rosetta field, the P12/P13, Thekah and others, these will make BGI the biggest gas producer in Egypt during this decade. BGI has also found gas in deep water in offshore Gaza and in offshore Israel.

In Sinai, a peninsula between the Mediterranean, the Gulf of Suez, the Gulf of Aqaba and the Red Sea, exploration has concentrated on the Miocene and pre-Miocene. There, ex-EGPC vice chairman and geologist Wafik Meshref (now a consultant to Pennzoil & others) believes Miocene and pre-Miocene structures studied could contain oil and gas as large as 10 bn barrels of oil equivalent.

However, only 800m barrels of oil equivalent have been proven in Sinai. Cumulative production in Sinai by Jan. 1, 1999, had reached 600m barrels of oil equivalent. The remaining proven reserves of Miocene and pre-Miocene oil and gas were then estimated at 200m barrels.