Algeria
Petroceltic views Algeria as being a key part of our strategy to develop energy resources in the Mediterranean region. The petroleum resources of Algeria are considered to be world-class containing some 35 billion boe of proven hydrocarbon reserves (Source: Wood MacKenzie). Algeria supplies approximately 10% of Europe's natural gas via existing pipelines to Italy and Spain and to LNG projects. This supply capacity is set to expand with further gas pipelines, namely "Medgaz" to Spain and "Galsi" to Italy, both of which are currently under development. Against this background, Algeria has the potential to present significant opportunities in the coming years for Petroceltic, not only within our existing portfolio but also for additional new ventures within the country.
Petroceltic's Isarene permit area is located in the south of the Illizi Basin in South Eastern Algeria. It covers some 7,520 sq km, equivalent to about thirty North Sea blocks. The permit area is bordered by a number of fields with proven oil and gas production. The In Amenas project to the east is Algeria’s largest wet gas project, jointly operated by BP, Sonatrach and Statoil. The Repsol operated oil field Tiffernine is less than 15kms from the northern block boundary.
Algeria has been a major area of activity for Petroceltic in 2009 with the commencement of a drilling program in May 2009 which was focused on appraising gas and oil discoveries already made on the Isarene permit by Petroceltic and previous operators. The drilling and testing program was completed in February 2010 with the drilling and testing of five wells. Four of the five wells were successfully tested at commercial flow rates ranging from 4 mmscfd of gas to 33 mmscfd of gas. In addition some wells had condensate production. Three wells were drilled on the Ain Tsila discovery (wells AT-1,AT-2 and AT-3) encountering gas in the Devonian and the Ordovician formations. Testing was carried out in the Ordovician with AT-1 flowing at 33 mmscfd and AT-2 at 4.9 mmscfd. Well AT-3 encountered an 80m gas column but due to the fracture stimulation not being successfully completed was unable to flow at commercial rates. The inability to carry out fracture stimulation was due to the well encountering a higher than anticipated in situ-rock stress regime. However, the testing of AT-3 did confirm that the gas was at the same pressure as AT-1 and AT-2 demonstrating that the discovery extends for a distance of at least 22km over the field. The remaining two wells INE-2 and INW-2 were drilled on Issaouane structure with both wells being tested in the shallow Devonian formation at rates of 3.9 and 16.7 mmscfd of gas respectively. Unlike the Ordovician none of the wells were fracture stimulated. The flow rate from INW-2 is the highest recorded from a single Devonian zone in the Illizi basin.
Discovery declarations have been submitted to Sonatrach for all of the wells that flowed at commercial rates from separate reservoirs. Prior to the end of the second exploration phase of the licence, April 2010, all First and Second Discovery Reports will be filed with Sonatrach for approval in preparation for commencing a delineation drilling program in late 2010. The next phase of the licence agreement will be focused on delineating the discoveries, scoping out a conceptual development plan and preparing a Final Discovery Report for all of the fields that demonstrate full field life commerciality.
The results of this program have been very encouraging and have demonstrated that Petroceltic have partnered in a block with considerable potential and have the capability of delivering a technically challenging operations program safely in a remote and challenging environment.
Algerian Overview:
Isarene Permit Area:
