TAG Oil has received approval to enter into a petroleum services agreement with the Egyptian National Petroleum for Exploration and Development Company for the development of the unconventional Abu Roash F reservoir within the Southeast Ras Qattara concession in Egypt’s Western Desert, marking a significant expansion of the company’s footprint in the North African nation.
The award follows a competitive bidding process initiated by Egypt’s Ministry of Petroleum and Mineral Resources through the Egypt Upstream Gateway. The PSA will become effective upon execution of the definitive agreement and the posting of a 100,000 dollar performance letter of guarantee.
The SERQ Concession spans approximately 2,000 square kilometers and benefits from extensive existing subsurface data, including full 3D seismic coverage and several existing wellbores. The area has a record of conventional oil production from deeper formations that intersect the ARF reservoir. Conventional production will remain and continue to be developed by ENPEDCO. TAG Oil will have access to several shut-in wells within the concession offering low-cost re-entry opportunities to evaluate the ARF’s unconventional potential.
TAG Oil has completed detailed technical studies of the ARF reservoir, identifying it as a low-permeability carbonate formation with substantial development potential. The company believes the reservoir holds a high likelihood of commercial success using proven horizontal drilling and hydraulic fracturing technologies, methods that have already demonstrated positive results in TAG Oil’s Badr Oil Field concession in Egypt, as well as in comparable plays such as Canada’s Montney formation and the Eagle Ford shale in the United States.
The development will advance in two phases. The first phase involves a firm commitment evaluation period of two years, during which TAG Oil will re-enter one or more existing vertical wells to perform Diagnostic Fracture Injection Testing of the ARF, and drill a new vertical well or sidetrack an existing well, followed by potential hydraulic fracture stimulation of the ARF. Upon successful completion of Phase 1, and based on actual production results and cost analysis, TAG Oil will have the option to proceed with full-scale commercial development of the ARF reservoir under acceptable economic terms to be agreed by both parties.
Under the PSA, ENPEDCO will pay TAG Oil a sliding-scale service fee based on production volumes, ranging from 55 to 48 percent of gross project revenue. This fee compensates TAG Oil for funding 100 percent of the capital and operating expenditures associated with the ARF development at the SERQ Concession. All royalties and taxes will be paid by the Egyptian General Petroleum Corporation on behalf of the company.
Abby Badwi, TAG’s Executive Chairman and CEO, commented that the company is very pleased to have received this approval, which represents another significant step in expanding TAG Oil’s footprint in Egypt. While the initial phase focuses on piloting the development concept, the reservoir characteristics and proposed strategy are based on proven technologies that have consistently delivered successful outcomes in similar projects across North America.
Source: energy-pedia.com