ERHC Energy Inc (ERHE)

[TOB]

The proximity of JDZ-2 and Block R gas discoveries which are noted by stars. GEPetrol and Ophir are interest holders in Block R gas field development.

(Scroll down for more text and charts below)



Ophir is the operator. The current plan is a sub-sea pipeline back to the LNG plant on Bioko Island at Malabo. This would support a second Train for Equitorial Guinea Liquefied Natural Gas (EG LNG). Unlike Nigeria which has Natural Gas to spare, Equitorial Guinea requires supplemental imports from Nigeria and Cameroon to support its existing single LNG Train.

(Lykos-1 well in Block R) was located in 1,536m of water and was drilled to a total depth of 2284m sub-sea. The well targeted a shallow gas anomaly identified on existing 3D seismic data, with the dual objective of proving the presence of a gas column whilst demonstrating feasibility of a low cost "riserless" well design to explore and develop such features. The well penetrated a gross gas column of 29m, as proven by both wireline logs and pressure data. Reservoir quality was excellent and gas samples were taken to determine composition. The well was subsequently plugged and abandoned.

Same geology as JDZ-2, Toe Thrust Belt. Note a discovery is plugged and abandoned which is SOP.

Another view showing the proximity to JDZ-2



An overview showing JDZ near Block R, with major area discoveries and Bioko Island.

The Company is in advanced negotiations with the Government of Equatorial Guinea regarding the incorporation of gas terms into the PSC in respect of Block R. In parallel, there are discussions with other stakeholders in the area to identify ways in which the project can be moved forward as efficiently as possible within the framework of the gas commercialisation structure proposed by the Government for a second LNG train on Bioko Island. Ophir 2010 annual report

Sinopec and ERHC is certainly a stakeholder “in the area” of Block R with a significant gas discovery in JDZ-2 with the other large target believed to be also gas. Likely non-commercial as a standalone development, but could well be commercial tied into the Block R field development and its planned pipeline to the EGLNG plant on Bioko.

It’s been often proposed that Total is the only possible nearby operator to be interested in JDZ gas if Sinopec and Addax don’t wish to produce it. Also the only one developing nearby infrastructure. But noting that Total is really after oil which it produces via FPSO, and the Nigerians are likely not very interested in more offshore gas as they have gas to spare. Unless Total plans an FLNG they may have little interest in additional gas at this point.

You almost have to wonder why Ophir wouldn't want a large gas discovery in tie-in distance from their gas field development if SNP doesn't want it? Alternatively, you have to ask why Total would want deepwater gas, unless they intend an FLNG for Egina, as Total is already re-injecting spare Akpo Gas and has Egina coming online?

So no, Total is not the only option for JDZ gas, not not the only one with planned development and infrastructure nearby.

Alternatively, a JDZ area wide FLNG is a real possibility, as there are not only existing gas discoveries but many blocks yet to be explored. Even an oil discovery is likely to produce with a high gas component because of the depth and temperature.

Yet another alternative; An LNG plant for São Tomé and Príncipe is almost a given at some point. They very much need exports and both LNG and Oil are valuable. As STP has an EEZ that is primarily ultra-deepwater, it is again very likely that they will make additional gas discoveries, and any oil discovered will produce with a high gas content.

Natural gas can also support industry, agriculture, and provide for electrical generation on the São Tomé and Príncipe islands. Just cheap air-conditioning for the population would be a politically popular move in a hot and humid tropical climate with a yearly average temperature of 27 °C (80.6 °F).