ERHC Energy Inc (ERHE)

[spp119]

steelwundrin (#186663),

At this stage it is impossible to put any isolated discovery in dollars and cents. Notice I say "discovery". If drilling on that Blks 2 well came up dry, then one could put price tag on it....$0.00 and throw it away.(Although a petrogeologist and the company he worked for would disagree saying that the drilling itself and the assorted technical actions accompanying it yeilded valuable information for other nearby prospects/fields and therefore "there is no such thing as a throw away well". Especially in super-expensive deepwater drilling).

But we did not hit a dry well on the Bomu prospect in Blk2. (ditto that for the two other prospects drilled so far -Kina and Lemba, and it looks that Malanza will also be a find) It is said that the discovery yeilds were uncommercial and of the order of around 250Bcf (at least on intial calculations, as there are more being done now,using different metrics and formulae).

So what you have to ask is what makes a deepwater well commercial. For oil, the standard requirement is around 180-200m barrels minimum. That, in the case of gas, is over one trillion cubic feet (Tcf) about 1.2Tcf in fact. So on that very elementary consideration, finding only 250Bcf is certainly disappointing.

What in our particular case made it seem more disappointing is that people here expected to find oil (at Bomu and everywhere else) not natural gas. Lots of oil, to the tune at least of around 250m barrels according to the NSAI/Addax estimates. So on this second, and ERHE particular, level finding only what amount to an equivalent 45million barrels, speaks for itself in terms of the angst it created.

But that is not how the story ends.

For in the real world, there are only a few single well major discoveries in deepwater acreages, be they oil or gas bearing. Indeed, for gas wells, standalone commercial finds are something of an extreme rarity.

What makes them "possibly" commercial is through the (subsea) linking of a number of such finds in the same general vicinity (which can extend almost to 100km)into a cluster, a commom tie-in to a central processing platform for either on-board processing (LNG) or piping to an onshore facilities. With the "possibly" caveat being a relative abundance of the dispersed stuff to be gathered into the central platform.

In my (very limited) experience, I know of one such recent and relatively small scale project, where the volume of discovered gas from about five different wells amounted to no more that 1,5Tcf, enough to produce almost 15,000 tonnes of LNG per year for well over a decade. Just think of what even larger volumes being present in the multi-prospect JDZ blocks would mean...

One can conclude therefore that any extrapolations made from just a single gas well are premature, if not irrelevant. And you can imagine consequently, how important any large gas finds in our blocks (as I believe is definitely what the current drilling reveals as being the case) would be should they they be interlinked as described above. Moreover, one does not have to wait until all possible prospects are explored to begin production and extract value. Each new find can just be linked to the main gathering platform.

People here talk of the multi-billion AKPO production paradigm. And they are right in doing so, given that AKPO includes fields which are mostly oil rather than bearing. The cluster-tie-in AKPO paradigm could be the same here also, only it would be mostly for gas. The only question would be wether to pipe it thereafter to onshore facilities, or, IMHO more likely, to go for some of the up-and-coming "floaters" to produce,refine and ship the stuff (as LNG)directly from platform to the market.

See the (very fresh) pdf on these "floater" platform based endeavours which Tryoty had the courtesy (and digital know-how) to post for me in #186678 post.

http://bb.us.advfn.com/boards/board.aspx?board_id=1909&NextStart=186685

That is how this story will end (at least in terms of discoveries and drillings). Happily. But no one can tell you what that would mean in dollars and cents. At least not yet.Too many fields to drill yet and too many things to decide,.... even before then.

.... of course you can always say that all the above is just a long-winded way of saying those immortal words... "nobody knows nuttin.."
And you would be right. Its just that some of us do actually try to learn something.....and share.

spp119