1 060404 the challenges of the gt project – unctad – 10th africa oil & gas, trade &...

1060404 The Challenges of the GT Project – UNCTAD – 10th Africa Oil & Gas, Trade & Finance Conference & Exhibition

Gassi Touil – Rhourde Nouss QH LNG Integrated Project

The Challenges of the Gassi Touil

Integrated Project

Algiers, April 04, 2006

NOT AN OFFICIAL UNCTAD RECORD


Gassi Touil – Rhourde Nouss QH LNG Integrated ProjectGassi Touil – Rhourde Nouss QH LNG Integrated Project

First Integrated Project (Exploration, Development, Production, Liquefaction & Commercialization of Gas) in Algeria

Launched initially by Sonatrach in 2002

Scope increased by Sonatrach in 2004 as initial reserves were perceived as insufficient to pay for development & risks

Very tight schedule (start-up end of 2009), with penalties if dates not met

Awarded to Repsol YPF and Gas Natural in December 2004

Effective Date May 2nd, 2005



Repsol YPF’s Assets in AlgeriaRepsol YPF’s Assets in Algeria


Gassi Touil – Rhourde Nouss QH LNG Integrated ProjectGassi Touil – Rhourde Nouss QH LNG Integrated ProjectContract AreasContract Areas


Partners:

• Association: Repsol YPF (60% Operator) + Gas Natural (40%)

• Upstream: Sonatrach (35%) + Repsol YPF / Gas Natural (65%)

• Transport: Sonatrach (100%)

• LNG Plant: Sonatrach (20%) + Repsol YPF / Gas Natural (80%)

• Commercialization: Sonatrach (51%) + Repsol YPF / Gas Natural (49%)

Contract:

• Production Sharing: 30 years (2005 - 2035)

Production:

• Start Up: End of 2009

• Sales 100% (plateau): 4 MTA LNG + Associated Liquids

Gassi Touil – Rhourde Nouss QH LNG Integrated ProjectGassi Touil – Rhourde Nouss QH LNG Integrated ProjectContract & Expected Production Data Contract & Expected Production Data


One of the 10 most Large & Complex E&P Projects in the World. Initial CAPEX (100%) estimate 3 B$

The present extremely Tight Oil & Gas Market makes it very difficult to control Schedules and Costs, and to find the adequate Resources

Expect to have a peak of some 5 - 6,000 Persons (mainly Algerians) working during the Construction Phase

Some 500 - 600 Direct Employees once on Production, plus a similar number in indirects

Cooperation among the partners, particularly with Sonatrach, and with qualified service companies, is critical to success

Gassi Touil – Rhourde Nouss QH LNG Integrated ProjectGassi Touil – Rhourde Nouss QH LNG Integrated ProjectMain Challenges Main Challenges


Very Aggressive Exploration Campaign, with a cost of 105 MM$ (Contractual 35 MM$) in 5 years

The largest 3D Seismic Campaign ever launched in Algeria (3,500 km2)

A total of at least 19 Identified Accumulations in a surface of 3000 km2 to be Explored / Appraised or Developed

Up to Three Different Reservoirs per Accumulation. The most important one being the Hamra Quarzites, never economically produced before

Production of Hamra Quartzites advanced to 2009 (Contract 2012) to obtain real drilling and production data as soon as possible



85 existing wells to be inspected, tested, secured, possible workovers, etc. Some will be abandoned, others as producers

Additionally, some 40 – 50 new wells will be drilled for production start up

Hamra Quartzite drilling (estimate 100 days per well) and fracturing extremely challenging. HQ productivity critical to the success of the project.

Up to 7 Drilling and Workover Rigs working simultaneously

Gas Treatment Facilities (22 – 23 MMNm3/d) at three locations, including Separation and Injection of CO2 and some 600 km of in-field flowlines and pipelines

A 4 Million Tons per Year LNG Plant to be located at Arzew. Possible second LNG Train to be decided by 2008




ReservoirsReservoirs


Gassi Touil – Rhourde Nouss QH LNG Integrated ProjectGassi Touil – Rhourde Nouss QH LNG Integrated ProjectMain Progress MilestonesMain Progress Milestones

Contract Award December 1st

Effective Date May 2nd

Seismic Acquisition

Well Inspection & Testing

Drilling & Workovers

UPSTREAM FACILITIESInternal FEED

Open Book Estimate Upstr.

EPC Upstream

LNG PLANT AT ARZEWFEED + Open Book Estim.

EPC

"Sociedad de Licuefacción" March 14th

2005 2006 2007


Gassi Touil – Rhourde Nouss QH LNG Integrated ProjectExploration – Map & Works

Minimum Phase I (5 Years)3 Exploration Wells500 km 2D Seismic150 km2 3D Seismic1 Long Production Test1 Hydraulic Fracture

35 MM$

Planned Phase I (5 Years)

8 Exploration Wells1430 km 2D Seismic260 km2 3D Seismic1 Long Production Test1 Hydraulic Fracture

> 105 MM$


Gassi Touil – Rhourde Nouss QH LNG Integrated ProjectThe largest seismic campaign ever in Algeria


Full scale reservoir characterization as a key tool to drill new Full scale reservoir characterization as a key tool to drill new opportunities and predict reservoir behavior opportunities and predict reservoir behavior

Matrix Permebility 0.1 mD


Gassi Touil – Rhourde Nouss QH LNG Integrated ProjectAdvanced Well Design, Planning & Architecture

High-tech to optimize productivity from the Ordovician fractured reservoirs


Gassi Touil – Rhourde Nouss QH LNG Integrated ProjectDepleted fields rejuvenation

Existing wells surveillance campaignExisting wells surveillance campaign

16 RESERVOIR: HQ - 4938 – 5016 m - PRES = 10 000 psi - 1.42 s.g. equiv. - Static BHT = 158°C - CO2 < 11%, N2 <1%

BRIDES WELLS TO ORDOVICIAN

CP 30’’ or 42’’ @ +/- 9 m

26” drilling, WBM 1.05 s.g.425 m : 18 5/8” Csg, 87.5#, K55, BTC

16” drilling, OBM 1.25 s.g

2350 m : 13 3/8” Csg, 68#, N80, BTCcement to surface : Light Cement or DV

12 ¼’’ drilling, OBM 2.10 s.g. 3250 : 9 5/8” Csg, 53.5#, special drift, P110,Tenaris BlueCement to surface : DV @ ~2500 m, in Lias Anhydritique

8 ½” drilling, OBM 1.30 to 1.50 s.g.(Possibility of ‘’Flow Drilling’’)

TOL @ 4470 m

4670 m : 7” liner, 32#, P110, Tenaris BlueTOL @ ~ 2250 m, +/-250 m above 9 5/8” DV

6” drilling, OBM 1.45 s.g. 5200 m : 4 ½” liner, 13.5#, P110, Tenaris Blue

WH 15 K Compact

optDV

BRD 4, 5, 6

24” WBM 1.05 – 1.06

18 5/8”: 415 426 440(Sénonien LagunaireAnhydrites & Dolomites)

17 1/2” OBM 1.10 – 1.45

13 3/8”: 2361 2376 2331(Top Lias: Lias argilo-dolomitique)

12 ¼” OBM 2.10 – 2.40

9 5/8”: 3260 3190 3260(Base Lias: Lias argileux)

8 3/8” - 8 1/2” OBM 1.24 – 1.57

7”: 4666 4670 4724(Top Ordov.: DMK)

6” OBM 1.45 -1.49

4 ½”: 5130 5220 5204(Grès d’El Atchane)

DV

225023502500

32502678 - 2721 Hz B

BRIDESBRIDES WELL TO ORDOVICIAN

RIG: 2000HP - ENTP 198

0

1000

2000

3000

4000

5000

0 10 20 30 40 50 60 70 80 90 100 110 120

Days

Dep

th (

mts

)

Budget

Actual


Gassi Touil – Rhourde Nouss QH LNG Integrated ProjectCO2 Injection

CO2 Injection Project – Defined Workflow


Gassi Touil – Rhourde Nouss QH LNG Integrated ProjectGassi Touil – Rhourde Nouss QH LNG Integrated ProjectUpstream FacilitiesUpstream Facilities

Present Market Environment very difficult:

• Large increases in equipment and materials prices,

• Much longer delivery times,

• Most quality contractors are saturated

To accelerate engineering, FEED done mostly in-house

Preliminary Open Book Estimate Contract signed with major international contractor, expect to sign EPC in October 2006

First Gas Planned September 2009


Gassi Touil – Rhourde Nouss QH LNG Integrated ProjectGassi Touil – Rhourde Nouss QH LNG Integrated ProjectUpstream FacilitiesUpstream Facilities

The integration of a large number of gas fields of different characteristics (high pressure vs depleted, wet vs dry, high CO2 vs sweet) present significant challenges for an efficient, long term development

To optimize this very complex network, large scale integrated simulations, from the reservoir to the facilities, have been developed.

This allows the Project Team to select the optimum development scenarios (e.g. compression) and to update them easily


Gassi Touil – Rhourde Nouss QH LNG Integrated ProjectGassi Touil – Rhourde Nouss QH LNG Integrated ProjectLNG FacilitiesLNG Facilities

The Market Situation is even more difficult than in Upstream Facilities, as only a very small number of contractors are qualified to design & build LNG Plants

The number of LNG projects under development has increased dramatically, giving the international contractors a very large leverage

This is causing significant costs increases in many projects around the world


Gassi Touil – Rhourde Nouss QH LNG Integrated ProjectGassi Touil – Rhourde Nouss QH LNG Integrated ProjectLNG FacilitiesLNG Facilities


Gassi Touil – Rhourde Nouss QH LNG Integrated ProjectGassi Touil – Rhourde Nouss QH LNG Integrated ProjectLayout of LNG Facilities at ArzewLayout of LNG Facilities at Arzew


Gassi Touil – Rhourde Nouss QH LNG Integrated Project Gassi Touil – Rhourde Nouss QH LNG Integrated Project ConclusionsConclusions

Very Complex and Demanding Project, in very Difficult Market Circumstances

Very Tight Schedule, but presently On Target

Productivity of the Hamra Quartzite is the cornerstone of the project

The Project will use Cutting-Edge Technology in several areas to overcome the technical / economical challenges

Close collaboration among the partners, in particular with Sonatrach, is key to the success of the project

1 060404 the challenges of the gt project – unctad – 10th africa oil & gas, trade &...

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