Most North African countries have yet to enjoy the oilfield boom their western neighbors, particularly Angola and Nigeria, have seen. Yet the continent's most developed oil region and the largest natural gas sector is generally quite active, and with new licensing areas opening in the Nile Delta offshore Egypt and on the Atlantic Margin offshore Morocco, equally bountiful reserves could be just one well away.
Egypt
Egypt is due to hold a deepwater licensing round this year, although several delays and the lack of a solid date have kept many companies leery of expressing too much public interest. But the interest is there, nonetheless.
"Egypt is the most populous country in Africa after Nigeria, and it's by far the most populous Arabic country," said Richard Morgan, manager of European, African and Middle Eastern exploration services for Veritas DGC. "Beyond this, the eastern Mediterranean in general is probably going to have an extremely healthy market for hydrocarbons, particularly for gas."
Veritas is hoping to take advantage of the deepwater interest by offering a 2,400-mile (4,000km) 2D speculative survey over blocks A and D. Processing of these data is complete, Morgan said, and some prestack depth migration also has been undertaken due to the presence of a Miocene salt basin beneath the deepwater part of the delta. So far, he said, the data and the area look promising.
Companies with existing acreage in the deepwater area include Shell, BP and BG. But regardless of Egypt's anticipated market for gas, Morgan believes these companies are after oil instead.
"Despite its population, Egypt at the moment is fairly able to supply its own needs, so they'd need to find an export market (for gas)," he said. "So it's down to economics. The deepest water out there is almost 10,000ft (3,000m), and the economics of finding a gas field that works in those water depths are to a certain extent untested. But the field would have to be absolutely huge.
"The economics of an oil field kick in much earlier on the pool size."
The area has late-Mesozoic source rock potential, which Morgan said is most likely to have generated oil because it's a marine source rock. However, this petroleum system in the eastern Mediterranean is almost completely untested. Offshore production has come largely from the shallower delta sediments rather than the deeper rocks that were buried by the delta over time. And as with any area, one discovery could ratchet up activity tremendously.
"I guess a key issue is really water depth. Although these areas have been looked at in the past, what we now consider as explorable was beyond exploration limits then," Morgan said. "So those regions were not studied in the same kind of detail that they are now, and a new potential is being seen."
Onshore Egypt continues to hold great potential as well. Apache Corp. has been active there since 1994, when it joined Phoenix Resources in an exploration drilling prospect in the Qarun concession in Egypt's Western Desert. The Qarun A field was declared commercial in 1995. Apache acquired Phoenix's interests in the country in 1996 and picked up acreage in other Western Desert concessions, including the Khalda complex. Its continued success resulted in the opening of an office in 1996. Net production for 2000 was forecast to be 28,000 b/d of oil and 48 MMcf/d of gas.
"Since our arrival in Egypt as an operator in 1996, Apache has become the most aggressive driller in the Western Desert, drilling or participating in nearly 300 wells," said Rod Eichler, Apache's vice president and general manager in Egypt. "Frequently, Apache drills more exploration wells than all the other Western Desert operators combined. The aggressive business culture that we've honed in North America has been successfully exported to our operations in Egypt."
Eichler said Apache initially was attracted to the area because of a favorable geological setting and discovery history, with multiple exploration opportunities for oil and gas. "It was at a time when many of the majors were exiting the Western Desert because the reserve size was not sufficient for them compared to their many other competing projects in their worldwide inventories," he said. "But the mean field sizes and discovery rates of the Western Desert are very attractive and economical for a company of Apache's size."
The region is not without its challenges. Geologically, multiple periods of rifting have created complex geology, and sparse well control increases the risk. "Prospecting here can be unforgiving if you don't have a good geological model," he said. Apache has made good use of new 3D acquisition and processing technologies, but one odd challenge is the fact that many of the prospective areas were battlegrounds in second world war. "Millions of land mines and unexploded ordinance remain from World War II," he said. "One of our primary operational areas is in the heart of the historic Alamein battlefield."
Production operation of development leases is managed by the joint venture company system provided for in the concession agreement, and many of these bureaucracies are large and cumbersome, he added. Decisions and approvals are slow by US standards, and acceptance of new methods, particularly in drilling, completion and production, is slow.
On the bright side, Eichler said the Egyptian government is motivated to increase oil production, and the economy and political system is stable. Foreign investors are "welcomed and encouraged," and production-sharing contracts are reasonable. The country holds frequent open bid rounds. BP, Shell, IEOC, Repsol, British Gas and Apache are the major stakeholders. Eichler said drilling activity is robust at current prices, and there is a minimum of a 6-month wait for a semisubmersible or jackup for use in the Mediterranean.
Morocco
"The Moroccan people are good people to do business with," said Paul Ashton, executive vice president of exploration for Vanco Energy Co. "I know we're supposed to say that, but they really are."
The people aren't the only thing that makes Morocco attractive. With both Mediterranean and Atlantic coastline, its northern waters lack the deepwater prospectivity of the eastern Mediterranean, but its western areas share some of the same Atlantic geological characteristics as its neighbors to the south. It also, oddly, shares similar characteristics with offshore Nova Scotia since the two countries were connected millions of years ago.
Vanco entered Morocco 2 years ago, negotiating a reconnaissance permit over truly virgin territory - no well control, no seismic. The reconnaissance permit allowed Vanco to explore the area for a year at very little cost or exposure and be able to walk away at the end of that time if need be.
It shot about 1,200mi (2,000km) of 2D data in 1998 over the acreage, known as the Safi Haute Mer block. "It's a very coarse grid of reconnaissance seismic, but what we saw got us excited," Ashton said. There also looked to be prospectivity to the south, on the Ras Tafelney block then permitted to Lasmo. Vanco negotiated with Lasmo to take 60% of the interest and became operator on that block in November 2000.
A more recent 2D survey did some infill on the original programs. Vanco plans to acquire 3D prior to drilling, which probably will begin in 2002.
The combined acreage, about 8 million acres, is essentially the northern half of the offshore salt basin. Shell and Enterprise hold licenses to the south. "We're very happy with the half that we own, and I'm sure they're very happy with the half they own," Ashton said. The combined reserves for both of Vanco's blocks are estimated at about 7 billion bbl.
Ashton said Vanco went to Morocco because it likes the geology of salt basins and has operations in similar areas offshore Gabon and Equatorial Guinea. The 2D has indicated simple, well-defined salt features, a relatively low-risk way to establish the presence of a petroleum system in deep water. If the simple structures turn out to be viable, there are multiple prospects within the acreage that are more complex. "We'll have some subsalt plays that are as good as the Gulf of Mexico subsalt plays in Teak and Mahogany. We're really switched on by the upside potential beyond this first phase of exploration."
Meanwhile the country is holding a bidding round for eight Rabat-Safi offshore blocks covering an area of about 12,000sq mi (31,090sq km). The round opened Oct. 31, 2000, and will close April 30, 2001, and the announcement of winning bids is set for the end of July. Already a group of companies including Kerr-McGee, Enterprise and Africa Energy Ltd. has acquired a 3 million-acre Cap Draa Haute Mer exploration license south of Ras Tafelney.
In anticipation of that round, TGS-Nopec has shot 4,815mi (7,750km) of new 2D data offshore Morocco over the area.
Onshore, Skidmore (Lone Star) announced "important" oil and gas deposits in the eastern area of Talsinnt. The energy minister for Morocco, which imports all of its oil and gas, said new discoveries are expected in other regions soon. A 1999 attempt to entice foreign companies onshore resulted in little interest, although US-based Skidmore will invest US $50 million to explore for oil in Ounara, on the Atlantic Coast near Essaouira.
Other North African countries have potential as well. Algeria is one of the largest gas importers to Europe, and Libya has a well-established oil industry, though it's trying to reduce its dependence on oil as the country's sole source of income. Tunisia produces modest volumes of oil and gas. Its state-owned oil company, ETAP, along with Fugro-Geoteam, has begun a 2D seismic survey covering four open offshore blocks. Veritas also is doing a land survey in that country. Altogether, the area is quite active, and the excitement the geology is generating among foreign operators will probably keep it that way for years to come.