ITALY - The Board of Mediterranean Oil & Gas (MOG) has announced an operational update and has confirmed that in the Ombrina Mare Oil & Gas Field, in which MOG is the operator holding MOG 100%, the Company has submitted its application to the Italian Ministry of Economic Development (MSE) for an offshore production concession.
The application for the production concession to permit development of the Ombrina Mare Oil & Gas Field was prepared on schedule, following the completion of:
- The independent oil & gas reserves assessment by Studio Ingegneria Mineraria (SIM);
- Formal recognition of the hydrocarbon discovery by the Italian Authorities;
- Completion of the OBM 2 dir temporary platform and certification of its compliance from RINA (the responsible Italian authority);
- The feasibility study for the Field Development Plan (FDP) prepared by PROGER Engineers.
The Company estimates that the technical and environmental approval process should be completed by Q1/Q2 2010 and that the production concession should be granted by Q2/Q3 2010.
The Ombrina Mare Production Concession Application covers an offshore area of approx. 150 sq km.
The Field Development Plan (FDP) has been designed to produce the 20 MMbbls and 6.5 Bcf of certified 2P oil and gas reserves from the Ombrina Mare Oil and Gas Field. The proposed development has:
- A single production platform at the OM2dir producer well location;
- 5 Development wells (including the already completed and suspended oil producer OM-2dir), two of which will have a double completion for oil and gas;
- 1 FPSO plant designed for a maximum oil production of 10,000 bbls/d and to store up to 50,000 tonnes of oil;
- A 12km submarine gas pipe line to connect directly offshore the produced gas from the Ombrina Mare area to an existing gas production plant.
The current estimated capital expenditure for the FDP is 150 to 170 million euro based on oil services prices prevailing in 2008. The Company anticipates that it should be able to achieve significant CAPEX savings as the oil services market is expected to become more competitive in 2009 and 2010, which is when we will be seeking bids to perform the work. Oil and gas production from the main Ombrina Mare field should progressively reach 5,000 to 7,500 bbls/d of oil and 3.5 MMcf/d of gas. Production is scheduled to start in late 2011 once all of the development wells have been drilled and the production facilities are in place.
An additional and contingent development plan has also been submitted in the application for the oil and gas production concession. The additional plan is directed at obtaining the approvals to appraise and explore the additional contingent and prospective oil and gas resources identified inside the production concession area, once the main Ombrina Mare Oil and Gas Field is in full production.
In 2008 MOG drilled the offshore Ombrina Mare-2 vertical (OM-2) and horizontal (OM-2dir) wells that confirmed the presence of the oil and gas fields and successfully appraised the Ombrina Mare oil field structure to a distance approx. 1.7 km east of the OM-1 discovery well. Oil is trapped in a Miocene and Cretaceous carbonate platform reservoir and gas is trapped in 16 sand levels in the middle-upper Pliocene gas sands complex. The OM-2dir well was producing 17- 19 °API oil at a rate of approx. 1000 Bbls/d without any formation water. OM-2Dir well was completed as an oil producer and a temporary platform has been set up.
Whilst drilling OM-2, significant gas shows from 5 to 12 % (C1) were recorded in the Pliocene sand complex between 1500 and 1800m. Most of the Pliocene gas sands were associated with direct hydrocarbon indications such as seismic amplitude anomalies and/or amplitude versus offset visible effects on the seismic image and had a good correlation with the main gas sand levels of the discovery well OM1 (where the same sands produced 150,000 to 190,000 scm/day (5.3 to 6.7 MMcf/d) of dry gas (methane (C1) 99.5%)). The Company chose to complete the OM-2 well as an oil producer and therefore for technical reasons it was not possible to also undertake a production test of the several gas bearing Pliocene sands encountered by OM-2.
P1 & P2 Oil Reserves of 20 MMbbls of recoverable oil were certified by independent reserve engineers in June 2008 and P1 & P2 gas reserves of 6.5 Bcf of recoverable gas were certified by independent reserve engineers in September 2008.
On the S.S. Bernardo exploration permit well Monte Grosso-2 (MG-2) in which operator MOG holds 22.89%, MOG and its JV Partners have recently agreed to reschedule the drilling of the Monte Grosso-2 Well to the year 2010.
Sergio Morandi, the Company's CEO, stated: “Submitting the Ombrina Mare Production Concession Application just 6 months after the OM2 discovery represents a major operational success for our Company and confirms the Company's technical and operational ability to deliver on schedule. Our team continues to achieve major milestones on the path to developing Ombrina Mare and to our goal of becoming a medium sized oil and gas producer. We believe that Ombrina Mare development will benefit strongly from declining drilling and construction cost during the development phase and commence production at a time when we also expect there to be an improved oil price environment.”
REPORTER: Cristina Gallardo.
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