Dana Gas Egypt, a unit of Dana Gas, has been awarded the North El Salhiya (Block 1) and El Matariya (Block 3) onshore concessions in the Nile delta as part of the 2014 EGAS bidding round held recently in Egypt.
The company will operate the Block 1 concession area on a 100% basis. It is expected that exploration success and future production from conventional gas reservoirs in the Block, utilizing Dana Gas Egypt’s existing infrastructure, will extend the company’s highly successful gas production business onshore the Nile delta.
Dana Gas Egypt will participate in the Block 3 concession area on a 50% basis with BP as partner and operator. Under the terms of the agreement, BP will fund all of the cost (including Dana Gas’s share) of one exploration well up to an agreed maximum limit. In the event that the well proves commercial, BP has the option to back into 50% of the deep potential of Dana Gas’ adjacent development leases.
BP also has the option to back into 50% of the deep potential of Dana Gas Egypt’s other development leases and Block 1 concession area by drilling and funding all of the costs of a second exploration well in either the development leases or Block 1 up to an agreed maximum limit.
The two blocks are located adjacent to the company’s existing development leases. Together with BP, the company will look to explore the multi-TCF gas potential of the Oligocene reservoirs that have proven successful to date in the offshore and which extend into Dana Gas Egypt’s existing development licenses. The first Oligocene exploration well is scheduled to be drilled in 2016. In case of exploration success, an early development system is envisaged to allow rapid production of the wells located close to the existing El Wastani plant.
The two blocks have a 6 year exploration period, comprised of two phases of 3 years each. A 20-year development lease period will be granted to each block, based on approved commercial discovery. The two concessions, which cover 1,527 km² and 960 km² respectively, were awarded as part of the EGAS international bid round in August 2014. Ratification of the two new concessions is expected to take place following the completion of the necessary approvals.
Press Release, September 29, 2014; Image: EGAS