30 Tcf offshore gas play went from discovery to production in 28 months: “a historic day”-Eni CEO
Eni announced first gas from the Zohr field today, marking one of the fastest development processes of an offshore field in recent years.
Discovered in August 2015, Zohr is a large gas field located in offshore Egypt, about 120 miles north of Port Said. Eni estimates the field has resource potential of more than 30 Tcf of gas, or 5.5 billion BOE. Eni announced FID on the field in February 2016, only six months after discovery. Facilities began test production over the weekend at a rate of 350 MMcf/d, and began official output on Wednesday. Bloomberg reports volumes from the field will reach 2.7 Bcf/d by the end of 2019. The project has cost $12 billion, with a break-even cost equivalent to $30/bbl.
Eni proves its ‘dual exploration’ business model
According to Eni, this rapid development proves the success of its “dual exploration” model. In this strategy, ENI operates and explores a license while selling stakes in any discoveries. These proceeds will fund new ventures. This allows the company to appraise and develop an area in parallel, meaning first production can be accelerated. In this case, Eni sold 10% of the field to BP and 30% to Rosneft in late-2016.
Competing with Tamar and Leviathan
Natural gas from Zohr will likely compete with Noble’s Tamar and Leviathan projects, which aim to unlock a combined 32 Tcf from fields in offshore Israel.
Eni CEO Claudio Descalzi commented, “Today is a historic day for us. … It will completely transform Egypt’s energy landscape, allowing it to become self-sufficient and to turn from an importer of natural gas into a future exporter.”
