Member Info for Exploration

Gkb

Operators in SE Turkey try to minimize water production using polymer gels. This has been quite successful to control water-oil ration. This approach improves economics by 1) reducing water re-injection costs and 2) reducing scale build-up precipitated by water. It is a tried and tested recovery method in SE Turkey. AME will know all about this.

Tony

All your points are valid. But the reason Basur is currently non-productive lies in an understanding of the regional petroleum geology developed by Turkish geoscientists over the years. Shell worked this out in the 1950s and 1960s when SE Turkey was their great new hope.

The trouble is caused by the intersection of two tectonic events. The first in the Eocene and the second in the Miocene.

If one looks at the bigger picture of SE Turkey’s oil province the distribution of oilfields falls into two distinct areas.

In the Eastern `Taurides, where AME will drill, oil maturation and trap formation occurred in the late Eocene. The structural trend of oil-bearing anticlines was mainly east-west, parallel to the thrust front. Oil generated in the Cretaceous source rocks migrated into the Mardin Limestone reservoir which had been fractured during the earlier Taurides tectonic event.

Later, during the Miocene, the Zagros tectonic event, which formed the giant fields in Iran and NW Iraq (Kurdistan), created a NW-SE structural trend. Where the Zagros folding intersects the Taurides folds, some oil accumulations in SE Turkey some were breached and the petroleum escaped to the surface, while others survived. Where the fields were breached drilling found residual oil shows.

In short, AME will almost certainly discover oil, but the challenge will be to produce it. The SE Turkey Mardin Limestone fields generally produce with high water cut - often well over 50% - not a problem using gravity separation tanks and heater-treaters at the well site + water disposal wells. Prepare yourself for an upbeat RNS when drilling is completed followed by lengthy and costly ‘further studies’ to determine commerciality.

Cyan2

In the event of a failure to pay a valid cash call, under oil and gas JOAs, the non-defaulting party (AME) is granted a series of remedies against the party in default. But, generally speaking, the parties always try to come to an agreement, especially when drilling has started. Time will tell - but it just shows finding oil and gas is quite easy, but finding the money to do it is much more difficult!

Cyan 2 - you may be right.

Aladdin’s other major shareholder is 4D Global Asset Advisors, a Paris-based private equity investor. 4D has two of the five Board seats of AME. Tighe Noonan and Emmanuel Bazin on 4D cannot afford to upset their own investors and are highly professional. 4D has recently suffered a setback in one of their other investments due to a blowout and fire in Senegal so they will exercise maximum caution.

A third Board seat in AME is held by William Browning - a first class commercial lawyer with extensive experience in Turkey. He would have insisted that AME and UKOG’s arrangements were governed by a rigorous JOA, although UKOG have never announced it exists.

The other two AME board member are Cem Sayer and George Bruce - executives in AME.

If the analysis of UKOG’s funds reported by other posters is correct, perhaps the cash calls from AME cannot be met right now by UKOG now the really big money is needed. But it all seems rather precarious and I hope UKOG does not default or is not penalised.

RNS translator

You have to remember historical production data in North Yorkshire show that all the Zechstein reservoirs have experienced early water breakthrough, leading to impaired gas rates and low recoveries. Technical failures and non-commercial outcomes.

The water influx is due to a highly mobile, but finite aquifer, which under field production conditions preferentially flows through the high permeability fracture system in the Kirkham Abbey formation., bypassing the gas stored in the tighter matrix.

In the past, other operators tried to resolve the issue of water influx by using artificial lift to encourage the gas to flow. The idea was to keep the water cone created by drawdown of gas production below the gas perforations rising above the gas perforation. Reservoir engineering 101. A trial at the Pickering gas field met with partial success. If Rathlin can solve the issue of early water influx in the Kirkham Abbey Formation there is hope West Newton can be commercialised.

All this technical stuff seems beyond the capability of the heavenly twins to explain/publish, but they could at least try.

Lawrence - spot on. The remuneration for the CEO and Nunn-the-Wiser is scandalous. The share price is supported by cash which is steadily eroded by withdrawals for salaries and bonuses.

Wonders will never cease - they actually doing something. But without Deltic providing some context it’s just a photo of people looking at cores.

The Permian Leman Sandstone (also known as the Rotliegendes Sandstone) is pretty well understood in the main gas fields to the south of Deltic’s area.

Deltic is chasing the northern feather edge of the Leman Sandstone where it was deposited in the Permian Silverpit Lake. Deltic has described this before in a very upbeat article.

https://www.energyvoice.com/oilandgas/north-sea/287740/deltic-energy-next-cygnus/

There is a pretty good description of how Engie developed the Cygnus gas field in this link. The main Cygnus reservoir is Carbboniferous, but with a thin, overlying Leman Sandstone.

https://vdocument.in/reader/full/precise-well-placement-in-the-cygnus-gas-field-ian-dredge-the-first-well

Manwell2

I dare say a lot of thought is probably going into the EWT programme and investors need to be patient - perhaps for weeks.

The approach in Zechstein dolomite reservoirs in Netherlands is to test each discrete fracture system in the Dutch equivalent to the Kirkham Abbey Formation first, rather than the whole pay zone in one go. With petroleum in both liquid and gas phase that complicates the procedure which will take more time, but is crucial in designing any more appraisal and development drilling.

From earlier RNS announcements Raithlin has cores, open hole logs and pressures to display fluid gradients. Along with a cased-hole pulsed neutron log, which provides water, oil, and gas saturations of the formation, I imagine we’ll see spiral perforations over selected intervals followed by a cased hole formation tester.

This is run on wireline and can be placed precisely at exact positions along the well bore and will allow specific fractures to be intercepted and tested with pressure testing as well as fluid sampling and flow rates.

The Netherlands approach is to use the sigma pulsed neutron (PDK) to help pinpoint the testing points. This needs to be done with significant accuracy paying attention to surface and cable head tension on all logging runs so that exact tension variances can be monitored to optimize the correlation between the PDK log and formation testing depths. Wireline creep at the testing depths can easily put the pressure test tool just ‘off’ - instead of just ‘on’ - the given fracture.

Of course, Raithlin may try various other testing strategies but the above is typical of Netherlands Zechstein tests.

https://www.hurriyetdailynews.com/oil-to-be-extracted-from-3-wells-165065

Skwizz

You are correct about population growth. Below is a link to a talk by Paul Mcready who saw this coming 25 years ago. Simply put, the human race has been so successful that ‘we won’ life on earth and think we can engineer the climate of the planet.

https://www.ted.com/talks/paul_maccready_nature_vs_humans/transcript?language=en

Mcready was an aeronautical engineer who pioneered human-powered flight, but he also realised the modern world needed to do ‘more with less’. The trouble is that increased efficiency in energy use is swamped by the growth of the world’s population.

cyan2

Exploration or Appraisal

It’s really about semantics - I.e. the logic of meaning of words. SS tends to use ‘appraisal’ to imply low risk I.e. petroleum has already been discovered when it is nothing more than shows. This is evident in UKOG's Arreton project which ~SS characterises as 'appraisal' while previous drilling has flow tested every objective with no flow at all, but with the occasional oil show.

If one looks at the bigger picture of SE Turkey’s oil province the distribution of oilfields falls into two distinct areas.

In the Eastern `Taurides, where AME will drill, oil maturation and trap formation occurred in the late Eocene. The structural trend of oil-bearing anticlines was mainly east-west, parallel to the thrust front.. Oil generated in the Cretaceous source rocks migrated into the Mardin Limestone reservoir which had been fractured during the Taurides tectonic event.

Later, during the Miocene, the Zagros tectonic event, which formed the giant fields in Iran and NW Iraq (Kurdistan), created a NW-SE structural trend. Where the Zagros folding intersects the Taurides folds, some oil accumulations in SE Turkey some were breached and the petroleum escaped to the surface, while others survived.

In short, AME will almost certainly discover oil, but the challenge will be to produce it. The SE Turkey Mardin Limestone fields generally produce with high water cut - often well over 50% - not a problem using gravity separation tanks and heater-treaters at the well site + water disposal wells.

ZYX

Thanks for your excellent commentary on the morphology of the humble ‘pit’ and setting the record straight.

One of the main features of oil production from Mardin limestone reservoirs is water production and water disposal. While it is common for dry oil to flow in the short term (days), the dual porosity system in the fractured Mardin limestone results in sudden appearance of a water cone with typically >80% water or more. Operators cope with this using simply tanks for gravity separation and re-injection of aqueous phase in a water disposal well for longer term or in an evaporating pit in the short term. In recent years polymer gels seem to help delay the inevitable arrival of water.

With so much water, scale builds up which contains NORM which must be disposed of - usually by burial after de-scaling production tubulars.

None of above are show-stoppers and AME’s specialists will have plenty of experience on how to deal with it.

ZYX098

In my experience, the ‘hole in the ground’ is commonly known as the ‘reserve pit’.

This is simply a hole in the ground into which spent drilling mud and cuttings are dumped, rather than having to truck it to an approved landfill - of which there are few in Eastern Anatolia! The bentonite in the mud effectively seals the bottom of the pit and prevents it leaking, in the same way bentonite is used to seal leaking ponds in UK.

When all the cuttings and mud solids precipitate out to the bottom a pond of water remains as an emergency water supply for the rig. Abandoned mud pits eventually dry out and excavated soil is simply back filled for safety reasons.

Sometimes the reserve pit area is ‘bio-remediated’ which is a fancy word meaning the residual cuttings/mud are ploughed into the ground with grass seed.
 

Penguins

Here’s a thing. Anyone hoping UKOG can rely on HMG support in Turkey needs to take note;

Having stopped licensing in UK Landward and Seaward areas, UK’s government is withdrawing support for overseas oil and gas projects.

This was first announced last December and is now being implemented.

Since the 1st of  April this year  UK Embassies have received new instructions on how to deal with issues relating to the oil sector.  HM Government will no longer provide any new direct financial or promotional support for the fossil fuel sector overseas.
 
This is a part of the UK’s transition to a cleaner future and, ahead of COP 26, commitment to showing domestic and international leadership on climate issues.
 
This is not a blanket ban on HMG support for, or engagement with, UK oil and gas companies.
 
HMG will still be able to support in limited circumstances e.g. decommissioning activity. Full guidance has been published - https://www.gov.uk/government/publications/how-the-government-will-implement-its-policy-on-support-for-the-fossil-fuel-energy-sector-overseas.
 
UK trade representatives must check internally before replying to any requests for assistance from oil companies.

In practical terms in Turkey, this increases the vulnerability of UK oil companies to domestic Turkish pressures because they cannot turn to HMG for support.

Perenco, 1995 -

Shell developed SE Turkey over a period of ~ 70 years. In the 1920's oil companies were only granted exploration licences if they built refineries and fuel distribution networks. Shell was part owner of the ATAS refinery at Mersin, along with BP and Mobil.

Royal Dutch Shell Group of Cos. agreed to sell its Turkish-based NV Turkse Shell unit to Perenco, an independent, international operating company.

Perenco was formerly known as Kelt Energy.

In a statement, Shell said that the unit doesn’t fit its exploration and production strategy. Shell Petroleum announced in June its intention to sell the unit.

Shell said the sale would not affect its plan to expand its Turkish refining and marketing activities.

Mirasol - correct

There is extensive literature on the nature of the Cretaceous tight, fractured carbonate reservoirs in the area where AME is planning to drill. Luckily, Turkish petroleum geologists have untangled the evolution of the basin. Note, the timing of events and source of petroleum is different from NW Iraq,

In AME’s area major deformation phases took place in late Cretaceous times, before oil charging into the reservoir began during the Eocene/Late Eocene with later folding during Oligocene and Late Miocene i.e. after the oil charge. Fractures that were generated before oil emplacement tend to be cemented or partially cemented by calcite.

Partially-cemented fractures in cores are oil-stained with cement-lined walls, suggesting cementation began before oil emplacement but was not completed. Image logs and cores also show the presence of clean, open fractures with no cement present on the walls. These open fractures cut across the cemented or partially-cemented fractures and are, in general, related to Late Miocene compressional folding which dominates NW Iraq and the whole Zagros fold belt in Iran.

In a nutshell, Miocene structures usually have best open fractures and older, Eocene structures have cemented fractures. Wells produced with too much drawdown generally suffer from early water via fractures and the low-permeability matrix needs time to recharge the fractures with oil.

Does anyone know why are we bothering with Loxley and Arreton when Turkey offers much more potential in terms of ‘bang for buck.

Spot on, Tony. If Erdogan was running UK he would have arrested Surrey CC Planning Committee years ago and put them in prison for 20 years. Yes, GDP looks good on paper, but try explaining that to a peasant in central Anatolia or a garment worker in Bursa cranking out cheap clothing for Primark , or even the bloke who made your fridge - distribution of wealth is a bit lop-sided. Turks have their own system to approve ‘planning applications’ - build it first and get permission later - just what is needed in UK. TPAO and BOTAS are government companies staffed by civil servants with jobs for life.

Nearly 5% of world’s crude transits Turkey every day - 2 mmbbl/d via the 2 Ceyhan marine terminals from Northern Iraq and Azerbaijan and ~ 2 mmbbl/day via Turkish Straits from Russia and Supsa. Then there is gas - 2x24” pipelines from Russia to Samsun, 1 x 48” from Baku to Italy, 1 x 36” from Iran + others under construction. All built and operated by BOTAS. So Turks are well served by oil and gas and don’t really need the dribble from domestic supply. Even Batman refinery is run by government outfit, Tupras.

TheReverand - suggest you pop round to your local mosque and have a chat with the Imam

It’s Ramadan until mid-May. Working slows to a crawl. And just this week Gov’t has tightened curfew hours + closed restaurants and stopped end-of-day fast-breaking nosh ups due to Covid spread. Also banned travel between cities.

SS may sneak through on a business-class donkey.

The Turkish lira slumped dramatically last month after President Recep Tayyip Erdogan’s shock decision to fire the central bank governor, Naci Agbal. The reserve is now on its fourth governor in less than two years, and the lira has lost half its value since a 2018 currency crisis.

Inflation reached a six-month high in March of 16.19%, well above a 5% target, and unemployment remains high, at 12.2%.
The latest economic turmoil has led to an increase in cryptocurrency trading in the country, with investors hoping to gain from bitcoin’s rally and shelter against inflation.

Data from the US researcher Chainalysis analysed by Reuters showed that trading volumes between the start of February and 24 March hit 218bn lira (£19bn) with a spike on the weekend Agbal was sacked, up from just over 7bn lira in the same period a year earlier. Cryptocurrency worth 23bn lira was traded in the first few days after the shock announcement, the data showed, versus 1bn lira in the same timespan in 2020.

Turkish Google searches for cryptocurrency also hit a record high in the week before Agbal was removed. The governor, who took over the post in November, was reportedly at loggerheads with the president over interest rate hikes: contrary mainstream economic thinking, Turkey’s leader has repeatedly said that he believes high interest rates cause inflation.
Bitcoin’s climb to a new record of just under $62,000 (or more than £44,000) has seen interest in the digital currency soar worldwide: investors and companies have embraced the emerging asset despite warnings about its volatility.

“Turkish people like stable assets due to our history of high inflation,” Özgür Güneri, CEO of cryptocurrency exchange BtcTurk, told Reuters. “That is why generation after generation of Turks invested in gold, real estate and dollars.”

longwait

Deltic Board/Management members need personality transplants - although they're probably busy making tea and tucking into Hob Nobs. What else is there to do?

That’s right Wiz

GDPA may be leaky. Perhaps that’s what triggered the buying stampede by Turks under nominee accounts. Same thing happened when Genel started out and one of Turkish directors was fined in UK for insider dealing. For Turks with money looking for a safe home this type of thing is business as usual, but for PI’s in UK no amount of ‘research’ can get this inside information from the Istanbul bazaar!