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in the RNS of 8th of March "We have made excellent progress across all aspects of our planned development for Anchois and detailed discussions on partnering...". Apart from that, LAB Energy Advisors, on behalf of Chariot, are actively seeking a partner to jointly develop the discovery
In the recent leak it was suggested that the full GSA to be agreed by 23 February 2023
Jimmy,
I think I have to agree that the Chariot cost estimate is somewhat optimistic. The final cost maybe not as much as $1B but please have a look a the Cassiopea developement (Argo cluster) offshore Italy which is currently ongoing. There are many similarities. This is a 600BCF development in 500-600m WD, 4 subsea wells (2 new drills, 2 recompletions), 60km flow lines, 14" pipeline, 200 mmscf peak production through existing facilities. Quite similar development concept and scale. Estimated cost US$815M
https://medias24.com/2022/03/31/lextension-de-la-centrale-electrique-a-gaz-de-tahaddart-sur-les-rails/
The operator of this gas fired power station, Siemens and Endesa, could be the "Leading International energy Group"
From Global LNG Info: European countries agreed to substitute plans for Midcat gas pipeline project
Spain has reached an agreement with Portugal and France to set-up substitute plans for Midcat gas pipeline project with a new "Green Corridor" between Barcelona and Marseille that would carry naturalgas and hydrogen. Marseille area is a large petrochemical hub.
Reuters cited Spain's Prime Minister Pedro Sanchez as saying that the leaders of the three countries will meet again shortly to discuss the timeline, #investment required, and how much each country would contribute.
The new connection between Spain and France will be underwater, as opposed to the original Midcat project in the Pyrenees.
Spain had reportedly revived calls to build a gaspipeline between the country and France dubbed Midi-Catalonia (MidCat) Pipeline that would reduce Europe's energy dependency on Russia.
Initially proposed in 2003, the 190-Km Enagás-proposed MidCat pipeline project aimed to pump gas across the Pyrenees from Barcelona to Barbaira in France and #transport Algerian gas through Spain to the rest of the EuropeanUnion. There are currently only two small gas pipelines linking Spain and France.
Following several years of work, the MidCat project was abandoned in 2019 after energy regulators from both countries rejected it amid questions over its environmentalimpact and high cost that estimated in 2018 at 440 million euros ($460 million). The project would take three to four years to complete.
However, MidCat had recently received significant support, especially in Spain where the authorities are pushing for Brussels to declare the project to be of "community interest"; however the European Commission has not yet committed to funding it.
Spain has six operational #LNG imports terminals which most of them are generally working at low #utilization rate due to the lack of adequate interconnection pipeline network with the rest of European #gasmarket. MidCat would open a new gateway for supply regasified LNG from Spain to the continent.
Jimmy, thanks for your insights. I agree, the project still looks robust and economic however a couple of words of caution (in all the optimism): 1) looking at SDX who is selling gas to industrial clients in Morocco, they realized an average gas price of $10.86 for H1 of 2022 2) historically, the gas price for local industry has been higher than gas to power 3) European gas price forecast is expected to come down significantly from 2025 onwards to the levels of $10/mcf due to a series of LNG projects that will come onstream around that time. This corresponds to the expected First Gas of Anchois.
Having said that, Economics of the project remain strong and as for gas price forecast, there are many elements that are difficult to predict into the future that will have a major impact on European gas prices. Here my 5cts worth...
The Sound Energy GSA is for 29mmsfd, which is on the low end for 1 CCGT power plant, likel the Ain Beni Mathar while the MoU for gas oof-take of Chariot is for 40mmscfd, which is on the low end for the other CCGT power plant, the Tahaddart power plant (Siemens/Endesa). Besides, ONHYM will likely want to diversify their sources of domestic gas supply, to avoid dependency on only 1 supplier. In addition, the Ministry of Energy has always communicated they want to double or triple their gas fired power generation capacity. So it remains likely that part of Chariot´s production (40mmscfd) will be for domestic power generation.
Jimmy, I think Cassiopea (ENI, Sicily) is a good analogue for this development. There they installed a 14" pipeline to export 200mmscfd
Thanks for chipping in Jimmy. As we discussed before, it is expected that domestic use shoould be able to fetch the $10-11/mcf, assuming that this would be governed by a brent linked contract which based on analogues will likely be around 10% of Brent + $0.50 per mcf.
As for any excess to be send to European markets, based on the current 2C volumes I expect that the phased development should easily be able to ramp up to a plateau of 200mmscfd, allowing for a larger portion of the production to get exposure to a premium gas price.
From a reservoir quality perspective, it looks like Anchois should be able to do much more significant rates. If the 2C volumes are close to 1TCF, the phased development should aim for a plateau in the order of 250mmscfd. One of the unknowns are still what are the connected volumes (to the wells) and what´s the production mechanism. Is there any compartmentalization? For that, an Early Production System would be a wise choice. After 1 year of production, these uncertainties will be significantly de-risked.
As for Chariot´s thoughts on development, there is a hint in their corporate presentaiton of May 2022 on slide 7. This seems to suggest to develop Anchois from their existing 2 wells plus a 3rd well. In addition, it looks like they are suggesting to test and develop the Anchois footwall with 1 well and the two Anchois North "blobs" with 2 additional wells. this seems to imply an average recovery per well of 150-200bcf.
The other aspect to the theme of "production rates", is the market. But it looks like any surplus could be sent to Europe through the Maghreb pipeline. This gas will have to compete with LNG imports and therefore should expect to fetch good gas prices for years to come.
Fernan,
From the CPF it would require a 35km (14", subject to scale of the development) pipeline to connect it to the GME pipeline which is connected to several CCGT Power stations in Morocco as well as forms the direct exporting route to Europe via Spain. Hope this helps.
Jimmy,
Chariot is reporting specifically that the State participation is carried during the Exploration phase (and that all pst exploration costs are tax deductible). I therefore assumed the State would fund it´s share of the development. However if they can´t, I agree that a carry of the state through the development would be recouped fast and does not erode much value for Chariot.
"Drilling results from London-listed Chariot’s successful Anchois-2 well offshore Morocco have boosted the probability that a bevy of nearby exploration prospects the company has already mapped could hold trillions of cubic feet of gas.
Earlier this week, Chariot announced the appraisal-cum-exploration well on the Anchois gas discovery in the Lixus licence hit more than 100 metres of net pay in high quality reservoirs.
Speaking to Upstream after the well results were announced, Chariot’s acting chief executive Adonis Pouroulis said it “has unlocked the Lixus block’s exploration targets which, all of a sudden, have become much lower risk.”
These better-than-expected results triggered an immediate 40% increase in Chariot’s share price from 7.43 pence to 10.7 pence, before it hit a one-week high of 12.7 pence on 13 January.
The well results underpin the case for an economic development based on a subsea tieback to shore, but they also boost the potential of prospects in Lixus that have the same seismic signature as three new, thicker-than-predicted gas reservoirs intercepted in Anchois-2.
Anchois-2 both confirmed the existence of the A and B sands identified in Repsol’s original Anchois-1 well in 2009 and – significantly - discovered three new reservoirs called C, M and O.
In addition to some 600 Bcf of resource potential held in prospects located within 10 kilometres of Anchois, almost 3 trillion cubic feet of gas could be held in five prospects in the Lixus licence.
Technical director Duncan Wallace said the results from the A and B sands “were very good for us to continue the path to development,” while the additional resources unlocked in the three new sands could “potentially” be part of the project.
Before drilling, Chariot’s estimated contingent gas resource for the B sand was 247 billion cubic feet, with a further 115 Bcf held in the A sand.
However, Wallace said the “exciting thing” is that the seismic attributes Chariot used to predict the previously undrilled C, M and O sands can now be used with much more confidence to target other Lixus prospects that have the same seismic signature.
The pre-drill resource number for the O sand at Anchois-2 was 358 Bcf, with the C&M sands predicted to house a combined 185 Bcf.
The Stena Don semi-submersible is due to complete operations on Anchois-2 shortly and will then mobilise to re-enter Anchois-1 to assess the well’s integrity and ability to be used as a development well.
While acknowledging the excitement generated Lixus’s potential resources because of Anchois-2, Pouroulis was keen to not get carried away, pointing out the focus will be to try to reach a final investment decision on the Anchois project “to bring it into production as soon as possible.”
He suggested the development could be sanctioned this year, with first gas flowing by the end of 2024 or early 2025."
I´ve done my own analysis based on public information only, combined with industry experience. It is no rocket science... Happy to share!
Fair question... I am not!
affc21, most info on the original Anchois-1 well (2009) can be found in the presentations on Chariot´s website
https://www.chariotenergygroup.com/investor-centre/presentations/ , including GWC, Net reservoir and Net Pay thicknesses. If you have any specific questions or doubts, don´t hesitate to ask.
Hi Jimmy,
I agree, overall good news!
The net sand thickness of the B sand reported by Chariot in Anchois-1 was a bit over 50m of which 33m was net pay. Reporting a net pay thickness of the B sand in Anchois-2 of the known sand and one new sand, suggests that the known sand must be thinning in the direction of Anchois-2. What we don´t know is what is the assumed net pay thickness of the B sand in the Anchois-2 well location pre-drill (in the P50 case).
If the total net pay thickness in Anchois-2 is more than 100m and if all sands are gas filled, based on the pre-drill cartoon, the sand thickness of the C, M and particularly the O sand might be thinner than pre-drill expectations. But I agree with you Jimmy, there are still many unknowns, hopefully to be clarified in the coming weeks and months.
Jimmy, thanks for sharing your thoughts on this fantastic news. I want to reflect a little on your calculations and on the wording of the press release.
The fact they say the A sand was not targeted I believe is related to the fact the well penetration of the A sand was at the edge of the seismic anomaly. I presume the A sand might be thinning in this location and might be of lesser significance in this part of the field. This does not mean it will affect the P50 volumes. I presume they took into consideration in their volumes assessment that the A sand was pinching out in this direction.
The fact that the B sand has significant higher net pay thickness should not come as a surprise either. In Anchois-1 the net sand thickness of the B sand was in the order of 58m of which 33m was net pay. Having drilled Anchois-2 updip from Anchois-1 should put the whole net sand thickness of the B sand above the GWC therefore resulting in a net pay thickness of "more than 50m". I would expect this is still in line with the pre-drill P50 volumes. So so far I see no info that suggests that the A and B sand volumes are significantly different from the P50 pre-drill.
Finding gas sands in C, M and O is of course significant. Even in the pre-drill P90 this would add 300BCF of resources to Anchois resource base. And I agree with you Jimmy that these results significantly de-risks the prospectivity of the Anchois Satellites.
I would expect that with this well result the 2C resources will increase to 650-900BCF and de-risks the remaining prospectivity.
Any thoughts?
This is what Chariot´s Morocco country manager said in an interview that was published yesterday (Google translate from French): "The drilling campaign began on December 15. We expect it to end at the end of January, we are in the first third, it is going well operationally. We will probably have the first indications at the end of January. But then it will take several weeks or months before having a re-certification of the resources."