green light, 1.7bn-barrel16 Apr 2015 09:23
Madagascar Oil receives govt green light for development plan
By Ian Lyall April 16 2015, 7:32am The plan, subject to funding, is to be producing 6-000-10,000 barrels a day of heavy crude by 2018. The company will use a technique called steam flooding to lift the oil. The plan, subject to funding, is to be producing 6-000-10,000 barrels a day of heavy crude by 2018. The company will use a technique called steam flooding to lift the oil.
Madagascar Oil (LON:MOIL) has passed a major landmark by winning government approval to develop Block 3104 on the island, which includes the 1.7bn-barrel Tsimiroro Field.
It is the first company on the island to receive the green light to commercially develop its operations there.
The plan, subject to funding, is to be producing 6-000-10,000 barrels a day of heavy crude by 2018. The company will use a technique called steam flooding to lift the oil.
It will now push forward with development drilling and facilities upgrades.
MOIL said it is in “active discussions” with potential partners interested in helping fund expansion.
The company has been granted an initial 25-year licence with the potential to extent this to 50 years.
It called the award a “significant and major step forward” after 11 years exploration on Madagascar.
Chief executive Robert Estill added: "We are delighted to have reached this significant milestone in the growth of Madagascar Oil.
“Being the first company to reach the development phase within Madagascar is a truly exciting opportunity, both for us as a company, but more importantly for the people of Madagascar.”
Tsimiroro, south of the town of Morafenobe, is extremely remote - even by Madagascar’s standards.
The approval will bring more than just petro dollars into the country, as broker VSA highlighted recently.
“It will also bring construction of roads, pipelines and power generation,” said VSA oil & gas analyst Marc Anis-Hanna.
“So in addition to developing the Malagasy oil industry, this will significantly advance mining and agriculture, as well.”
The commercial potential is just as exciting as the economic and social benefits.
A mixture of cyclic steam stimulation and steam flooding means potential recovery rates are impressive at 40%-60%.
Oil can be found at a very shallow depth of between 100 and 200 metres below ground at Tsimiroro, which can keep drilling costs low.
Heavy oil such as the crude extracted from Tsimiroro is used in ships engines, meaning marine companies are the biggest buyers.
Stricter controls on sulphur emissions are forcing firms to look at other oil providers.
As a result, Madagascar Oil’s low 0.3% sulphur content should prove popular with businesses around the globe.
Outside of Tsimiroro, the company has three other exploration sites on the island - 3105 Manambolo; 3106 Morondava; and 3107 Manandaza.
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