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Orca find boosts Mauritania LNG prospects

Kosmos makes the year’s largest deepwater gas discovery

BP and US independent Kosmos Energy’s Orca-1 discovery in the BirAllah area off Mauritania could pave the way for a standalone LNG project in Mauritania. It would complement the Tortue/Ahmeyim floating LNG project already being developed by the two companies to the south, based on reserves straddling the Mauritania-Senegal maritime border.

Orca-1 is the world’s largest deepwater hydrocarbon discovery this year and was the ninth well in succession drilled by the partners in the 400km-long Mauritania/Senegal inboard gas trend to hit commercially promising quantities. Kosmos takes the exploration lead in the licences it shares with majority stakeholder and operator BP, as well as the relevant state hydrocarbons firm in the two countries. 

Based on initial shows, Kosmos estimates the Orca prospect has mean gas initially in place (GIIP) of 13tn ft³. Added to the Marsouin discovery, where a first well was drilled in 2015, Kosmos says some 50tn ft³ of GIIP from the Cenomanian and Albian plays in the BirAllah area has been de-risked. 

The Orca-1 well, which was drilled in a previously untested Albian play, encountered 36m of net gas pay in what Kosmos say are excellent quality reservoirs. It also extended the Cenomanian play fairway by confirming 11m of net gas pay in a down-structure position relative to its original Marsouin-1 well. 

The increase in estimated reserves provides “more than sufficient resource to support a world-scale LNG project”, according to Kosmos. 

“The next step for BirAllah is getting alignment among the partners on the development concept” Golembeski, Kosmos Energy

What shape that project takes—whether onshore or offshore—has yet to be decided. However, it would build on work at Tortue/Ahmeyim, Kosmos spokesman Thomas Golembeski told Petroleum Economist

“The next step for BirAllah is getting alignment among the partners on the development concept, a process that we believe could be accelerated if we leverage the engineering from Greater Tortue/Ahmeyim phases two and three. On this basis, we believe BirAllah will have a place in the market, as it will be competitive on cost, with low carbon intensity,” he says. 

Kosmos told Petroleum Economist in September that future phases of the Tortue/Ahmeyim project or any development of Senegal’s Yakaar-Teranga reserves could potentially employ an export plant built on a fixed platform in shallow water, rather than a FLNG or an onshore plant.      

However it is developed, impoverished Mauritania would provide a tiny domestic market for gas sales, so LNG exports would be the main aim. 

Competitive arena

Orca-1 improves the case for LNG in Mauritania, with caveats. If an onshore LNG solution could be found, BirAllah and Orca could prove to be a simpler hub to develop than the cross-border Tortue project that will start flowing LNG in 2022, according to Lennert Koch, sub-Saharan upstream analyst at consultancy Wood Mackenzie. 

“After a record year for LNG project sanctions in 2019—63mn t/yr to date—supply by the mid-2020s looks plentiful, which may keep prices low,” he says. “Developing another LNG project, and finding buyers for that LNG, could be challenging. Finding the right partners that can provide LNG offtake will be an important next step for the further developments after Tortue phase one.” 

Nevertheless, Wood Mackenzie assesses that LNG from Mauritania and Senegal could compete with the expected increasing flows of US shale gas LNG into the European market, due to the relatively short cargo transport distance and the lower cost of producing from conventional reserves. It estimates that the cost of Mauritanian and Senegalese LNG delivered into Europe has a breakeven cost less than $6.20/mn Btu, while US LNG’s breakeven is around $7/mn Btu. 

The consultancy predicts that Mauritania and Senegal will form a major LNG hub in the long term, with a combined output over 30mn t/yr by the mid-2030s. 

Kosmos sell down 

The discovery will be a boon for Kosmos’ efforts to maximise income from a proposed sell-down of part of its stake in assets on both sides of the Senegal/Mauritania border. It remains in farm-in talks with as-yet unidentified companies over reducing its stakes in both countries to 10pc. It currently holds 30pc in the Senegal venture and 28pc in Mauritania. 

The company had been planning to find a buyer before the end of 2019 but says it will now extend the process into 2020 in order to give potential bidders time to analyse data from Orca-1.

Source: Petroleum Economist


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