Çatalca Licence

Context and Introduction

Merty Energy is both right holder of a Gas wholesale licence and operates in 14 domestic exploration and production blocks in Turkey. There are 7 licences in the gas-prone Tertiary Thrace Basin. Out of these licences commercial gas discoveries were made at Catalca Licence, Pınarhisar Licence, and the Ortaköy licences.

Merty’s Çatalca block (3853) with a 364 sq-km (36 429 hectares) areal extend is situated at around the town of Çatalca, nearly 40 km WNW of İstanbul. Not considering the surface geology, the exploration activities in the area is fairly early, mainly commencing in 1966 with the drilling of dry test Kadıköy-1 by TPAO. In years 1974-2011 a total of 295.25-km 2D (mainly intensified on the SW towards the Silivri Gas Field) was acquired and processed. There are both shallow (mainly Osmancık and Mezardere) and deeper plays (Hamitabat and Soğucak) being the main target objectives. Followed by the licence awarded in 2004, Merty has made agressive G&G plan, including 2005, 2009-2010 and 2011 seismic and year 2007 Gore surveying ( implemented in 52 sq-km area to the SW of the block ) and 2010 drilling . Based on Gore results and seismic (prior to 2009) interpretation Merty has drilled Damlıca-1 with gas shows. In 2011 additional 187.2 km 2D seismic was acquired, processed and interpreted by Merty.

Current Status

Following the date (October 16, 2004) the licence was awarded, Merty has spend considerable effort for fully exploring and subsequently developing the area. In years 2005-2011 5.2 MM$ was invested by Merty for 2D seismic, Gore and exploration drilling. 2010 Damlıca-1 drilling ended up with gas shows that are further evaluated and decided worth testing. In the 2nd quarter 2012, WO and completion for Damlıca-1 will be implemented.

Çayırlık-1 well (formerly Baglar prospect) is drilled and encountered commercial gas in several intervals.
One level is flow tested with success. The discovery of commercial gas is declared and approved by the Ministry.
As part of the exploration, Merty has also made a resource and reserve assessment. The estimated gas reserves and resources (including contingent resources) (recoverable) figure for the entire block is in the order of 308 BCF.
Highlights

High quality dry gas/ oil
No sulfur or sour gas
Shallow reservoir depth (200-1400 m.)
HighYield : Good Porosity (17-25%) and Permeability (0.1-25md)
One  hundred BCF recoverable reserves
Easy market access and low cost surface facilities
Established infrastructure  and close proximity to pipelines
Ready Sales contract
Brent referenced pricing mechanism
Quick PB period and high NPV

 

LICENSE OWNERSHIP

On October 2004, namely called  Çatalca exploration licence (AR/MER/3853) was awarded to Merty Energy. Merty is the 100 % share holder  and operator in the area of exploration.  Up to date, Merty has implemented  quite a bit work in the area to mitigate the exploration risk   and   keen to continue to exploration with additional works all briefed below:

a)Re-visited and evaluated  the  subsurface well data.

b)Re-processed  and interpreted existing 295.25-km 2D seismic.

c)Planned, proposed and implemented  52 sq-km Gore survey.

d)Driled  Damlıca-1 exploration well with significant gas shows

e)Proposed to implement Damlıca-1 completion & WO program

f) Drilled and flow tested  the Cayirlik-1 exploration well.

LICENSE TERMS AND HISTORY

Turkey has attractive fiscal terms, under a tax royalty system, with a gross royalty of 12.5 percent and corporate tax rate of 20 percent. Each license has a term for four years and is renewable twice for a period of two years per renewal. Exploitation licenses are granted for a period of 20 years, and may be extended twice, each extension maximised to 10 years.

Refineries are obliged to purchase any locally produce crude oil at the world market price as per the Law. Current prevailing selling price of 37 API crude is averaging 2-3% lower than benchmark IPE Brent price.

On the other hand, the natural gas sales are regulated  by EMRA (energy market regulatory authority) within the context of Gas market law  and the petroleum law  giving the local production the priority.

The gas prices developed in the market freely within the context of competition within the gas wholesales companies and the distribution companies as well as the big consulers which the gas producer has the right to choose  to sell from.

There are several mechanisms where the gas sale price is determined by.

a.A small percentage discount from the local state price (300-340 USD/1000 scm)

b.5-10% discount from Brent defined price (350-370 USD)

Or mechanisms that  companies create within the similar context.

Technical

Thrace  basin is a gas-prone Tertiary basin in NW Turkey. In terms of exploration It is a semi-mature basin and characterized by the well-defined hydrocarbon system(s) (mature source rocks and good-quality multiple reservoirs or plays with generally high yield). Since 1985, 9 % of domestic gas in use in Turkey is provided from the Thrace basin.

In addition to the significant gas production, commercial quantities of waxy oil  with 31-37 API and some condensate  with 40-55 API gravity are also produced from several fields (Deveçatağı, K. Osmancık and Gelindere) of the basin. Limited  oil resources discovered so far may be attributed to the inadaquate exploration directed to the deeper horizons. Overall , 60 % of the basin has not been explored yet and awaits for further exploration with unconventional concepts.

The basement in Thrace in general  is Paleozoic-Mesozoic in age and cosists mainly of  crystalline rocks with  complex nature. Up to 9000-m-thick Tertiary sequence  above basement overall presents major deep-marine coarse to fine fan clastics, fractured shallow-marine limestone/open-marine marl or calcareous shale, fluvio-deltaic sand/shale reservoir/seal pairs. Sandstones are in good qualty with high porosity (15-25%) and permeability (0.1-25 Darcy’s) and often encompassed by the  intra-formational sealing rocks of shales. Source rock intervals are several  incorporated into major sequences of Lower to Middle  Eocene, Upper Eocene and Oligocene.

catalca3

Initial Results

 

In the southern area of Çatalca block, more than 3000 m-thick Tertiary sequence drilled and tested in Silivri gas field  overall structurally  first down-dips to NE along Kadıköy–Damlıca trend (see map).

The first is the structural ramp towards the basement high to the NE (shaded red) where oligocene is not preserved. Plays in this area are deeper horizons (Hamitabat and Soğucak) mapped along NW-SE trending elongated basement high. Soğucak is a mature play  tested generally oil  with low yield in the region. Hamitabat sand play is significant in deeper part of the basin. Hamitabat field is good example with  over 5 BCM gas production from Hamitabat fan forming  reservoir sands.

The second is low relief southwesten ramp digitized with the subtle structures towards
the Silivri -2 gas discovery. Cayirlik  structure is mapped on this area covering 1.3 sq-km closure on the Osmancık level. A total of 6 gas sand levels are detected and the estimated gas resources and reserves allocated to Cayırlik gas sands are in the order of 1.297 MMCM ( 46.1 BCF)  respectively.

WO and flow tests are performed at Cayirlik-1 well and sand 450 is tested up to 150.000 m3 / day gas. In Cayirlik -1,  3 different gas sand levels are detected by well log interpretetions.

 catalca4