Marmara Licences

Context and Introduction

Merty Energy, holding an ownership of a Gas Production & Wholesale License, operates within 21 licences in Turkey. Of these, 10 exploration licences are in the main inland and marine area of Tertiary Thrace Basin. In the southern extend (Marmara Sea Offshore) of the Thrace, 3 exploration blocks of Merty are positioned on the shallow shelf to slope area formed on the westerly moving southern block of NAF (North Anatolian Fault).The Thrace is a shallow to deep gas-prone basin overall ;but, in areas where younger rocks (Mio-Pliocene) are preserved, the basin is fairly rich in shallow gas accumulation; Destan-1 & 2 well recent (2010) shallow-gas discovery by Merty is a type analogue of this new concept proven in the Ortaköy block 3913 to the west.
Directly to the east of Ortaköy land block, the Marmara offshore blocks (4328, 4397 and 4398) with 1237 sq-km areal extend are situated on the northern periphery of the Marmara Island. As in most part of the Thrace, hydrocarbon exploration in the western Marmara dates back to 1968 as parallel to the first 2D seismic was acquired. In years 1968-1973 a total of 412.7 km 2D data was collected and on this bases by Marathon and TPAO three offshore wells of Marmara-1, Doluca-1 and Işıklar-1 were drilled to test mainly the oil potential of the Eocene carbonate play. In Marmara-1, significant gas is encountered in the shallow depths of Miocene but left untested due mainly to the market demand to oil at that time. Fallowing the licences awarded to Merty in 2007 and 2008, Merty has recognized that re-processing of 2D is needed and re-processed 294-km 2D seismic. Merty has implemented the horizon interpretation of this re-processed 2D but due mainly to the large seismic grid and poor quality, mapping has not been implemented to evaluate the area to a certain extend

Since 2007 Merty has continued appraising and further exploring the area. Under the subsurface geology and geochemistry hydrocarbon system is analyzed in the regional context and the dry-hole analysis of 16 wells completed. Most of the wells drilled nearby is on the coastal area to the W and NW of the blocks. Combined with the revised subsurface geology

Highlights

Unexplored with respect to gas ; underexplored for oil in 1960-80s.
High quality dry gas/ condensate
No sulfur or sour gas
Shallow reservoir depth (200-2000 m.)
HighYield : Good Porosity (17-25%) and Permeability (0.1-25md)
Several hundred BCF recoverable reserves
Shallow water depth
Close proximity to coast with eestablished infrastructure, surface facilities pipelines and easy market access
Good production rights granted up to 40 years
Ready Sales contract
Brent referenced pricing mechanism
Quick PB period and high NPV

LICENSE OWNERSHIP

From SW to NE, the offshore block 4328 to SW is in the İzmir petroleum District XVII and awarded to Merty in 2007;whereas, the license blocks 4397 and 4398 are awarded  a year after (in 2008) and are positioned in the northern sector called  Marmara District-I.

Since April 2007, Merty has been the  operator within these three license blocks of western Marmara sea. Up to know, Merty has accomplished quite a bit geological and geochemical works in the area and  keen to continue further  exploration with additional  diversified G & G studies highlighted below:

a)Re-visit the wells nearby and re-analyze subsurface well data.
b)Develop and continue  with the Miocene facies and sequence study that Merty-Marsa has already implemented  most of the work  in the Ortaköy block.
c)Implement IP (Interactive Petrophsicist) analysis for selected wells with gas occurences.
d)Initiate the integrated well-log seismic sequence stratigraphy in a semi regional extend.
e)Acquire, process and interpret  2000-km new 2D seismic to define the leads and prospects covering  entire blocks
f) In realization of this seismic campaign, including processing and interpretation Merty alone will be invested approximately 7.1 MM USD prior to drilling stage.

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 (280-300 USD/1000 scm)
b.5-10% discount from Brent defined price (320-410 USD)
c.Or mechanisms that  companies create within the similar context.
Technical

Thrace basin is a gas-phrone Tertiary basin located in the European side, NW Turkey. Among the other Tertiary basins across the state It is characterized by the well-defined mature source rocks and good-quality reservoirs with generally high yield. Since 1985, entire gas production from the existing Thrace basin approximately make up 90% of the total gas produced in Turkey.

Together with the significant gas production, commercial quantities of waxy oil (31-37 API) and some condensate  (40-55 API gravity) are also produced in several fields of the Thrace. The oil production is relatively low due may be to unexplored deeper horizons associated with structures, like western Marmara offshore ,60 % of the basin has not been explored thus awaits for exploration.

Up to 9000-m-thick Tertiary sequence overall presents, coarse to fiene turbidite-fan clastics, fractured shallow-marine limestone/open-marine marl or shale and fluvio-deltaic sand/shale  reservoir/seal pairs with in the major sequences. Some of which are well discernable, traceble via seismic and considered to be key horizons for mapping. The Paleozoic-Mesozoic basement type is a crystalline and  generally complex in nature. Source rock intervals are diverse, mainly exist in  Early Eocene, Late Eocene and Oligocene .

The reservoirs are mainly deep-marine coarse clastics, shallow-marine limestones, deltaic and fluvial sandstones of moderate to high porosity (15-25%) and permeability (0.1-25 Darcy’s) Clastics are often encompassed by the  intra-formational sealing rocks of shales and mudstones that can be correllatable well to well distance or across the field. Several thick overbank shales are also found in the Mio-pliocene section providing intraformational seals for the underlying  coupling channel-sands of fluvial in origin.

Initial Results

Western Marmara sea  licences adjacent to Ortaköy onshore block is structurally positioned on the westerly moving southern block of right-lateral North Anatolian Fault (NAF). On the NW-SE seismic, the structural configuration seen is very much like SW-NE trending asymmetric through genetically formed with the normal fault blocks primarily initiated in relation to the existence of structural splay in Early Miocene. The area may have acted as Miocene-Early Pliocene extensional depression (sub basin) that was later effected by the NAF active since Late Pliocene.

Marmara licence blocks are surrounded by wells  with strong gas, gas seeps and small to medium scaled gas fields. Marmara-1 to E and Ortaköy-1A to W are good examples for the untested gas wells. Various thermogenic gas seeps are present in the relatively deeper water area to the  NE.  Destan-1&2 Miocene gas discoveries with the mixed type  to west and Tekirdağ and K. Marmara  thermogenic gas fields to NE  are also known in  close proximity to the Marmara blocks. Oligocene Osmancık and Eocene Sogucak plays in the Tekirdağ and K.Marmara fields are considered to be fed by the thermogenic gas most likely generated from the source bed (s) buried underneath  the extensional Marmara .

In Thrace basin natural gas is not confined into a certain level,  instead found in both deeper and shallow horizons. High yield multiple sand plays of the Miocene shallow gas have been recently confirmed via  completion tests performed  in the Destan-1 & 2. In Marmara blocks, moreover, similar pays are expected in both on the Oligocene and Miocene rocks flanking the sub-basin with SW-NE trend.