Georgian Gas Potential a World Class Play

Georgia Today continues to inform its readers about the finding by US independent oil and gas exploration and production company Frontera Resources of an estimated 3.8 trillion cubic meters of gas in the Georgian region of Kakheti early in October this year.

In search of an expert opinion on the subject, Georgia Today was able to exclusively interview a London-based energy expert- a scientist working in the field of energy.

How can we assess how much gas will be recoverable from the 135 trillion cubic feet gas-in-place in the South Kakheti Gas Complex?

Earlier this year, the independent O&G consulting firm Netherland, Sewell & Associates confirmed combined prospective natural gas resources of as much as 12.9 trillion cubic feet (365 billion cubic meters) of gas-in-place, with as much as 9.4 trillion cubic feet (266 billion cubic meters) of recoverable prospective natural gas resources at the Mtsare Khevi Gas Complex and Taribani Field Complex. In terms of recoverability, 70% of the gas-in-place is classed as recoverable from this source-rock.

The recently upgraded internal estimate of gas-in-place of 135 trillion cubic feet was realized as a culmination of many years of geological studies when it became clear that the two separate gas fields were in fact one giant gas field. This upgraded giant field could also yield a similar recovery prospect of 70% giving a figure of anywhere between 50 and 100 trillion cubic feet of gas recoverable as a prospective resource.

While there are numerous ex-Soviet wells drilled into the Mtsare Khevi and Taribani fields that are being re-entered and re-perforated to yield additional gas, Frontera is continuing to advance drilling programs to progress the development of these fields with new wells. In addition, the large team of Frontera engineers has been upgrading the gas gathering, processing and associated facilities. While it is clear that a great deal of money and additional resources will need to be spent to realize the full potential of this field and this could take many years, significant increases in production are currently within reach for the near future.

Could Georgian gas be competitive with that of Qatar or Azerbaijan and is there a possibility that the launching of this project will negatively affect Georgia-Azerbaijan relations in terms of TANAP or other mutual energy projects?

The South Kakheti Gas Complex is truly a world-class play, comparable with many of the larger fields in the world. The Georgian gas potential can only strengthen relations between countries in the region as it contributes to the regional success as an energy supplier to mainland Europe through TANAP and other regionally significant projects. Azerbaijan is looking to diversify its trade and so, as the region develops and diversifies its own energy potential, it will be seen that there is plenty of demand for gas- bringing prosperity to the different contributors to the international gas markets from this region. The international gas market has always been fluid and flexible and this Georgian resource will not impact upon Georgia’s relationship with Azerbaijan; the potential of the Southern Gas Corridor via Turkey is big enough for all players.

One key aspect of Georgian geography, however, is its Black Sea coast; LNG (Liquefied Natural Gas) tankers from Qatar and elsewhere are currently unable to pass through the Bosporus strait into the Black Sea to supply Romania, Ukraine etc. Georgia will in due course potentially be in a unique and strong position to contribute to the trans-Black Sea supply of LNG from its own resources to countries with Black Sea ports. It is possible that Georgia could leverage its advantage here in time, but it needs to be careful in the short term to ensure that it doesn’t upset its neighbors as it will take time to fully develop this gas field, and diversifying supply in the short term, even with Gazprom, would be sensible.

To what extent do you think these gas resources could be part of the greater politics and who are the potential players in this process?

It is widely recognized that the US supports the principal of Europe reducing its reliance on Russian gas and diversifying its supply. Georgia has a warm relationship with the US and Europe and, in June last year (with Ukraine and Moldova), Georgia signed an Association Agreement with the European Union, by doing so announcing that their ultimate goal is to join the European Union.

USAID projects continue to help facilitate investment in the energy sector in Georgia and the nation continues to develop economically in a very positive way with this international support.

The development of Georgia into an economically strong nation helps to assure the energy security for the region and for the European mainland; as a key transit country for energy and increasingly as a potential partner in the export of its own energy.

Which companies are potentially eligible to undertake this project and develop the newly discovered reserves?

Frontera Resources will need to continue to form business alliances with larger more fiscally flexible organizations to exploit this gas field and other potential resources in a timely manner. The Georgian government will certainly wish to see this valuable asset exploited quickly and therefore larger organizations with deeper pockets will play a part as the project develops. However, it is Frontera who has spent many years and huge resources understanding and unlocking the potential of these fields. The South Kakheti field is a large and complex gas play and Frontera are critically and uniquely positioned to build upon their deep understanding of the geology of the Kura basin. In Frontera Resources, Georgia has similar technological expertise and experience that facilitated the shale gas boom in North America working to develop Georgia’s potential; the upstream skill-set of the team within this company is highly impressive.

However, Frontera is a relatively small organization; there are obvious players in the international O&G industry who are mooted to be potentially looking to a joint venture with Frontera to develop this and other plays within Eastern Georgia.

Zviad Adzinbaia is an Analyst at Georgia Today newspaper covering regional politics, security, Russia-Georgia affairs and issues of Georgia’s Euro-Atlantic integration. He is also a fellow of a number of high-caliber programs at the Georgian Foundation for Strategic and International Studies (GFSIS).

Zviad Adzinbaia

12 November 2015 22:13