News & Events
Making Malta an oil and gas services hub
Decommissioning will develop into a major business activity, and it is critical that we in Malta are ready and able to share some of this work. PKF Malta plans to organise an international oil and gas conference in London in the month of May hosted jointly with a reputable foreign organiser who is a specialist in the field. It is planned to attract more than 250 investors and others in the international media who may be encouraged to invest sufficient resources into Malta’s nascent hydrocarbon sector and in particular the expansion of maritime facilities.
In a wider context, the conference is gearing up to sow the seeds which will see Malta grow into an offshore hub servicing the needs of operators requiring maintenance and upgrading of rigs and in particular building of advanced subsea modern structures. It is common knowledge that the massive decommissioning work which is currently being contemplated in the North Sea oil platforms will lead to potential sharing of structural work. While the UK oil and gas industry has reason to be optimistic of further growth, however the North Sea remains one of the world’s mature petroleum provinces and, despite new developments, many assets are reaching the end of their field lives and will require decommissioning.
One reliable estimate for the short term is that the total industry cost of decommissioning will amount to €8 billion, focusing on 40 platforms and their associated wells, pipelines and subsea structures across 80 fields. Of course the estimate does not cater for other variables such as the asset type, regulatory requirements and decommissioning strategy, will also greatly affect the costs from one decommissioning project to the next. Decommissioning will develop into a major business activity, and it is critical that we in Malta are ready and able to share some of this work. Really and truly, the island is strategically well placed to exploit fully our facility as a maritime service centre which is planned to be developed in Marsa, a project for which international tenders are currently undergoing adjudication by government.
It is common knowledge that the North Sea oil and gas facilities are now well beyond their utility date and decommissioning is expected to cost £30 billion over the next three decades. Malta can gear itself up to share part of this once in a lifetime bonanza given that existing facilities in the UK are over-stretched to service the massive task. This opportunity to revitalise our ship repair and steel construction expertise and extend it to service the oil and gas sectors will complement our recent attempts to join in the list of countries which are actively involved in offshore exploration.
It is true that our vast acreage map where to drill is surrounded by neighbouring countries who themselves are active and competing in offshore oil drilling. Some of these countries have in the past disputed the way we have delineated our boundaries but recent attempts are ongoing to try to persuade such countries to accept joint drilling on contested areas. Naturally it is in everybody’s interest that we start reaping dividends from oil and gas exploration that in the past have eluded the exchequer. It is no secret that the island has laboured hard to combat its handicap arising out of its limited size and its geographical isolation being located at the periphery of Europe and lacking in natural resources. No prizes for guessing that the gradual transformation from a fortress economy based on revenue as a naval base to a EU functional economy with exemplary unemployment levels has been an demanding task and came with a price-tag as can be evidenced by the burgeoning national debt.
Naturally, PKF Malta is gearing up to promote the island among investors prepared to participate in the transformation of the maritime sector as a mini-Aberdeen. Malta is well-placed in the centre of the Mediterranean, to service other offshore operators using its natural harbours and revamped maritime facilities to generate extra revenues. Add to this the renewed interest by government not to leave any stone unturned to kickstart oil and gas exploration, one can augur that the future is bright. Regardless, of our future vision as an oil-producing nation one is mindful of past failures when drilling for oil. Certainly nobody can blame the man in the street for displaying a high level of cynicism on the chances of a lucky strike this time around. Yet, hope springs eternal when considering that the latest seismic study on offshore Area 4 which comprises four contiguous license blocks in the southern offshore area, are encouraging.
The study covers an interpretation of a 390 sqr miles long-offset 3D which was concluded three years ago. The good news is that the Area 4 is not part of any contestation by neighboring countries and the acreage contains mature prospects analogous to proven plays in the Libyan Sirte basin, and field analogues in Tunisia. According to media reports, the latest interpretation shows prospective oil resources of about 300 million barrels. One area, nicknamed ‘Hagar Qim’, could hold as much as 130-200 million barrels recoverable and is expected to take approximately 60 days to drill this year to depths of 2,500 metres.
Moreover, according to trained geologist Dr Peter Gatt the issue needs to be scientifically assessed in the light of new facts and improved drilling technology. Quoted in MaltaToday, he said, “There is no reason to believe that Malta doesn’t have its own oil reserves. In fact, the indications I have seen suggest the opposite.” Perhaps this is due to the recent study of 3D Seismic reports which yielded what he describes as ‘definite hydro-carbon indicators’, mostly in the form of gas emissions.
“In the rest of the world, such indicators would be interpreted as signaling a high probability of an underlying oil or gas field.” At this juncture, it is important to note that geologists are the experts responsible for conducting scientific surveys to succeed in their quest to find the right conditions for an oil trap – the right source rock, reservoir rock and entrapment. Traditionally, geologists interpreted surface features, surface rock and soil types, and analysed small core samples obtained by shallow drilling. Modern oil geologists also examine surface rocks and terrain, with the additional help of satellite images. However, they also use a variety of other methods to find oil typically using sensitive gravity meters to measure tiny changes in the Earth’s gravitational field that could indicate flowing oil, as well as sensitive magnetometers to measure atomic changes in the Earth’s magnetic field caused by flowing oil.
Still, there is a feeling of déjà vu among islanders which, considering the saga of previous failed attempts and the high cost to drill for hydrocarbons, most would prefer that the government goes slow on promoting the sector yet continues to put its money where its mouth is… i.e., supporting the public expenditure including significant investment in free healthcare and pensions. So let us seriously reconsider the option of oil prospecting which, if successful can in the next decade prove to be a panacea.
The news of oil discovery is now a common occurrence and it is being found in ever-larger quantities in many places around the world. Yet not all oil is accessible on land or in shallow waters. One can find some oil deposits buried deep under the sea floor and of course improved technology such as subsea drilling is available to drill not only vertically but also in an Omni direction. This has reaped many success stories. Safety is always a high priority and when an offshore drilling unit is used to drill down such deep wells into the sea floor, it installs a blowout preventer consisting of a pair of hydraulically-powered clamps that can close off the pipe leading up to the rig in the case of a blowout. At a time when oil is hit, the task of sealing the well can be dangerous and this is taken very seriously by engineers using a pair of plugs to seal off the well bore.
To conclude, one reflects how Cyprus and Israel have both succeeded in drilling for offshore gas in the Levant and closer to us we know that the central Mediterranean is an intra basin where countries such as Greece, Italy, Libya and Tunisia have been successful in offshore drilling. One augurs that the conference in London will help usher in a new era of investment into our offshore acreage and concurrently increase our potential as a Mediterranean oil servicing hub.