London-based minnow Chariot Oil & Gas is touting the development prospects of the Anchois gas field on its Lixus license offshore Morocco.

Though prospective output of 70mn cfd is small by any sort of international comparison, it is seven times Morocco’s current output of 10mn cfd. The latter comes from small onshore deposits, mostly operated by SDX Energy, a somewhat larger London-listed firm which is also active in Egypt.

Based on reprocessing of legacy seismic, Chariot on 7 September announced a more than doubling to 1.05tcf of its estimate of recoverable resources from Anchois, discovered by Spain’s Repsol in 2009 in 388ms water depth 40km off the northern stretch of Morocco’s Atlantic coast.

FID could come in 2022 with first gas two years later, Chariot says. However Chariot’s plans are missing a wheel, or two. There are major obstacles to the field reaching FID, never mind producing.

NO CASH

With less than $10mn in the bank, Chariot lacks the cash to carry out the appraisal drilling needed to firm up current reserves, never mind add the additional volumes that would make development a more attractive proposition.

The firm says efforts to find a deep-pocketed partner are “ongoing,” but then it has been saying this for some time.

Since acquiring the license in April 2019, Chariot has focused on reprocessing Repsol’s legacy 3D seismic. Of this week’s upgraded reserves figures, a modest 0.36tcf (up 18% from the previous estimate) is in the ‘2C’ category, that is to say the reservoirs proved to exist by Repsol’s 2009 discovery well which hit a total 55ms of gas pay in two columns (MEES, 6 April 2009).

Chariot reckons yet-to-be-tested deeper strata contain a further 0.69tcf of recoverable reserves (2U), whilst it has also identified other nearby targets.

Repsol relinquished the acreage in early 2014 with ‘Anchois-1’ the only one of four wells drilled to find gas. Of course the global market for virgin offshore development projects is considerably more bearish now than in 2013, when oil prices were $100/B-plus.

But that isn’t stopping Chariot, which says it has drawn up a viable development plan based on the Anchois discovery alone. This would see production of around 70mn cfd from two wells tied back by a 40km flowline and umbilical to onshore gas processing facility, with a further 35km onshore pipeline linking to the existing GME Algeria-Morocco-Spain gas pipeline.

The reserves are “high quality dry gas (97% methane, no CO2 or H2S) in excellent quality reservoirs,” Chariot says.

Chariot estimates the cost of these plans at $250-$540mn, adding that it expects an ongoing pre-FEED study to tighten this range.

UNREALISTIC PRICING

The most unrealistic element of the plans is a presumption Morocco would be willing to pay $8/mn BTU (≈$8/’000 ft³) for its gas, in line with the price Morocco has in recent times paid for imports from Algeria which averaged just over 90mn cfd for 2019.

For sure Morocco would be glad to lessen its dependence on its eastern neighbor, with which it has a fractious relationship (MEES, 5 June). But it has other options: a surge in coal and solar capacity mean that since last year the country has enjoyed a power surplus (MEES, 7 August).

Previously-outlined plans to add 2.4GW of gas-fired capacity to be fueled by a major LNG import terminal at Jorf Lasfar near Casablanca look to be dead in the water. But there is no reason why Morocco couldn’t opt for more modest imports via an FSRU – an option that would give it greater pricing leverage with Algeria, the current sole supply option for its two CCGT plants totaling 935MW (SDX’s domestic output supplies nearby industry).

The ability to import LNG would also give Morocco no reason to pay above international prices for domestic supplies. And with a string of US LNG export projects set to maintain an Atlantic Basin LNG surplus for years to come, it is a safe bet that the price of these supplies would be well below $8/mn BTU.

Morocco’s other planned gas development project is in the hands of an even more cash-strapped London listed minnow, Sound Energy. Whilst the Tendrara field on which Sound’s plans are based is onshore, in the country’s northeast, in other ways the numbers are very similar to Chariot’s Anchois. The field was discovered more than a decade ago, in 2007, before being given up as uneconomic. Sound has tried and failed to add significantly to the reserves it inherited, leaving it with plans to produce 60mn cfd based on 2C reserves of 0.38tcf (MEES, 24 May 2019). And, as with Chariot’s Anchois, the plans are going nowhere fast.