UK independents reassess oil and gas potential off Montenegro

Similar geology productive elsewhere

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Th 6008osmont1
The map shows newly awarded offshore acre-age and the location of two discovery wells.
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Drilling could resume soon offshore Montenegro following a 16 year gap. Since Chevron's withdrawal in 1990, exploration activity of any kind has been minimal, due to successive Balkan conflicts. However, two UK oil companies are about to raise the tempo, following recently awarded production sharing contracts.

Ramco Energy was the first new arrival in May 1998, when its subsidiary, Medusa Oil and Gas, signed an accord with state oil concern Jugopetrol Kotor to explore Block 3. Block 3 covers overing a wide swathe offshore the southern half of Montenegro plus a 15-km wide strip stretching inland from the coast. This February, London-based Star Petroleum signed up for the adjoining offshore Block 1 and Block 2 to the northwest of Ramco's acreage (also including a narrow coastal strip). Ramco is farther advanced in its geological interpretation work, but both companies have seen enough to warrant wells, potentially in 2001 under a coordinated drilling program.

Regional geology

As this was the first well ever drilled offshore Montenegro, the identification of the mapped seismic horizons was highly speculative, Webb says. The partners had hoped to intersect Eocene/Cretaceous carbonates at 10,500 ft, but at this point, they had only reached the top of the Miocene. Below this level within the underlying Tertiary sequence, they did encounter gas shows in the Oligocene clastic sequence. But drilling conditions deteriorated, because the well was eventually terminated at 15,500 ft. The logs revealed several hundred feet of potential gas pay, however at that time, no one was interested in gas offshore Yugoslavia.

In 1980, Chevron shot 2D seismic over the blocks, followed in 1981 by a second well, JJ-2, in the nearshore overthrust complex (a dry hole) and then by well JJ-3. According to Webb, this third well has good oil shows within the Eocene and the Cretaceous carbonate sequences. A total of 200 bbl of 24 degree API crude was recovered via a 1/2-in. choke.

"They concluded that the reservoir was tight and lacked permeability," Webb adds. "This was confirmed by the core analysis. However, they didn't acidize or fracture the well." Subsequently, Chevron shot further seismic, reprocessed the data, and conducted geochemical analysis. It concluded that the oil was derived from the Mesozoic, with possible source rocks in the Triassic and/or the Upper Cretaceous carbonates. "The study also indicates that there are quite a few places where oil has migrated through the carbonate complex, demonstrating that there is a working hydrocarbon system in the offshore."

Chevron, which had also been active off Croatia, decided to pull out of the Adriatic in 1990, leaving Yugoslav companies INA, Naftagas, and Jugopetrol to pursue exploration without western help. They acquired further seismic offshore Montenegro and also drilled a test well near the shore in Block 3, targeting a Triassic prospect. But the well came up dry before reaching the Triassic, and was abandoned at 5,000 meters due to technical difficulties. In 1991, war halted concerted studies of any sort. Since the region stabilized, drilling has resumed onshore Montenegro, conducted by NIS-Naftagas from Novi Sad.

Triassic target

Both Star and Medusa are 51% operators of their blocks, and both must bear the full risk for their respective exploration programs. However, Jugopetrol will pay 49% of costs following a commercial discovery. In Block 1, Star is paying attention to a deep Triassic onshore/offshore structure that could contain substantial quantities of oil. "This is a simple, rollover anticline that would require a 5,500-meter deep well to drill," Webb says. "The Adriatic Basin has a low geothermal content. Agip has tested black oil from depths of up to 22,000 ft in the Po valley, and has numerous other offshore discoveries in the Adriatic. Most of the Adriatic's gas, by contrast, seems to be biogenic rather than from thermally mature petroleum source rocks."

Ramco's acreage covers 3,000 sq km - any profit resulting from a discovery will be shared between Ramco and Jugopetrol Kotor on the basis of annual levels of production. Their joint venture company will handle development, marketing, and sale of any hydrocarbons produced.

The area includes an external part of the Balkan Dinaride fold belt with large fold and thrust units deformed by Neogene (Alpine type) crustal movements. The internal part of the Dinaride fold belt lays to the northeast in Serbia where oceanic crustal rocks, that formed part of the former Tethys Ocean, are found. The geological sequence in the license is mostly sedimentary, with Triassic to Pliocene age strata present. The sequence is dominated by thick Triassic to Eocene age limestones and dolomites that were deposited on a broad, shallow marine platform that flanked the Tethys Ocean.

The Dinaride fold belt is believed to have been compressed laterally 100 km or more, due to the plate tectonic movements during closure of the Tethys Ocean. The license also contains part of the Adriatic Basin that extends across the Adriatic Sea towards Italy, and this is characterized by a young, thick (up to 15 km or more) shale and sandstone succession, mostly Pliocene in age.

The petroleum potential of the license centers on the occurrence of oil source rocks, reservoirs, and the formation of structural or stratigraphic traps. A comparison to the geology of Italy, Croatia, and Albania shows that while the hydrocarbon potential in Montenegro has not yet been realized, very productive oil and gas discoveries have been made in these similar geological provinces nearby. The Ramco exploration effort to date has included a review of previously existing seismic and well data, that had been acquired during earlier exploration attempts, made between the 1950s and 1980s.

Ramco's main recent effort has involved the acquisition of 775 km of modern 2D marine seismic data during 2000. Ramco has conducted geological studies on the previous wells and surface outcrops and has concluded that effective oil and gas source rocks are present in several intervals, particularly within the Cretaceous to Eocene-aged shaley limestones and Miocene shales.

While the limestones are likely to be oil-bearing, the Pliocene sandstones are assumed to be gas-bearing. Ramco has already identified several potential drillable prospects and these will be high-graded using the new seismic data, to improve chances of a discovery when the well is first drilled, probably in 2001.

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