Syntroleum Corp. and EurOil Ltd. signed an agreement to jointly negotiate a production sharing agreement with the government of the Republic of Cameroon for the production and monetization of gas from the offshore MLHP-4 block. If negotiations with the government are successful, the agreement also calls for joint assessment, development, and production of natural gas and condensate in the Sanaga Sud field, which lies within block MLHP-4. The government already awarded the right to negotiate a production-sharing license for block MLHP-4 to EurOil and Syntroleum through competitive bidding, under the new petroleum code of the Republic of Cameroon.
The Government of Cameroon awarded EurOil and Syntroleum for work program submitted in mid-2002. EurOil received formal notice of acceptance of the work program in December 2002.
The Sanaga Sud field is in the offshore Douala/Kribi-Campo basin, 20 km northwest of the city of Kribe. Mobil Producing Cameroon Inc. drilled the Sanaga Sud gas and condensate discovery in 1979 and appraised it in 1981 with two additional wells. There has been no subsequent drilling activity in block MLHP-4 because of lack of markets for the discovered gas. Productive intervals for the field fall between 1,000 and 1,600 m subsea, in 20 m water depths. Total recoverable gas for the Sanaga Sud field is to be 600 bcf, according to a 1992 paper by Mobil New Exploration Ventures Co., published by the American Association of Petroleum Geologists.
Under the terms of the agreement, Syntroleum and EurOil would each have 50% working interest in the MLHP-4 block. Each company would share equally in the cost of assessment and development of the block, including field development, gas liquids extraction, gas-to-liquids conversion and/or other possible end-use applications for natural gas, including electric power generation and iron ore smelting. With support from EurOil, Syntroleum will complete a gas reserve and project assessment study for a gas-to-liquids (GTL) plant, which would be in Cameroon to utilize gas produced from the MLHP-4 block. The first phase of this work will involve full analysis of previous data that has been developed on the block to refine assessment of estimated reserves for the field.
"From our experience in Cameroon we concluded that the Sanaga Sud field, similar to other previously-drilled fields in West Africa, could be economically developed using Syntroleum's gas-to-liquids technology," stated Don Vandergrift, CEO of EurOil. "We have developed an excellent working relationship with Syntroleum and all of us are anxious to move ahead with the development of this project."