Egypt has signed its first contract with Apache and Shell Egypt to extract gas by fracking by investing US$30mn to US$40mn to boost output and ease a lingering energy crunch in the North African country
The Egyptian Oil Ministry said, “The project will require horizontal drilling and hydraulic fracturing, which is the same as the shale gas production method used in the USA.”
The ministry added that the deal to drill three wells in the Abu al-Ghardeeq region of the Western Desert, about 200 km west of Cairo, was the country’s first contract for the production of unconventional gas.
According to Reuters, shale gas extraction is more expensive than traditional drilling and generally requires high energy prices to make it economically feasible. Global oil prices are at five-and-a-half year low, with benchmark Brent crude futures under US$60 a barrel.
A source at the Petroleum Ministry told Reuters that unconventional gas extraction in the Western Desert would require the operators to drill to depths of 4,267 metres. The deal came as Egypt was seeking new sources of energy to cope with its energy crisis caused by declining gas production and rising consumption.
In November 2014, Egyptian Natural Gas Holding Company (EGAS) had reached an agreement with Norway’s Hoegh LNG for an LNG import terminal to be installed by the end of March 2015, in time to receive cargoes before power demand peaks in summer. It was also seeking a second floating LNG import terminal to boost its import capacity.
