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Orca-1 delivers the goods for BP and partners
BP, Kosmos and SMHPM have made a major gas discovery with the Orca-1 well, drilled just south of the BirAllah discovery, offshore Mauritania. With 13tn cf of gas in place, Orca-1 is the third-largest discovery made so far this year, and the largest deepwater find, according to consultancy Wood Mackenzie.
Lennert Koch, Principal Analyst, Sub-Sahara Africa Upstream, at Wood Mackenzie, says: ‘Orca-1 de-risks up to 50tn cf in the BirAllah area plays, which are in the same fairway as the Greater Tortue Ahmeyim and Yakaar gas discoveries. It also provides options on what to develop first. Nevertheless, each is faced with a major monetisation challenge. Mauritania has no domestic gas market to speak of. There are plans to further develop Senegal’s gas market, but this will not be sufficient to develop these deepwater gas resources. The main way out will be LNG.'
Koch adds: ‘After a record year for LNG project sanctions in 2019 (63mn t/y to date), supply by the mid-2020s looks plentiful, which may keep prices low. Developing another LNG project, and finding buyers for that LNG, could be challenging. Finding the right partners who can provide LNG offtake will be an important next step for the further developments after Tortue Phase 1. But if an onshore LNG solution can be found, BirAllah and Orca could prove to be a simpler hub than the cross-border Tortue development.’
Liam Kelleher, from Wood Mackenzie’s gas and LNG team, notes: ‘As the resource is right on Europe’s doorstep, it will be able to compete with expensive US LNG. Meanwhile, the majors are preparing for energy transition, in which gas will be a crucial ingredient. We think the discoveries in Mauritania and Senegal will see the region become a major LNG hub in the long term, with a combined output of greater than 30mn t/y by the mid-2030s, pushing the region into the top 10 producers worldwide. Orca-1 simply adds to this potential.’
He continues: ‘The region will have to compete for buyers in the competitive global LNG market, in which the US is set to become the biggest supplier in the world by 2024. Yet its lower cost conventional resource can make it more competitive. The delivered cost of LNG into Europe from Mauritania and Senegal has a breakeven of less than $6.2/mn Btu, while US LNG has a breakeven closer to $7/mn Btu.’