Melrose Resources said on Wednesday it plans to start gas production as early as October from three fields in Bulgaria, which could meet up to 20 percent of the country's annual gas needs.

Drilling results in the Kaliakra, Kavarna and Kavarna East fields in the Black Sea, offshore Bulgaria, showed they have a combined reserves estimate of 3 billion cubic metres, David Archer, Melrose's operations director told a news conference. 'It has been our intention to identify smaller fields, which together at the moment add up to about 3 billion cubic metres. This should supply up to 20 percent of the country's needs over the next five to six years depending on consumption,' he said. The company said it will start laying pipes next month and plans to start production in October.

Melrose Resources earlier estimated the Kaliakra field reserves at 57 billion cubic feet and that of Kavarna field at 24 bcf. Archer declined to give an exact estimate for Kavarna East field, saying it will be ready within few weeks. Bulgaria, almost fully dependent on natural gas deliveries from Russia's Gazprom, welcomed the news and said the government would speed up concession granting to Melrose.

Energy Minister Traicho Trakov told the same news conference that he was confident the gas production in the country will allow cheaper natural gas prices for industries and households. 'The price of the locally produced gas in all cases will be cheaper than the imported Russian gas and that will lower the prices,' he said.

Recession-hit Bulgaria was forced to increase the natural gas price by 24.6 percent as of July to reflect the higher prices for imports from Russia. Since then, Sofia negotiated a minor drop in the price the Russian gas giant sells gas to Bulgaria and hopes to ensure more significant price cuts as of next year.

Melrose's recent operations in Bulgaria

In an operations update issued by Melrose on July 6 2010, the Company provided the following update for Bulgaria:

The Jupiter jack-up rig has been mobilised to the Galata block, offshore Bulgaria, and commenced drilling operations on the Kavarna East No.1 exploration well. The well will test a low risk prospect located in between the Kavarna and Kaliakra fields and which contains gross recoverable prospective resources of 12 Bcf and a chance of success of 80 percent. In the event of success, the discovery would be developed at minimal cost via the Kavarna field flow line.

Following the Kavarna East No.1 well, the drill rig will be used to install the sub-sea tree for the Kaliakra field development well. Subsequently, it may be used to drill a well to test the Kaliakra East Prospect which contains recoverable prospective resources of 59 Bcf with a 34 percent chance of success. This well remains contingent, however, on confirmation that the seabed conditions at the well site will allow the jack-up rig to operate at the required water depth.

The Bigfoot pipe laying barge is now expected to arrive on the Galata block in early August to install the flow lines for the Kavarna and Kaliakra gas field developments.

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Source: Newswires / energy-pedia