Applied Political (geo)Science:  The History, Context and Technical Basis Behind Central European Petroleum's Guhlen Discovery, Brandenburg State, Eastern Germany

Peter Putnam | Central European Petroleum Ltd.
Alula DamteCentral European Petroleum Ltd. 
11:45 am
Tuesday, March 14th, 2017 | Marriott Hotel - Kensington Ballroom

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Abstract

Germany sits astride the North European Plain, one of the world's great geopolitical corridors that also rests upon much of a large sedimentary basin known as the 'Southern Permian Basin' that stretches from the southern North Sea into western Ukraine.  As well as being a well-trod invasion route, this region is also the location of many pipelines that carry exported petroleum from Russia to central and western Europe which makes this area one embodying much actual and potential geopolitical conflict.

Commercial hydrocarbon accumulations found within Permian Rotliegend sandstone and Zechstein carbonate reservoirs form a near-continuous chain extending from the British sector of the North Sea eastwards through the Netherlands, Germany, and into western Poland. Giant gas fields in this trend include the Rotliegend-hosted Groningen (100 Tcf; Netherlands and western Germany) and Altmark-Salzwedel (7 Tcf; westernmost portion of the former communist German Democratic Republic ('GDR')) accumulations whereas substantial oil and liquid-rich gas deposits are known from the Zechstein-hosted LMG (70 mmbo) and BMB (135 mmboe) fields of western Poland.  A prominent gap between significant accumulations is found within the easternmost German state of Brandenburg.  Central European Petroleum ('CEP') posted and acquired the Lubben exploration license in the gap and the Guhlen discovery resides within this acreage. 

Beyond being on the regional trend, CEP targeted Brandenburg acreage because:

I. The state is one of the poorest in Germany but has a resource economy based mainly on lignite mining.
II. Historic petroleum exploration and development activity was carried out by the former national communist petroleum company 'EEG' (i.e., only one competitor has ever worked in the area).
III. The availability of, and ease of access to, much open acreage at favorable terms.
IV. The limited availability of subsurface data which historically limited competition for acreage, 
V. The proximity to large markets reliant to a significant degree on Russian imported petroleum. 
VI. Stable regulatory and legal regime based on German mining law.

Since German re-unification in 1990, exploration in this region has been hindered by the following challenges, all of which have been overcome by CEP: 

I. German mining law stipulates that, under certain conditions, subsurface data can be held confidential in perpetuity.  As there has historically been only one operator that created virtually all subsurface data prior to CEP, the former communist national petroleum company, it and its successor own all historic well and seismic information.  CEP has overcome the challenge of data access by acquiring its own seismic and well data, acquiring legacy data from the owner under a range of commercial conditions, and forensic investigations of museums and government agencies.  As an example, after the ownership of the communist national petroleum company passed to Gaz de France-Suez (now 'Engie') in 1994, several thousand employees lost their jobs.  Several of these former employees subsequently created a museum dedicated to the petroleum industry of the former GDR.  Within this museum CEP staff found a significant amount of data otherwise unavailable to the public and also uncovered those approaches and techniques used during GDR operations.  The museum also provided insight into the limitations of EEG's activities (see next point).

II. An absence of modern subsurface information and approaches.  As an example, most wells were drilled by EEG before seismic was acquired.  Prior to CEP operating activities there was only one small 3D seismic data set in the state.  CEP acquired the largest (275 km2) 3D seismic data set found to date east of the Elbe River in Germany; acquisition of this data set included a significant area covering a large recreational lake.

III. The exploration trend upon which CEP's Guhlen discovery sits extends through a very large former military area that is plagued by contamination by unexploded ordnance dating back to World War II and the Cold War.  To provide surface access CEP has conducted unexploded ordnance surveys, one of which resulted in the controlled explosion of 4.5 tons of munitions.

The Guhlen-1a well provided one of the largest test results harvested from any well onshore northwestern Europe over the past several years.  The evolution of the Guhlen prospect included the following steps:

I. Acquisition of gravity data along hiking trails and roads surrounding the Guhlen-1a location.  Interpretation of this data suggested the presence of an untested structural high.

II. Acquisition of a regional 2D seismic grid confirmed the presence of the structural high.

III. A vertical well, Guhlen-1, was drilled with a sub-commercial hydrocarbon gas flow obtained on test from a porous but tight Zechstein grainstone pervasively cemented by anhydrite, halite and carbonate.  The reservoir was 40 meters thick with 20 net meters deemed hydrocarbon-bearing.  No bottom water was measured on well logs and no aquifer water was recovered on test.

IV. Acquisition of 275 km2 of 3D seismic data surrounding the Guhlen well which represented the largest data set of its kind ever acquired in the state.  The data was subsequently inverted in a way similar to that employed by the Polish national petroleum company in its discovery of large Zechstein-hosted accumulations in western Poland.

V. A sidetrack well, Guhlen-1a, was subsequently drilled from the original Guhlen-1 well into a seismic anomaly located about 700 meters to the southwest of the original bottom hole location.  The sidetrack location was drilled low on the structural flank in order to avoid gas as the initial play concept was focused on oil.  The sidetrack discovered 46 meters of highly fractured oolitic grainstone with variable matrix porosity and virtually no anhydrite or halite cement.  The reservoir displays an 8 meter gas cap resting upon a 38 meter oil leg with no bottom water, based on log analysis.

The test of Guhlen-1a resulted in a recovery of 1,692 boepd formed of the following constituents:

I. 17 mmcf/d of raw gas, with rate limited by tubular size, formed of 5.2 mmcf/d of hydrocarbon gas and the rest was mostly nitrogen with minor amounts of carbon dioxide and hydrogen sulfide.
II. 509 b/d of natural gas liquids formed mostly of butane and pentane.
III. 293 b/d of condensate and 23 b/d of oil.

The following was also measured during the test:

I. Flowing well head tubing pressure of 3,035 psi/207 bar.
II. Maximum drawdown was 7%.
III. No reservoir depletion was measured.
IV. No formation water was recovered.

The runway created by a combination of the Guhlen-1a test result with the well location low on a large regional structure, that extends at least through a previously 'no-go' region covered by one of the largest former military bases in Europe, results in a prospective fairway up to 50 km long and covering an area of several hundred km2.  It may turn out that, with successful appraisal and additional exploration, the Guhlen discovery will be the largest German find in a generation and may open up a large conventional play type within the eastern German borderlands.  The immense geopolitical upsets of 20th century Europe echo today within the realms of energy supply, competing national interests and, at least for CEP's purposes, the creation of substantial commercial opportunities.
Biographies

Peter Putnam
Peter Putnam is a geologist with 37 years of varied global experience at both technical and executive levels.  His endeavors have covered the areas of exploration, development (inclusive of primary, secondary and thermal recovery), operations, reserves assessments, research and training.  Over his career he has been, at various times, an employee, an advisor to technical and management teams as well as boards of directors, a board member, and a founder of new companies.  Early stage companies started by Peter have raised over $1 billion in equity from investors inclusive of large private equity firms, sovereign wealth funds, pension funds and family offices.  With experience on six continents, he is currently the Chair and Chief Executive Officer of Central European Petroleum Ltd., a private petroleum company focused on eastern Germany.  Peter holds a Ph.D. from the University of Calgary and is a past-President of the Canadian Society of Petroleum Geologists, a former adjunct professor at the University of Calgary, and a former councilor of the Association of Professional Engineers and Geoscientists of Alberta (APEGA).  He has published widely as an author of scientific articles dealing with various facets of petroleum geology and is a regular guest lecturer at Canadian universities.

Alula Damte 
Alula Damte is a structural geologist with over 24 years of petroleum industry and teaching experience. He has worked in evaluating petroleum systems in varied structural styles including intracratonic rift basins, convergent plate margins and offshore coupled shelf extensional and basinward toe thrust systems. He has provided exploration and business development advice and led exploration ventures in geographically diverse areas that include onshore and offshore frontier basins of Canada, North and East Africa, the Middle East, the Gulf of Mexico, South America, Australia and onshore Europe. He is currently the President and COO of Central European Petroleum Ltd (CEP), the Geschäftsführer of CEP's German subsidiary, and he also serves as Chairman of Petrel Robertson Consulting Ltd.  Alula is a Fulbright Scholar and holds a PhD from University of California, Santa Barbara.