ITALY TO OPEN 'EXCLUSIVE' PO BASIN AREA IN 1992

Fabrizio Rigo
Consultant
Houston

Under new regulations of the European Community, no oil and gas state monopoly is allowed in the member countries.

As a consequence, by 1992 Italy will open for application by international oil companies all lands not covered by exploitation concessions in the "ENI exclusive area."

This monopoly area covers the prolific Po basin, the cradle of the Italian state oil company AGIP SpA, Milan.

Due to profits derived from numerous gas discoveries of the 1950s in this basin, AGIP, a relatively small enterprise at that time, could eventually afford to expand in Italy and abroad and through successful exploration achieve status of a major international oil company.

The ENI exclusive area covers the Po and Veneto plains and adjacent 15 km of territorial waters, for a total surface of more than 23,000 sq miles.

The area to become available for exploration will be regulated by the Italian petroleum law, one of the most favorable in the world.

Exploration permits, granted to qualified companies at a nominal rental payment, for 6 years plus two extensions of 3 years each are converted, in case of commercial discoveries, into 30 years plus 10 years exclusive exploitation concessions.

State royalties are 9% for oil and gas produced on land and 8% for oil and 5% for gas produced offshore. No royalties apply offshore if and while production is less than 1,000 b/d of oil or 19 MMcfd of gas.

A 1990 decree allows 3 years of royalty exemptions if royalty money is invested in additional exploration works in Italy.

The main reason for these favorable terms is that Italy is a net importer of energy. Three large gas pipelines from Holland, Algeria, and the U.S.S.R. and a liquefied natural gas terminal from Libya are the main arteries for imported gas.

Northern Italy in particular, where gas prices exceed $2.80/Mcf at the wellhead, is one of the highest industrialized regions in Europe.

EXPLORATION HISTORY

Exploration in the modern sense of the word started in the Po basin with introduction of seismic reflection methods and perfection of drilling techniques that allowed discovery by AGIP of Caviaga gas field in 1944 and later Cortemaggiore, Ripalta, Cornegliano, and numerous other gas fields.

After being granted exclusive rights to the Po Valley in 1953, AGIP increased its exploration activity to reach a record production of 500 MMcfd of gas in 1957.

Throughout most of the 1960s AGIP was the sole offshore operator in Italy. Its activity was confined to the offshore extension of the Po basin, where newly discovered prolific gas fields coupled with continuous successes on land more than doubled its Po basin production.

DEEP EXPLORATION

A new chapter in the Po basin's exploration history started in 1971 with the 1 Valle Salimbene well, a dry hole drilled to Mesozoic objectives to T.D. 19,720 ft.

This first phase of deep Mesozoic exploration achieved success in 1973 with the discovery of Malossa field, near the city of Milan (oil from Lower Liassic and Upper Triassic carbonates at 17,700 ft) and Cavone, near the city of Modena (oil from Lower Triassic carbonates at 10,000 ft).

Seven other oil fields were discovered in western Lombardy and Emilia regions in the succeeding 17 years. Out of a total of 21 wildcats drilled, the success ratio was 42%.

All of these fields are related to overthrusted anticlinal traps formed during Oligocene-Miocene Alpine orogeny.

The second phase of deep exploration focused at Upper Triassic-Liassic paleohighs below Cretaceous unconformities started in 1982, with discovery of Gaggiano field, west of Milan (oil from Middle Triassic carbonates at 15,000 ft).

Three oil discoveries resulted from the nine wildcats drilled in this second phase of deep exploration. A strong contribution of these last discoveries in a complicated tectonic framework was given by the use of 3D seismic surveys and advanced computerized geological modeling.

Now and during the last 2 years AGIP has actively explored areas to be drilled before the 1992 privatization deadline.

GAS FIELDS

Well data have indicated the presence of hydrocarbons throughout the entire stratigraphic sequence of the Po basin from Quaternary to Oligocene.

However, production is mostly confined to the Pliocene and, in a few cases, to the Miocene. Smaller Quaternary gas pools have been discovered in the southeastern part of the basin.

Pliocene sediments rest unconformably over older formations, and an unconformity is present between Lower Pliocene and Middle Upper Pliocene.

The Lower Pliocene pools are scattered throughout a belt extending in an east-southeast direction from Milan to the Apennine foothills of the Ravenna-Rimini area. Gas is found in anticlinal traps at depths ranging from 1,500-12,000 ft.

Middle Upper Pliocene fields are more frequent along the southeastern flank of the Po basin, and traps are structural and stratigraphic or a combination of the two. The same geological features are present in the offshore areas, with pay zones found at depths varying from 5,00013,000 ft.

Most of the gas in the Pliocene and Quaternary fields is of biogenic origin, including gas of such large fields as Dosso degli Angeli and Agostino (Fig. 2).

Reservoirs are predominantly represented by high porosity and permeability turbidities. out of 55 fields discovered since 1944, 42 are yet producing, including seven offshore fields.

IMPORTANT GAS RESERVOIRS

Middle Upper Pliocene clastics of turbiditic origin represent the most important reservoirs of the majority of Po basin gas fields.

Abrupt and important facies and thickness changes due to Middle Pliocene tectonics, which deeply affected the area, characterize these sediments.

They are frequently either impervious and very thin or missing on top of Lower Pliocene structural highs. As a consequence, important stratigraphic traps are found on the flanks of these structures.

Gas produced from Middle Upper Pliocene pay zones is predominantly dry.

Lower Pliocene reservoirs normally contain medium size gas accumulations, with the best porosity generally found in the lower part of the stratigraphic section. The majority of the traps are structural.

In the area between Milan and Brescia, where porosity is related to a Lower Pliocene transgression towards the basin's edge and where lateral facies changes are numerous, several stratigraphic traps are found with pools in the upper part of the Lower Pliocene sequence.

Some Lower Pliocene pools contain a low percentage of condensate, probably due to migration from pre-Pliocene source rocks. In fact, the more or less eroded or faulted Miocene structures, unconformably covered by Lower Pliocene sediments, are often oil-bearing or contain remarkable percentages of liquids.

Miocene reservoirs are represented by clastics intercalated within a marly-shaly sequence. The most frequent type of trap is structural, although stratigraphic traps are also found.

Oil is produced from sand and sandstone lenses in Langhian marl along the southern border of the basin at Podenzano field. The impervious cover is formed by Miocene marl and shale varying in thickness from a few feet to 800 ft (Desana field).

The Tortonian pool of Sergnano field is sealed by transgressive Pliocene shale. The Miocene reservoirs bear oil or wet gas with a content of higher hydrocarbons ranging from 2-5% in volume. Overpressure is common in the Lower Miocene reservoirs.

OIL FIELDS

Virtually all oil fields so far discovered are reservoired in Lower Mesozoic, mainly Triassic carbonates.

In North Italy, Triassic and Liassic tensional tectonics established a complex paleogeographic pattern of shallow water platforms and basins, with local reef development and volcanism, an ideal environment for the presence of good reservoirs and source rocks.

Another period of tensional tectonics occurred during Cretaceous times, with widespread unconformities at various levels. Strong compressional movements, related to Alpine orogeny, started during Oligocene and continued for most of Miocene times.

Pliocene is again a period of tensional tectonics and strong subsidence, which caused accumulation of more than 15,000 ft of clastic sediments in the deepest part of the Po basin.

Starting from Oligocene times, oil sourced by Upper Triassic and Lower Jurassic rocks migrated both into Upper Triassic paleohighs remodeled by Cretaceous Tertiary tectonics and into younger compressional structures of alpine origin.

GAGGIANO, MALOSSA FIELDS

A typical example of the first type of oil accumulation is Gaggiano field discovered in 1982 (Fig. 3).

Gaggiano found 35 gravity oil, reservoired in Middle Triassic Ladinic dolomite, with 10-20% primary porosity coupled with fracture porosity, along a north-south trending anticlinal horst. The trap is sealed to the east by unconformable Middle Lower Liassic and ladinic impervious wackestones.

Two pools totaling 90 ft oil columns are located between 14,750-15,000 ft.

AGIP has released no reserves estimate, but available data indicate reserves probably are 20-30 million bbl.

The oil fields associated with overthrusted anticlines so far discovered are 10, as compared with three of the other type, related to Triassic-Liassic paleohighs. The only one described in literature is Malossa, discovered in 1973.

The Malossa structure is an anticline trending north-northwest/south-southeast, 3 miles long by 2 miles wide, overthrusted to the west-southwest, and bordered by normal faults, giving the anomaly a wedge shape.

Oil is reservoired in porous fractured dolomite and dolomitic limestone of Upper Triassic Noric to Lower Liassic age at 16,900-19,000 ft (water table).

A preliminary assessment of field reserves in a 1979 AGIP publication mentions 1.75 tcf of gas and 5 million bbl of liquids and an average daily production in early 1979 of 15.8 MMcfd/well and 2,620 bbl/well from eight producing wells.

Based on production history, however, reserves seem to be less than one fourth of those originally calculated. In spite of predominance of gas contents, the field is classified genetically as an oil field due to its depth and anomalous static pressure of 14,900 psi.

RESERVE ESTIMATIONS

Figures of produced and remaining reserves in the Po basin have never been released.

The Official Hydrocarbon Bulletin published by the ministry reports global yearly production in Italy only starting from 1957 with oil and gas production data by regions.

From this and other information, the volume gas produced from the Po basin in the last 45 years should be roughly 8 tcf.

Remaining reserves in existing fields are even more difficult to establish. Based on the fact that in the last 3 years production has averaged 160 bcf/year, the author's guess is that remaining proved reserves should be 23 tcf.

Of 12 oil fields discovered so far, six are not developed, five are in an early stage of production and probably not completely developed, and one is in declining production status.

Judging from production data available of 4.5 million bbl of oil in 1989 the fields must be of medium size, and total produced and remaining recoverable reserves should be a few hundred million barrels.

EVALUATING RESOURCES

Criteria to be used for evaluating oil and gas to be discovered in future years should take into account several factors.

Fifty years of exploration and production would normally qualify a basin as mature.

But the fact that only one company, i.e. only one exploration team (or better, school, admittedly very highly qualified), has worked in the area, probably deprived exploration of multiplicity of ideas that normally derives from competition.

In a competitive environment more contractors would have been employed, seismic grids would be smaller, and more wells would have been drilled.

In spite of the fact that AGIP tried to give priority to exploration in Italy, a great portion of its financial resources was absorbed by overseas activity and capital of private industry was not allowed to be invested in this basin.

A typical example is found in the place at which deep exploration for oil developed. Giving due credit for technical difficulties and high costs, 30 wildcats in 20 years would qualify the Mesozoic portion of the basin as immature from an exploration point of view.

The very high 40% rate of success of 12 discoveries out of 30 wildcats, on the other hand, should attract attention of international oil companies.

In conclusion, about future potential of the basin, much more oil and associated gas should be found in the Mesozoic together with several trillion cubic feet of gas reserves still hidden in stratigraphic and subtle traps in Pliocene and particularly in Miocene reservoirs.

Another theoretical consideration: statistically, almost every prolific basin worldwide contains one or more giant gields, and none has been found in the Po basin.

PRESENT, FUTURE ACTIVITY

The ENI exclusive area covers only part of what the author defines as Po basin, which includes the overthrust belt of both the southern Alps and northern Apennine.

These areas are presently covered by exploration permits recently granted to 18 public and private companies.

Those worthy of mention are U.S. (Chevron, Trend, Anschutz), Canadian (Home, TCPL), British (Enterprise, Lasmo), French (Elf, Coparex), Belgian (Fina), and Italian (Montedison, Fiat) companies.

All are actively exploring and waiting, together with other companies that have expressed an interest for the opening of the ENI exclusive area.

Copyright 1991 Oil & Gas Journal. All Rights Reserved.