Energy Spain: Backyard Oil Prospects Gain Appeal.

Oil explorers are once again fanning out through a vast swath of land at the foot of the Pyrenees Mountains in Spain's northeastern Catalonia region as record high oil prices revive interest in this area and several other prospects on the Iberian Peninsula.

The search for oil in the Catalonian Pyrenees is driven by Cepsa; controlled by the French-Belgian TotalFinaElf company, Cespa is Spain's second-largest oil company after Repsol-YPF.

Explorations have focused on a zone divided into two areas -- West and East Vallfogona, each covering an area of 88,500 hectares.

The University of Barcelona is providing technical assistance for Cespa's investigations. Mariano Marzo, a university professor of Energy Resources and Oil Geology participating in the prospecting, spoke with IPS.

Marzo explained that the university signed an agreement to provide the oil company with environmental as well as geological consulting services. "We are in the first stage of exploration, which will run for two years and is primarily focused on re-evaluating data," he said.

"The presence of bitumen and tar -- crude forms of oil -- was first discovered in various Pre-Pyrenees districts in the late 19th and early 20th centuries. There is definitely oil in the subsoil -- that's not the question. What we need to know is how much there is, what the quality is, and how hard it will be to extract," said the expert.

As far back as 1890 the region's bituminous clays were being exploited. Between 1905 and 1917 the Riutort mine, set up by two oil prospectors from France, managed to produce 500 tonnes of oil.

In 2008, the initial "general exploration" stage will be complete; in the following stage, less attractive areas will be eliminated and efforts will be concentrated on conducting detailed geological subsoil profiles in the most promising areas, explained Marzo.

Lastly, a site will be chosen for drilling, which is expected to begin by 2010 or 2011. In June 2005 Cepsa received permission from the autonomous government of Catalonia to carry out prospecting activities until 2011.

Sporadic explorations have been undertaken in Catalonia's pre-Pyrenees area over the years -- the most recent between 1987 and 1991. Results of these investigations "were negative, but they did not rule out interest in the area. Now we are armed with better scientific knowledge and more advanced technology," said Marzo.

Would this prospecting be happening if the price of North Sea Brent, the European benchmark, hadn't skyrocketed from 10 to 70 dollars a barrel over the last 10 years?

Pedro Miró, CEO of Cepsa E&P, an affiliate of the company backing the exploration, said "We are in a phase of high oil prices. From the costs point of view, deposits and wells which did not previously appear viable could be now."

According to Marzo, "high oil prices, of course, are driving these explorations, but other factors should not be discounted -- specifically, that there are clear indications of the presence of oil on the surface."

"But the profitability of a well or deposit depends on a number of factors, such as the depth at which the oil is found, its quality, how difficult it is to extract and the geology of the subsoil," he said.

"Furthermore, you have to consider whether infrastructure exists to transport fuel to the refineries, and even how close centres of consumption are located. Then you have the environmental and political considerations."

This is not the only area experiencing an oil prospecting renaissance. Several companies are also working on three other projects: one in the northern Basque region, another offshore, near the Ebro Delta in Catalonia, and another along Spain's Levante coast. In addition, Repsol-YPF is preparing for deep-sea exploration near the Canary Islands (southwest of the peninsula, off the coast of Africa), pending a favourable resolution of territorial disputes with Morocco.

Spain's first oil field, La Lora, was discovered in 1964, in the country's northern reaches. But the country's largest deposit lies in the Mediterranean basin, off the shores of Tarragona (Catalonia) and in the Valencia region, in the east, where the Repsol-YPF Casablanca oil platform operates.

The company, which also extracts natural gas in the Gulf of Cádiz, has permits to search for oil in maritime deposits off the coasts of Murcia, Asturias, Malaga, Tarragona and the Canary Islands.

Production at La Lora field has always been small-scale, and the quality of the oil mediocre. In contrast, said Marzo, the oil off the coast of Tarragona is of excellent quality.

Spain imports 99.8 percent of the oil it consumes; that is, domestic output covers a mere 0.2 percent of the country's needs. Spain's total 2005 production reached 1.23 million barrels, roughly what Venezuela produces in half a day.

Environmental organisations have strongly opposed oil exploration and potential exploitation projects in various regions of Spain, and have spoken out against prospecting in Catalonia's Pre-Pyrenees area, one of the country's most idyllic landscapes.

[Source: By Carlos Alfieri, Terraviva Europe, Barcelona, 01sep06]

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