A senior official from the Ministry of Trade, Industry and Energy stated during a background briefing held at the ministry's press room in Sejong on the 6th regarding the exploration drilling of the deep-sea gas field named 'Blue Whale' in the East Sea, "We confirmed that there were some signs of gas, but it was not at a level that could ensure economic viability."
The official emphasized, "Starting with the East Sea gas field off Ulsan, which ceased production in December 2021, we have successfully developed oil fields in both offshore Guyana and the North Sea after multiple explorations and drilling efforts." This highlights the need for perseverance in the resource development process.
The government plans to conduct a detailed analysis of the sample data extracted this time through a specialized agency.
The government also plans to continue resource exploration and development for the remaining six promising structures in the deep sea of the East Sea, including the Blue Whale.
The following is a Q&A session with the senior official from the ministry.
—We did not obtain satisfactory results from this investigation.
"The East Sea gas field that was previously produced and ceased operations succeeded on the 11th attempt. Guyana was the 13th, where the Rija oil field was discovered. Norway's Ekofisk succeeded on the 33rd attempt. It would be ideal to have immediate drilling success, but it's important to obtain data throughout the drilling process, correct errors, and enhance the probability of success. We discovered a higher quality reservoir than we expected, or confirmed that the cap rock is also thick, and found many organic materials and shale layers, which are positive aspects."
—What does it mean to say there were signs of gas?
"Whether the gas came from organic matter in the structure or moved from the source rock to the reservoir rock is significant. If the component analysis confirms that the gas originated from the source rock, it indicates the source rock's gas generation capacity. However, it is currently premature to make that judgement. We will provide results after a detailed analysis at the end of May to June."
—Is Actgeo participating in the precision analysis service?
"Actgeo is an institution that interprets existing data through computer processing. At this stage, it's akin to a 'tissue examination' phase by humans. We have collected more than 1,700 samples and rock pieces such as those obtained through sampling. These need to be analyzed in specialized research facilities. Actgeo is not the target for this analysis."
—Based on the results of this drilling, will the next drilling move to other promising structures like squid and pollack instead of the Blue Whale? Or will more drilling occur within the Blue Whale structure?
"The Blue Whale is a consolidated structure. According to the current drilling results, the overall gas saturation of the Blue Whale was not high. Therefore, the necessity for further exploration seems low."
—What were the positive aspects?
"For the oil system to be beneficial, the source rock must be good, the reservoir must be well preserved, traps must be well formed, and cap rocks must cover well. There were thicker reservoir layers than initially expected. There should be many openings, and the porosity is quite high at first glance. During the drilling process, we observed a thicker cap rock layer than anticipated. There was also a surprisingly thick organic shale layer in between. This indicates there are elements that could oxidize, which is positive from an oil structure perspective. However, the gas saturation did not reach the threshold standards."
—What level of gas saturation was recorded? What are the criteria for determining economic viability, and how did the results from this drilling measure up?
"Please wait for the results of the detailed analysis. I can't comment on figures today. However, it fell far short of what is considered economically viable. For that structure, the need for additional exploration drilling has decreased."
—What are the future plans for attracting investment?
"There are corporations that have expressed interest in bidding. Existing companies that wish to invest will decide based on the entire range of promising structures. In typical resource development cases, the success in the first drilling rarely leads to immediate results. While I cannot say that the outlook for attracting investment is positive based solely on the results of the first drilling, we believe it is important to reduce risks in resource development through future investments."
—Will investments proceed for the remaining six promising structures?
"It is likely that the investment attraction will focus on the remaining six promising structures. When attracting investment, there is the concept of 'mandatory drilling' that will take place until then."
—Do you believe there is a need to allocate more budget to this project?
"I understand that about 50 drillings have been conducted recently in the deep sea. The success rate is only 5 to 10%. Given the performance relative to investment, it is challenging to determine whether to prioritize 'risk reduction' or 'future profit expansion,' as opinions may vary among experts and the public. The government plans to collect opinions from experts and the public on the need for investment attraction and budget allocation and act accordingly."
—Last year, the government announced the estimated reserves as 'five times Samsung's market capitalization.' Wasn't that premature?
"In the case of the initial announcement, there were many political factors involved that we did not anticipate, which highlighted the metaphor used by the Minister. It was unintentional, and I apologize for the resulting announcement."
—The first drilling has been conducted. What measures will be taken to reduce trial and error in the future?
This was the first deep-sea exploration case. Generally, the success in the first case is lower than the odds of winning the lottery, but due to previous political factors, we were under a lot of pressure. We will enhance our resource exploration capabilities while proceeding with attracting overseas investment in the future.