Hungary's Mako Trough could produce gas 2012-14-MOL

BUDAPEST, April 16 Wed Apr 16, 2008 1:36pm BST

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BUDAPEST, April 16 (Reuters) - Production of unconventional natural gas at Hungary's Mako Trough could begin at some time between 2012 and 2014 if exploration is successful, Hungarian oil and gas firm MOL MOLB.BU said on Wednesday.

MOL said it estimated the Mako Trough in southern Hungary contained more than 340 billion cubic meters of unconventional natural gas of which around 30 percent could be successfully explored over a 30 year period.

"The risk, both geological and technological, involved in this project is around the same as in other exploration activities MOL is involved elsewhere," Zoltan Aldott, MOL's director for upstream activities told a news conference.

Exxon Mobil Corp (XOM.N) and MOL announced earlier this month that they purchased part of Falcon Oil's (FO.V) stake in the Mako Trough.

After the deal, MOL said Exxon Mobil and MOL each controlled 40.44 percent of the Mako Trough, while Falcon Oil held 19.12 percent.

Falcon Oil has been exploring the region for years and discovered natural gas, but said it was unusually hot, very deep below the surface and required unconventional technologies to produce it.

It also needs more gas wells than conventional sources and is more expensive to produce.

MOL said the entire gas field would need around 2,000 gas wells and around 50 wells could be drilled per year.

"These gas wells are deeper, more complicated and produce significantly less (than a conventional field)," Attila Holoda, MOL's European upstream director said.

The cost of drilling one well was seen at between $8 million and $12 million, while ground infrastructure was estimated to cost between $22 million and $28 million.

Once production is under way, the costs are estimated at around $2 to $3 per barrel of oil equivalent.

"If production is successful, by 2015 we could be producing as much unconventional gas in Hungary as conventional gas," Aldott said.

(Reporting by Balazs Koranyi, editing by Barbara Lewis)

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