Did we get a hint about the top of the Reservoir at Antelope-3?

[sageo]

Looking at http://www.interoil.com/iocfiles/documen...tation.pdf page 16 we can see that the top of the reservoir is expected to be at 5,545 feet (1,690 meters).

If we look at the transcript http://seekingalpha.com/article/1010821-...ipt?page=5 where Dave Holland is talking I think he may have given us a hint that we did not pick up. He said on pages 3 & 4  “ The formation being drilled consists of approximately 70-80% clay stone, 5-10% [unintelligible] stone, and 10-15% sandstone, with a trace to 5% coal penetrating from 1,532 meters to 1,535 meters. This occurrence of coal is higher than prognosis based on the Antelope-1 offset well. At 1,535 meters, the [calcimetry] measurements were at possibly 6.9% calcium carbonate, or limestone, and 1.75% magnesium carbonate with dolomite. However, at 1,540 meters [unintelligible], the calcimetry increased to approximately 20% limestone and 70% dolomite. As such, we are currently drilling ahead at a controlled rate toward the top of the reservoir and circulating bottoms up at approximately 2-meter intervals.”

They are drilling ahead very carefully in case this formation (which is 20% limestone and 70% dolomite) is the top of the reservoir. If this is the top of the reservoir they have hit it 150 meters (492 feet) higher than expected. If they get a large increase in gas or a gas kick they will probably set casing near this depth 1,540 -1,560 meter level. If the top of the reservoir is truly that high, the mud weight will have to be higher that anticipated in order to control the pressure. We will have to hope they do not experience a loss of circulation before getting the casing set. If they get into trouble they may have to set a cement plug at the top of the reservoir in order to safely run the casing.

If this turns out to be the top of the reservoir the gas column will be about 500 feet thicker than we had previously expected.  With a derrick floor elevation of 99.7 meters above sea level and a gas water contact at -2,228 meters sub sea,  the gas column would be 768 meters or 2,519 feet thick.

Otherwise the formation could turn back to claystone as we drill ahead and we might proceed to drill to the top of the reservoir as per the original prognosis.

[sageo]

Admin- Thanks for modifying my reply for Pet-1 . As you can quickly tell, my computer skills are extremely limited. I really appreciate all (everyone's) thoughtful commentary on SHU !

[admin]

No problemo, Sageo. You're not the only one confounded by the [/quote] token. One has to reply AFTER it, not before..

[Stavros]

I took the liberty of copying your posting "Petrengr1" and I sent it to Dave Holland.
I hope you don't mind that I did this.

He reiterated that what he reported in the CC was true; he seemed to indicate to me that he's relatively sure they are in fact just above the top of the reservoir. They don't think the formation will turn back to claystone.

IMPLICATIONS ...

1. LOT'S MORE GAS IN THIS SECTOR OF E/A THAN THEY THOUGHT
2. MUCH HIGHER VALUE FOR E/A IN THE SELL DOWN
3. WHEN THIS IS ANNOUNCED THE PPS SHOULD BE IMPACTED POSITIVELY > > > HOPEFULLY NOOS

[jft310]

I took the liberty of copying your posting "Petrengr1" and I sent it to Dave Holland. I hope you don't mind that I did this. He reiterated that what he reported in the CC was true; he seemed to indicate to me that he's relatively sure they are in fact just above the top of the reservoir. They don't think the formation will turn back to claystone. IMPLICATIONS ... 1. LOT'S MORE GAS IN THIS SECTOR OF E/A THAN THEY THOUGHT 2. MUCH HIGHER VALUE FOR E/A IN THE SELL DOWN 3. WHEN THIS IS ANNOUNCED THE PPS SHOULD BE IMPACTED POSITIVELY > > > HOPEFULLY NOOS

Henry Aldorf right again. Geez maybe 30 years in the OIl and NG biz in Senior positions pays off.?? Ya think.. Developing LNG plants from scratch for Marathon might have some implications for IOC's development of their fields??. Grey hair can be benficial if its from experience.

In NYC July last year Henry told the Institutional investors there that IOC had 13 T's at E/A. (GLJ high number is 12.1 T's)Thats NG and condensates. Many chose to ignore Henry. Since then Henry has updated that number again with what he think post A-3 and E-3 will yield and thats 18 T's of NG and condensates. I don't have access to what Henry bases this on but I do know he has been incredibley right so far.This is why IOC wants a down payment on the sell down and then payment as assets are produced. Further explains why IOC can sell some to the government and then we have Triceratops and Tuna and........

Explain to me who can beat the EWC cost to develop????

[Stavros]

A stick built duplicate of the PNG LNG Plant will be cheaper than 8 EWC modules .... That's what I want to see BABY.

[jft310]

Stavros. EWC is paying for the modules so thats the way to go early. Why not a combination of both?? Mitsui should be okay with that idea. There will be lots of money for IOC and the PNG govt to do lots of things thats for sure.

[Palm]

Stick-built in PNG at this time would be a hard sell to both the PNG gov and banks. With the recent cost blowouts strategies are shifting. Recent discussions are hinting at LNG pricing models being reworked in the next few years and expectations are it will bring prices down to the $9 range. To get a 12% return a PNG LNG stick built including cost blowouts would have a hard time getting financed.

[sageo]

Guys- Souldn't we be setting our 9" plus casing about now? I know we have been drilling "cautiously" in the last 48 to 72 hours, but with so much dolomite around, we sure don't want to run the risk of an unexpected event that would jepordize our progress !! Pet did mention the "possiblility" (not gaurantee ) of a 2500+ section of  our NG column, The shorts would not be too happy with that if it should happen,GLTY all.

[trans]

I agree Sageo, should be laying casing, or very close. From what Stavros commented on by Dave Holland, it adds weight to your conclusion.