What are the odds of drilling a dry hole at Triceratops-2?

[petrengr1]

This question comes along every time we drill and you probably already know what my answer to that question is but let me make a short story of a one word answer.

Back in August of 2009 someone asked a similar question about what to expect at Antelope-2. My answer may be found at: http://messages.finance.yahoo.com/Business_%26_Finance/Investments/Stocks_%28A_to_Z%29/Stocks_I/threadview?bn=26290&tid=115901&mid=115998

I guess my first thoughts about Triceratops-2 (Formerly Bwata-2) were mentioned in Part II of this string back about one year ago: http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_I/threadview?m=tm&bn=26290&tid=242164&mid=242164&tof=-1&rt=1&frt=2&off=1

So, what has happened in the last year to influence my thinking about Triceratops-2?
1. They have acquired more seismic data and concluded that Triceratops/Bwata is one large structure.
http://www.interoil.com/presentation/201..._Final.pdf charts 24 and 25.
2. Both the IOC and Knowledge Reservoir (3rd party) Geo-scientists have evaluated the data and, based on preliminary data, Knowledge Reservoir has estimated that in the “most likely case” the reservoir would contain 4.594 TCF of gas in place. Chart 25
3. Chart 26 suggests that Triceratops-2 (Formerly Bwata-2) is expected to be 1,500 feet higher than
Bwata-1which had a 512 foot gas column, meaning that Triceratops-2 is expected to have a 2012 foot gas column.

4. Chart 26 also suggests that “the seismic reflection character at Bwata is analogous to the Antelope reefal build up”.

5. Since the above estimate of gas was made by Knowledge Reservoir the Phase 3 seismic has been completed and evaluated. http://www.interoil.com/presentation/201..._Final.pdf charts 13, 14 and 15. On the conference call Phil and David Holland said the new data indicated the field was bigger and broader than previously thought. This would lead one to think the Knowledge Reservoir estimate is low since it was made prior to the acquisition latest seismic data.

My latest guess about the odds of making a dry hole at Triceratops-2 is once again zero. Of course I must remind you all of my guesstimates come from data provided by IOC. We will be drilling on a large “hump” thought to be a reef, 1500 feet higher than a known gas well. So it is not too big of a stretch to expect to make a gas well. Even if there is no reef (highly unlikely I think) then we should have +/- 2000 feet of fractured limestone which would contain gas. Even with that remote possibility we would have a very high volume gas well but the reserves would have to be reduced. I do not expect this last described worst-case scenario.

Yes, we did drill a dry hole at Triceratops-1, but I believe with the additional seismic data and the much higher structural location we will make a good gas well. The likelihood of drilling through 2000+ feet of reef or limestone without finding some porous rock or fractures seems quite remote to me.

I hope this make you sleep well this weekend.

[admin]

Thanks Pet, much appreciated. I was sort of thinking not finding a reef would be almost as bad as a dry hole, as from memory the low estimate from KR is something in the range of 1-2Tcf and although I realize there are numerous companies who would kill for that, it could be a bit disappointing for IOC, especially with the talks of reducing IOC's stake in E/A to 10%. It would basically be a large Elk and not enough to feed a new LNG venture. Or perhaps we've just been too spoiled with these whoppers at Antelope.

But if you think it's highly unlikely, that's quite encouraging

[Tree]

I'll drink to another 4-5Ts of temporarily stranded gas!

If you are sleeping well with T-2's chances of success, so am I.
Thanks Pet.

[Spartina]

Thanks Pet- that is like music to my ears coming from you. Forgive me for I know I have brought up this point before, but I still believe that this point is more significant than folks are giving it credit for and I would love to get your take on this Pet. Triceratops is significant because when we hit there it will prove that E/A wasn't just a one hit wonder. This now speaks to the higher probability of ALL THE OTHER STRUCTURES ON THE ROLODEX being valuable, and containing more T's of gas. The possibility of Arun like numbers then seems VERY probable. Gentlemen this is the stuff that dreams are made of... sleep well? Are you kidding? I am too damned excited to sleep well!

[maui4marko]

They should snap up Laurus Energy next door to the SE with the $$$ from deals. Extend the string of pearls from the twin peaks all the way down to the valley.

[Palm]

Pet, it is great having your analysis to rely on. Reading those older posts is as close to crystal ball technology that we can have. Even your comments on the road that IOC has been building are spot on. It's interesting also your comments on FID as far as Mitsui and EWC. That really reminds of what the interplay is between the different partners and how valuable having Mitsui involved is. They have had to do an enormous amount of adapting the plans as things have changed. They really are the main cog in this project when you think about it.

Thanks again for all your analysis over the years. Having these posts to read and re-read is huge, and a lot easier when we don't have the Yahoo noise to filter out.

[sageo]

Pet-Am new to board. First,thanks for your skillful insight. Second,could you comment any further on small anticline b/low carbonate base? Third, how far down do you think we will go with surface casing?(also casing diameter) Many thanks.

[petrengr1]

Sageo- These are some of the same questions I would like to have the answer to so I can not be of much help.
On the PR where they announce the spudding of Triceratops-2 they said they would "3) in the event of success,
complete the well as a future production well."
If they are planning to complete the well as a high volume producer they may start off with larger casing so they can end up with 7" tubing for the producer. Just a guess of course.
At Antelope-2 they set 18 5/8" surface pipe at 810 feet and intermediate 13 3/8" at 3609 feet with 9 5/8" at the top of the carbonate.

At Triceratops-1 they set 13 3/8" at 381 feet and 9 5/8" at 2,539 feet.
My guess is they will follow the casing sizes they used at Antelope. Since the well will be a bit more shallow I would expect to see the casing strings set a little more shallow than Antelope. The 13 3/8" may be set somewhere near the sandstone they are expecting at +/-950 meters (3,117 feet).

If you are new to the board you must hear my disclaimer that I am not a geophysicist. So you must take anything I say about seismic pictures with a grain of salt. Regarding my comment about the little anticline below Triceratops-2 that is just something that looks interesting to my untrained eye. There has been some talk about finding the Pale/Subu sandstones below the Limestone section but we have never drilled deep enough to test that theory. The theory may only apply in areas East and Southeast of Antelope. Still it would be interesting to know what real geophysicist would say about the cross section http://www.interoil.com/presentation/201..._Final.pdf slide 15.
I don't think IOC plans to drill deep enough to test this section at Triceratops-2.
IOC had previously hoped to find oil in the Pale/Subu sandstones in the area North, East and Southeast of Antelope.

[sageo]

Pet-Thanks for your enlightenment. I wish that ioc would consider going that 1500 ft.(?) deeper.If that fm. contained oil, we could "shout it out".(No?) Phil then could claim "hero" status.

[admin]

Welcome aboard Sageo!