Drilling Progress at Antelope-6

[Stavros]

They anticipated seeing crappy rock and saw something better.

I wouldn't be surprised to find out at some point that they didn't clean up the hole ... if that's they case, they would get better results after they do the hydrochloric acid cleanup that Pet mentioned.

[jft310]

I don't think they anticipated 40 feet of Dolomite . May have hoped for it ??Why they drilled this well ???Does this mean the eastern boundary is even further east .

[petrengr1]

The three closest wells to Antelope-5 (Antelope-2, Antelope-3 and Antelope-5) all had some limestone above the dolomite. See http://tinyurl.com/p5bttdy  page 6. We may have alternating sections of dolomite and limestone as was seen in Antelope-3, the closest well. See http://tinyurl.com/l2j4c2w page 17.

As I said before we do not know where the 12 meters of dolomite lies in the 68 meters of drilled hole. It could be the top, middle or bottom. Wherever it is they could have drilled through the dolomite and into limestone. They might have thought that was all of the dolomite but it could look like Antelope-3 and we could have more dolomite sections below before reaching the gas/water contact.

 Amount of Dolomite in Antelope Wells

Antelope-1 ~ 200 meters

Antelope-2 ~ 250 meters

Antelope-3 ~ 170 meters

Antelope-4    182 meters

Antelope-5 ~ 170 meters

Antelope-6 ~  12 meters as of March 3, 2016 at current drill depth of  2,330 meters (-2,144 meters sub sea)

                        Est. GWC at drill depth of 2,414 (-2,228 meters sub sea) Presently 84 meters above GWC.

                         If we have top of dolomite at 2,318 meters drill depth we would need another 84 meters of dolomite to have dolomite at the GWC.  Total of (84 + 12) 96 meters dolomite needed to have dolomite at the GWC. Total gas column 152 meters. 96 meters of dolomite and 56 meters of limestone cap. That would only be 56% of the amount of dolomite seen at Antelope-3 and Antelope-5.

If the 12 meters of dolomite is at the bottom of the present hole we could have dolomite the rest of the way to the gas/water contact. The least amount of dolomite we have seen in the other wells was 170 meters. If we have the minimum amount seen in the other wells the dolomite could extend to and well below the gas water contact.

I have always wanted to see a test just above the gas/water contact in rock with really good porosity and permeability so we could get a true evaluation of the liquid content of the formation and/or gas at that level. Of course in the back of my mind is the question: is the liquid black or clear? As I have mentioned before the only tests we have had near the gas/water contact have been in very low porosity and possibly fractured rock. In those cases the porosity and permeability of the matrix of the rock was probable too low to allow for the flow of liquids from the matrix of the rock. So the test would allow water to flow through the fractures but not the liquid (oil?) from the matrix of the rock. So for that reason I have always wanted to see a test near the gas/water contact in very good rock. Do we have higher liquid content gas (condensate) or is the liquid of a different color???

Antelope-6 may be our opportunity to get such a test. The present bottom of the hole is 2,330 drill depth which is 84 meters (275 feet) above the gas/water contact. If we add 12 meters to that we could have as much as 96 meters (314 feet) dolomite above the gas/water contact. As some of you may remember several years ago we had a theory, based on pressure analysis, that we had a 400 foot oil column. I believe that theory was around at Antelope-1 and was disproved by a water test in the horizontal well at Antelope-2.

So was the theory a dream or a nightmare? I don’t know but I would like to see a test in good rock in the 400 feet (121 meters) above the gas/water contact. The test reported was of an interval from 2,262 meters drill depth to 2330 meters drill depth. The top of this interval was 492 feet above the gas/water contact and the bottom of the interval was 275 feet above the gas/water contact. All they reported was the well produced 13 MMCFD but they did not tell us how much condensate per MMCF or give us the color. Sweet dreams!!!

ps: I would like to see them stop drilling a few feet above the gas/water contact, log and retest the entire open hole section. It would be good to see a test of the bottom only but we have been very unsuccessful in getting packers to hold in the open hole.

[bdahl385]

At this point in IOC's makeup, I am not sure the discovery of a commercial oil leg in the E/A field is that important.  5 years ago, it would have been a monumental game changer for IOC as they could have early monetization by producing the $100+/bbl oil, barging / trucking to their refinery.  The cash flow / profit margin improvement at the refinery would be enormous as feedstock costs would be next to nothing while selling petrol at retail pricing all over PNG.  Now the refinery is gone, sure they could sell oil to the new owners but at what, 30-35$ a barrel ?

How would the discovery of a "limited size" oil leg in E/A really help in the 2016 economic reality? Thoughts please.

[sageo]

I don't think they anticipated 40 feet of Dolomite . May have hoped for it ??Why they drilled this well ???Does this mean the eastern boundary is even further east .

Jft - I'm sure you know doggone well what this means ! I'm sure you just went back to page 17 of the Jan.2016 presentation by Goldman Sachs and reviewed that structure map again. Once you looked east (and slightly north) of Ant #1 and then you looked east(and slightly south) of Ant #4, the hair"stood up" on the back of your neck !! I think you are just testing us to see if we are alert . Have a good one.

[sageo]

At this point in IOC's makeup, I am not sure the discovery of a commercial oil leg in the E/A field is that important.  5 years ago, it would have been a monumental game changer for IOC as they could have early monetization by producing the $100+/bbl oil, barging / trucking to their refinery.  The cash flow / profit margin improvement at the refinery would be enormous as feedstock costs would be next to nothing while selling petrol at retail pricing all over PNG.  Now the refinery is gone, sure they could sell oil to the new owners but at what, 30-35$ a barrel ?

How would the discovery of a "limited size" oil leg in E/A really help in the 2016 economic reality? Thoughts please.

Bdahl- "Thoughts please". Okay ,here's my 2 cents worth. In the 2016 economic reality,maybe not much.....but in the 2018 to 2022 time frame,it could mean a lot more. You're right,the key word here is "could" . But if we might take it or not ,I would take it. [ as I stated, my 2 cents worth ...ha,ha.]  Best to you and yours.

[MartiniStocks9756]

I don't think they anticipated 40 feet of Dolomite . May have hoped for it ??Why they drilled this well ???Does this mean the eastern boundary is even further east .

Jft - I'm sure you know doggone well what this means ! I'm sure you just went back to page 17 of the Jan.2016 presentation by Goldman Sachs and reviewed that structure map again. Once you looked east (and slightly north) of Ant #1 and then you looked east(and slightly south) of Ant #4, the hair"stood up" on the back of your neck !! I think you are just testing us to see if we are alert . Have a good one.

Sageo I have no hair to stand up on the back of my neck and I looked and I looked and all I saw were colors and lines and the well locations.  I am not a geologist and enjoy all the technical discussion here ,but what good fortune may befall us.  And if you surmise something awesome when would they tell us anything.

[petrengr1]

At this point in IOC's makeup, I am not sure the discovery of a commercial oil leg in the E/A field is that important.  5 years ago, it would have been a monumental game changer for IOC as they could have early monetization by producing the $100+/bbl oil, barging / trucking to their refinery.  The cash flow / profit margin improvement at the refinery would be enormous as feedstock costs would be next to nothing while selling petrol at retail pricing all over PNG.  Now the refinery is gone, sure they could sell oil to the new owners but at what, 30-35$ a barrel ?

How would the discovery of a "limited size" oil leg in E/A really help in the 2016 economic reality? Thoughts please.

Bdahl- When I wrote the above post I was thinking in engineering and geological terms. What might be there? I was not trying to imply anything about economics.

As for what would be do with the oil we will not have to worry about that. Total will sell the oil and each of the JV partners would get their pro rata  share.

As for the "limitted size" oil leg is concerned, if we have dolomite along the gas/water contact and 200 - 300 feet of oil column I would not consider that "limitted size". Just for the record I do not think we have an oil column but I would not say that it is impossible until it has been tested in good high porosity rock.

The price of oil will not be $30/bbl forever. If we made an oil discovery Total probably would not sell any oil for several years. By the time the oil is sold I expect the price of oil to be much higher than it is today.

[petrengr1]

Pet - As aways,thanks very much for the March 1 post above. (great education you are providing us ! ) I thought we should be at least 100 ft into the reservoir antd it now looks like about 203 ft . ( close to 40 ft of dolomite as of today's report) .....hope at least one of those cores was in a fractured limestone area with good porosity. Looking forward to when you post your next "educating lesson".

Antelope-5-  There is a bit of a discrepancy between the data reported today as compared to the data reported on the first test http://tinyurl.com/q2lzmbq page 17. On the first test they say they produced 60 MMCFD through two 48/64” chokes. Now on this latest test they say they produced 57 MMCFD through a (one?) 48/64” choke. One or the other is incorrect.

The good news is, of course, that the new data has confirmed the connectivity between Antelope-5 and Antelope-1.

They are still evaluating the pressure buildup data to “quantify nearby reservoir properties”. I do not know what this means unless they are trying to prove the distance to the nearest fault. I assume that would be the western fault. As I have stated before I do not think they can learn much from a near instantaneous 2 psi pressure buildup but I wish them luck. I do not know what more they can learn about the permeability since we already know it is unbelievably high as proven by the 2 psi drawdown for 60 MMCFD.

We await the additional data of the reservoir pressure loss for the amount of gas produced which is what they would use to try to estimate the gas in place in the reservoir.

Antelope-6

I will try to tell you what we know and what we don’t know.  IOC has been using sub sea depths in all of their previous reports but today they switched to drill depth, just to keep us guessing.

They have previously reported that we topped the reservoir at -2,076 meters sub sea or about 76 meters lower than they had it mapped. The top of the pay would be at 2,262 meters drill depth. Today’s report says they cut four cores across the interval from 2,268 to 2,330 meters drill depth. They do not indicate if all of the interval was cored or part of it was drilled without coring but the depth of the hole is currently 2,330 meters drill depth (-2,144 meters sub sea). They say a 9 5/8” liner was set at the top of the zone (2,262 meters drill depth). So we have open hole from 2,262 meters drill depth to 2,330 meters drill depth or 68 meters (223 feet) . They tell us “Preliminary interpretation shows approximately 12 meters of dolomite is present in the drilled section.”  What we do not know is where the 12 meters of dolomite is in the 68 meters of drilled hole. Is it at the top of the zone, the middle of the zone or the bottom of the zone? It makes a big difference. The best possible scenario would be that they have high porosity limestone from 2,262 meters to 2,250 meters and then 12 meters of dolomite at the bottom of the hole. That would mean they were still drilling in dolomite when they decided to log and test. At Antelope-3 we had high porosity limestone above the dolomite section and the dolomite section was in about four different segments with limestone between the sections of dolomite. See the logs at http://tinyurl.com/l2j4c2w  page 17. So no matter where the dolomite section is in the drilled interval it is still possible that we will have more dolomite when they drill the rest of the hole. The bottom of the hole is presently at 2,230 meters drill depth or -2,144 meters sub sea. We know the gas/water contact is somewhere between -2,214 and -2,228 meters sub sea. IOC has been using -2,214 but Hession has said data from Antelope-4 and Antelope-5 indicate the gas/water contact may be lower than they had been using. The -2,228 meters sub sea number was from the GLJ report and I think it is the most likely depth for the gas/water contact. So using -2,228 meters sub sea we have another 84 meters (276 feet) to drill before reaching the gas/water contact. I think some of that formation yet to be drilled could be dolomite.

Now let’s look at the test data. On the surface it does not look too great, 13 MMCFD on a 40/64” choke. What we do not know here is whether or not they have a bottom hole choke in the DST tools, what the tubing (drill pipe) size is and whether or not we have formation damage caused by drilling fluids. If the dolomite is as good as previous wells 12 meters (39 feet)  of dolomite should produce more that 13 MMCFD on a 40/64” choke. They did not give us the flowing tubing pressure at the surface but I would guess it to be about 1,200 psi. So we have a lot of pressure loss for some reason...bottom hole choke, small tubulars and/or formation damage. As you know the reservoir pressure is about 3,500 psi. If we have formation damage they will determine that by analyzing  the bottom hole pressure build up data after they pull the DST tools and gauge. Formation damage in a high porosity limestone or dolomite can be corrected with hydrochloric acid.

I am looking forward to hearing about the final log and flow test information, if they do further testing.

Nice job Pet, as usual, on all your diligence and thorough analysis.  Here's some thoughts.  All comments welcome.

Well 5:  The release said this: "Preliminary analysis has confirmed the excellent reservoir quality and connectivity seen in the initial Antelope-5 production test conducted in mid-2015. The forward plan is to undertake further analysis to quantify nearby reservoir properties."

it's not surprising, but is disappointing that the "forward plan" is so vague.  I presume the meter is running on a lot of men and equipment waiting on further orders.  After drilling, logging, sampling and production testing, what else do they need to quantify nearby reservoir properties?  I'm guessing they may obtain rotary sidewalls from some key points of interest??  If so, then they may be already done.  Can't recall their statements but what else would they do on this well unless they screwed up something (e.g., corrupted data) and are considering what has to be repeated???  I have not heard of any plans to sidetrack, but that might be a remote possibility to obtain more rock samples further from the current location to better characterize the properties.  

Well 6: I suspect IOC is merely cutting and pasting TOTs report which relies on measured depth as the convention.  IOC doesn't want to create compound errors in TOT's report by translating it.  This keeps all accountability for erroneous statements on TOTs back.  My guess.  If the dolomite was at the bottom of the hole, then I think they would have continued drilling to have a larger section before testing.  I suspect that they likely drilled a long section of nonproductive rock below this dolomite section and concluded they may be out of the reservoir.  I.e., there may be nothing below. The flow test perhaps was conducted to see if this well was in a small, isolated reservoir OR whether this was connected to the main reservoir.  If an isolated box, then further drilling would be less likely to bear fruit.  But of course if connected, then they probably should continue to see if more reservoir rock is deeper.  The long buildup after the flow test is likely indicative of very tight rock.  If they are in a small separate reservoir, then the buildup would confirm that sooner.  The flow rate was certainly low.

Kaliboo

Kaliboo - I can not answer your questions but I will offer some comments on what you had to say.

Antelope-5

“The forward plan is to undertake further analysis to quantify nearby reservoir properties." I think this must refer to analysis of the pressure data obtained during the flow test and the two week shut-in period. As I have said I don’t see how they will get much information from the 2 psi buildup but they have people much more sophisticated in this field than I am so I wish them the best. Since they flowed the well for 2 weeks maybe they saw a further pressure drawdown if the pressure wave hit a boundary (fault). Maybe the pressure dropped another 1 or 2 psi after a few days into the test. If they think they have learned something I hope they will share it with us.

Given  the quality of this well (maybe the best well they have ever seen or heard about) I do not think we have to worry about them sidetracking.

Antelope-6

Yes, I think they are just quoting the information they have received from Total. Both Total and OilSearch usually report “drill depth” instead of sub sea depth.

I hope you have read my other post concerning why we might have some high porosity limestone above the dolomite and we may have three or four intervals of dolomite separated by limestone like we saw in Antelope-3, the nearest well. They could have drilled through the 12 meters of dolomite and into the next interval of limestone. Of course I do not where the 12 meters of dolomite in located nor do I know why they decided to stop drilling to log and test after drilling only about 66 meters (217 feet) below the casing shoe at 2,264 meters.

Your comment: “The long buildup after the flow test is likely indicative of very tight rock.”

Where did you see that they will have a long buildup after the test. I suspect they flowed the well 24 hours, shut it in for 24 hours and then resumed drilling. Yes, the rock very well could be tighter than the other wells but the lower flow rate and larger pressure draw down could be due to a shorter open hole section, mud damage or the lack of a fractured zone in the drilled section. With the much larger pressure drawdown at this well they should get some good data from the pressure buildup analysis. They will be able to see any formation damage near the well bore (skin effect) and they may be able to see any nearby boundary. As you know they found the top of the zone about 76 meters lower than they had it mapped. Maybe they wanted to see if there is a small fault near the well. I do not think there is a fault and I do not think, even if there is, such a small fault would be sealing from the main reservoir. If there was a nearby fault we would probably have had a higher flow rate due to fractures. Since it appears, based on the flow rate,  that we do not have a fractured zone then I believe there is no nearby fault.

From the IOC PR: “Once testing is complete it is planned to drill through the gas-water-contact to a proposed total depth of approximately 2,650 meters MDRT and then run a full suite of wireline logs. Once logs have been obtained, a decision will be made regarding the need for further testing.”

It appears that the plan is to drill straight to TD and then log. They will then decide if further testing is needed. I can not believe that they will not do more testing. So maybe they think the formation is going to be much worse than I have been suggesting. I hope not!

[Stavros]

Just the opposite Pet.
I suspect IOC thinks the formation is much better than you have suggested.

TOTAL says: "Listen Hession, we need more testing at A-6 to confirm IOC's position that the formation is even better than suggested by that guy on Shareholdersunite. He calls himself 'Petrengr1.' We'd like to hire him as our Chief Consultant. Do you have his contact information?"