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Update IOC 28/5

May 29th, 2008 · 1 Comment

This remains a very curious story. Some points. Two weeks later, and they’ve drilled the grand total of 56 meters. A new gas kick was experienced after only 27 meters. We are somewhat mystified why they stopped drilling to do a second DST, perhaps because of that gas kick, perhaps they need to impress someone.

Impress is what they did, although the people who were impressed had to ponder over the press release for most of the day, as the buying kicked in only in the last half hour or so.

Perhaps they needed to verify some things, which is somewhat surprising as it is actually not that hard to figure out what was so impressive in the PR. They argued that if the skin in the well at the depths they’re measuring the gas flow would not have been damaged due to stabilization efforts (pumping mud into the well, things like that), it would probably flow at roughly 500MMcf per day.

Say what? Yes, indeed, that’s five times Elk1 flow rates. And we’re not even at total depth yet. Now, there are a couple of ifs and buts:

  • It’s a bit of a gimmick as a completely clean skin is too much to ask for at this moment, but it is our understanding that a relatively cleaned up skin can be achieved in a production well. Hey, you have to understand us correctly, we don’t ask for too much, half the flow rate would already do nicely..
  • It’s not a measured flow rate, but a guesstimate, albeit an informed one. As far as we’re concerned, it could be an overestimation by a factor of five, and the well would still be a monster.

Basically, we’re looking at something that is likely to be at least as large as Elk1, probably considerably larger. There is one potentially worrisome development though. They also flowed 245 barrels of water a day. Now, this could be water used to cool the drill that has gotten into the formation, or..

They say it’s apparent load water. We haven’t reached the water contact, that’s for sure (it would not flow gas if we had), so no ‘Elk2 like’ experience, at least for now. This is the only minor blemish we can see.

They’re drilling extremely careful, there is still chance of an oil leg, and we’re extremely curious about the results of DST no. 2. And we’re almost as curious why they have stopped drilling after less than 60 meters. Who needed convincing?

Raymond James has previously argued that they are in negotiations with people about all sorts of stuff (farming out drilling, 10% stake, LNG facility, we’re spoiled for choice here), so perhaps they needed to show off a little. But why the hurry?

In any case, the plot thickens, we really can see little reason why it shouldn’t go up further. All indications are that this is a monster of a well, and there could very well be an oil leg.

Tags: IOC

1 response so far ↓

  • 1 rory mcgowan // May 29, 2008 at 4:43 am

    with 3rd party drilling experts present ioc must have been told that the water was from the drilling.why would they test after only 60 meters?The reef might have been exposed,or fossils were present so they took a look. According to total dept only 100 ft to go? Will they keep drilling until water contact?