InterOil is presenting it’s case at a Raymond James conference today, and in the presentation slides, apart from giving a good summary, there are some interesting titbits. Really interesting….

First something amazing. That whopping gas flow of 382MMcf/d produced last week was not only through just 30% of the pipe (the rest was closed, presumably from security reasons), it also drew gas and liquids from just the top 12% of the reservoir.

Nothing below 1985 meters contributed to that enormous gas flow, due to the super-high permeability of the highest 12% section.

This is very significant, for a number of reasons:

• One can only imagine the gas flows from the whole reservoir
• Liquid content, at 12barrels per MMcf, will significantly increase with depth.

Liquids were already flowing to the tune of 5000b/d, so this will improve significantly when lower sections are drawn upon. On page 37 you can read that they will perform multiple DST tests on these lower parts (well, that is, the 88% of the reservoir that didn’t contribute to the flow test).

This means that the liquids themselves now really come into play, there can hardly be any doubt about that. But there is more. If liquid content increases with depth, and there is quite a bit of depth to explore (remember, this is the largest vertical reef zone in the world), there might come a point that the liquids will change into, well, something even more interesting…

Oil.

This is already a bit more than just speculation. CISRO, a renowned Australian engineering bureau (and inventor of the ‘ultra battery’, for instance, on which we will write in the near future) argued that the gas at Antelope is likely to come from an oil system.

They are currently sidetracking the Antelope1 well and will perform a series of DST tests on different sections, not only for the likely increased liquids content, but the fourth DST test, on that page 37, explicitly states that it will test for oil.

We say, all bets are off..

We’ll know fairly soon..