Once again, they find oil. The plot thickens..

It’s a little curious and a little premature, so don’t get too excited. However, with these provisos, read the following press release:

New oil prospect in Gulf’s Antilope licence: Kalinoe
OIL was found in the lower part of the Antelope Reef reservoir within the Antelope-2 appraisal well in the Gulf province, Petromin PNG Holdings managing director Joshua Kalinoe announced. He said on Dec 1, Antelope-2 recorded the highest rate of high quality natural gas at 705 million cubic feet of gas per day (mmcfd), and condensate at rate of 11,200 barrels  day (bcpd), within the upper part of the Antelope Reef reservoir. Antelope-2 is a joint-venture appraisal well among Petromin PNG Holdings, Clarion Finance Pte and InterOil Corp. Mr Kalinoe said the indications of oil, if successfully tested to be a significant oil column and commercially viable, would completely change the economics of the second liquefied natural gas (LNG) project for PNG which was being driven by InterOil and Petromin. “While cleaning the wellbore to conduct drill stem test No. 3, oil shows were circulated to surface at the depth of 2,325m.”

——–[End of article]———

And a similar story:

Potential oil zone found
By ERIC TAPAKAU

INTEROIL and its partner Petromin PNG Holdings Ltd are steps away from becoming the country’s oil producers after striking a potential oil zone at the Antelope Reef reservoir. Petromin managing director Joshua Kalinoe announced yesterday the intersection of a potential oil zone in the lower part of the Antelope Reef reservoir within the Antelope-2 appraisal well, in the Gulf Province. This announcement comes about a week after financial services firm Morgan Stanley reported that InterOil was poised to become an oil producer.

Antelope-2 recently recorded the highest rate of high quality natural gas at 705 million cubic feet of gas per day (MMCFD), and condensate at rate of 11,200 barrels of condensate per day (BCPD), within the upper part of the Antelope Reef reservoir. Antelope-2 is a joint-venture appraisal well between Petromin PNG Holdings Ltd, Clarion Finance Pte and InterOil Corporation. The indications of oil, if successfully tested to be a significant oil column and commercially viable, will completely change the economics of the second liquefied natural gas project for Papua New Guinea which is being driven by InterOil and Petromin. “While cleaning the wellbore to conduct drill stem test No.3, oil shows were circulated to surface at the depth of 2,325 metres.

The well was then drilled ahead to 2,337.5 metres, when a drill break was encountered, and in drill samples recovered, light crude oil equivalent to 45 degrees API was extracted,” Mr Kalinoe said. “This is a very encouraging result, as it indicates that the top of an oil column under a column of gas may have been intersected.” The current operation includes a conventional core sampling program, followed by a wireline logging survey through the potential top oil zone. “Drill stem test (DST) number three will then be performed over the zone below 2330 metres to evaluate the nature of the oil indications, early this week,” Mr Kalinoe said.

He said the forward program after DST number three will be to drill ahead to total depth of about 2525 metres and possibly conduct a core sampling program as well. This, Mr Kalinoe said, would then be followed by a wireline logging survey and a possible test after a full log and well evaluation. Mr Kalinoe said that if a significant column of oil was discovered, the JV Partners would seek approval from the Department of Petroleum and Energy to conduct an extended well testing program, during the second quarter of 2010 to fully evaluate the reservoir fluids and structural properties, of the discovery.

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What does this mean? Well, no better person to explain than Petengr1:

Getit-Am I surprised that they found oil at 7626 feet (2325 meters)? No!!!!! I have given ample warning to everyone on this board, since November 24, 2009 that the top of the oil column was expected to be at 7600 feet drill depth.

http://messages.finance.yahoo.com/Busine…

I believe that I mentioned this again at least 6 or 7 times in posts since November 24 th.

It appears that they have decided to forget about getting a DST in the bottom of the gas zone for condensate content and just go for a test that will include the top of the oil zone. The fact that they got a drilling break at (2337.5 meters) 7667 feet is good news. That means that the bit entered a more porous zone and started drilling faster. The drilling break showed they had hit a porous streak in the oil zone so they apparently decided to start coring at that point. There was no indication how far they planned to core before doing the DST No. 3. I believe they were 67 feet into the oil zone when they started coring. We will have to see if they try to isolate the oil zone only for the test or if they include the lower part of the gas zone. I think we will begin to see them refer to this as the “high liquid content zone” instead of the oil zone. I believe they plan to produce the bottom of the gas zone along with the oil zone when they commence production to the stripping plant.

Reading between the lines, I believe they will do an “extended” production test on the oil zone after the rig is moved off to the next location. I would assume they still plan to drill the horizontal hole but things could change if they find significant thickness of a high porosity zone in the oil column. What Mr. Kalinoe is saying is they will get Government approval to flare the gas while they get “an extended test” on any significant oil column they find. This will allow them to test the well without the stripping plant and without the requirement that the gas must be re-injected.

If they want to test the “oil zone only” on an “extended test” after the rig moves off they will need to set and cement a 4 1/2″ liner at about 7600 feet or lower to isolate the gas zone below the 7” casing which is set at 7290 feet. So, at the present they have about 300 feet of the gas zone in the open hole along with any oil zone they find in either the vertical or horizontal hole(s).

What does surprise me? That this information is coming from Petromin PNG Holdings Ltd instead of the OPERATOR IOC.

Have a good evening/day/night depending on where you may be!!