Falkland Oil and Gas Ltd announced Monday that the well drilled to the East of the Falkland Islands to a depth of over 4.000 meters is a gas discovery. The statement comes after a rough week for FOGL when its shares plummeted following poor and unfounded press coverage.
“The Loligo well has proven a working hydrocarbon system in the northern part of the East Falkland basin. The results also demonstrate that Loligo (prospect) is a viable stratigraphic trap. It is clear from the initial well results that the main hydrocarbon phase within the T1 to T5 aged reservoir objectives is gas” point out the company’s release.
However “it has not been possible to determine whether this gas has any liquid content”, but “gas bearing zones were encountered over a 1,300 meter vertical interval from 2,420 to 3,720 meters.
Well 42/07-01 was drilled to a depth of 4,043 meters with FOGL as operator of the well, holding a 75% interest with joint venture partner Edison International Spa holding the remaining 25%.
According to the release the well penetrated six Tertiary aged reservoir objectives on prognosis comprising T1, T1 deep, T2 (Trigg), T2 deep (Trigg deep), T3 (Three Bears) and T5 targets, all of which had been identified on the basis of their seismic amplitude responses.
“Very strong gas shows (C1 to C5) were encountered whilst drilling through each of these horizons. Analysis of the wire-line log data indicates that all six targets comprise fine grained sandstones, siltstones and clay-stones. FOGL interprets that these sediments have been deposited either outside, or at the distal (outer) end of the slope channel system”.
Gas bearing zones were encountered over a 1,300 meters vertical interval from 2,420 to 3,720 meters. Petro-physical analysis of the T1 to T3 intervals inclusive (2,420 to 2,885 meters) indicates porosities ranging from 18% to 35% in the gas bearing zones.
But “due to the thin bedded nature of these sediments it is difficult to assess precisely both hydrocarbon saturation and the total net hydrocarbon bearing reservoir.
Preliminary estimates however, suggest hydrocarbon saturations ranging from 40% to 60% and net hydrocarbon bearing reservoir of between 10 and 20 meters.
Within the T5 target two main hydrocarbon bearing zones were encountered (3,462 to 3,558 meters and 3,608 to 3,705 meters). The net hydrocarbon bearing reservoir in these two zones was 46 and 59 meters respectively. Porosities ranged between 23% and 30%, averaging 24% and hydrocarbon saturations between 40% and 75%.
FOGL now intends to plug and abandon the well, which is expected to take approximately 10 days. FOGL and Edison believe that it would be premature to drill a second well on Loligo at the current approved location (Loligo north-west) before having undertaken detailed analysis of the current well results.
Accordingly “the decision has been taken that the next well will be on the Scotia prospect in the Mid Cretaceous fan play. On the basis that Scotia is also drilled within budget, it is estimated that the Company's cash balance post the 2012 exploration campaign will not be less than 200m dollars.
FOGL CEO Tim Bushell said that Loligo is a valid trap that contains multiple gas bearing zones, with over 100 meters of hydrocarbon bearing reservoir and “we now need to focus on reservoir distribution within Loligo in order to find the sweet spots. A work program will be undertaken to achieve this, assess the resource potential and commercial viability of this discovery”.
“We now have a positive result from one of our major exploration prospects. This, together with the results from our next well, will help determine the priorities for our future exploration efforts. With our partners Noble Energy and Edison, we have the technical resources and funding in place to carry out substantial 3D surveys, followed by further drilling in 2014” said CEO Bushell.