Cambay-77H - Successful Well Test

The technical evaluation of the flowback and test data has been completed by RISC, a specialist oil & gas consulting company, with reservoir engineering personnel experienced in the Canadian Montney tight/shale gas play.  The Montney Formation is a major productive unit and possible analogue for the Y Zone reservoir of the Cambay Field due to its hybrid siltstone and shale content.  RISC designed the test programme to supplement the flowback data and acquire critical information that could be incorporated into a comprehensive production and deliverability model.

Key observations from the analyses of Cambay-77H flowback and test data are:

·     Oil to Gas Ratio (OGR)

·     Analysis of the data confirms that an OGR of ~100 bbls of liquids per MMscf of gas in the Cambay-77H area remains valid.  This ratio is 250% higher than expected, which was based upon Cambay-73 performance.

·     The significantly higher OGR has a material positive impact on the revenue stream from future Cambay horizontal wells.  Increased OGR adds ~40% revenue per MMscf of produced gas using price assumptions of US$8.00/Mscf and US$70/bbl for gas and oil respectively.

·     The high value and extensive gas market proximal to the Cambay PSC allows the Cambay JV to easily market the gas to accelerate oil production.  Dual products, which are readily sold into a premium energy market, cushion the economic impact of one product decreasing in value.

·     The upcoming Independent Reserves and Resource Certification will review this important parameter in the context of Cambay-77H well results.

·     Well Bore Configuration and Frac efficiency

·     Efficient lifting of additional oil to surface can be resolved by appropriately sized production tubulars and/or the use of artificial lift techniques.  Artificial lift techniques are common industry practice and already widely used in India.  With the appropriately sized tubulars in-place, the calibrated model predicted an initial production rate of 3.2MMscfe/d for Cambay-77H inclusive of the higher OGR.

·     The production test results confirm

·  Frac stim operational data is correct, and all fracs were successfully executed

·  That despite successful execution of the fracs, overall frac efficiency is ~25% according to the calibrated model

·  Partial impairment of the wellbore connection with the reservoir still exists and is currently being investigated

·  That mitigations, including core acquisition, should be incorporated into future well designs

·     Cambay-77H future production

·     The calibrated model forecasts ~360MMscfe to be recovered over ~3 years

 

 

Development Implications for the Cambay PSC Contract Area

·     Cambay-77H results provide a strong foundation for moving forward with development of the Cambay Contract Area and plans for the next drilling campaign are in progress.

·     The longer horizontal wells forming part of the next drilling campaign have been reassessed using the calibrated model and preliminary predictions of gas recovery are robust:

·     700m lateral with a frac spacing of ~80m is estimated to recover ~3.5Bcf gas in 10 years

·     1400m lateral with the same frac spacing is estimated to recover ~5.9Bcf gas in 10 years

·     This frac spacing is approximately double that in Cambay-77H and leads to significant cost reduction and risk mitigation

·     Indicative economics for these wells are very robust at current market prices for oil and gas

·     Analysis continues to achieve a suitable production history match for light oil/condensate

Reservoir data results

·     The Y zone permeability has been confirmed to be ~0.02mD and within the expected range.  This property has now been validated by 3 independent analyses.  This permeability is significantly better than classical "shale" plays in North America.

·     The reservoir pressure of ~4,330 psig has again been validated by the production test.  The overpressure has now been confirmed by a minimum of 3 different sources of data providing high confidence of its accuracy.

·     Oil and gas properties

·     Light oil/condensate averaged API 49.4º during the entire flow period.  It appears to be light sweet crude but further analysis of the latest samples is required to distinguish oil vs. condensate.  Stabilisation is readily achievable via simple separation after which it can be easily transported by truck to local refineries where it attracts a slight discount to Bonny Light crude oil.

·     Laboratory analysis indicates Cambay-77H gas has total inerts of ~3% including CO2 and no H2S has been detected.  Both of these results are very positive.  The same analysis also reports ~13% of the reservoir stream is Ethane, Propane and Butane (LPG's).  Recovery of LPG's for sale as separate products will be evaluated as part of expanding the production from Cambay field.  LPG's generally sell at a premium to the price of natural gas on an energy equivalent basis.

·     Subject to further engineering design work, minimal processing is anticipated to make the natural gas suitable for entry into the pipeline grid.

  

Key lessons

·     Oil and gas recovery started on the first day of flowback and gas sales during flowback operations in future wells is possible.  Planning for integrated flowback and production facilities has commenced to ensure immediate gas sales lead to faster payback.  Revenue during Cambay-77H flowback and testing would have been approximately US$750,000 with facilities in-place to sell gas.

·     Acquisition of geotechnical core data from the Cambay-77H area in a future well will form an essential part of the next drilling campaign.  Operations to date have been conducted without the benefit of modern core.  The detailed core analysis has been found to be very beneficial for optimisation of fracture treatments and production in North America.

·     The Plug and Perf completion method is appropriate for deployment in the Cambay Contract Area.  Larger diameter perforations are seen as part of the optimization strategy to minimise impairment of the connection between the reservoir and the well bore.

·     Operations water recovery is likely to be at the high end of expectation and North American experience and large water handling facilities are essential given operations water recovery rates exceeding 3000bwpd from a short 350m lateral section in Cambay-77H.

 

LIST OF ABBREVIATIONS AND DEFINITIONS

API	A unit of measurement established by the American Petroleum Institute (API) that indicates the density of a liquid. Fresh water has an API density of 10.
Associated Gas	Natural gas found in contact with or dissolved in crude oil in the reservoir. It can be further categorized as Gas-Cap Gas or Solution Gas.
Bbls	Barrels of oil or condensate.
BBO	Billion standard barrels of oil or condensate
BCF	Billion Cubic Feet of gas at standard temperature and pressure conditions
BCFE	Billion Cubic Feet Equivalent of gas at standard temperature and pressure conditions.
BOE	Barrels of Oil Equivalent. Converting gas volumes to the oil equivalent is customarily done on the basis of the nominal heating content or calorific value of the fuel.  Common industry gas conversion factors usually range between 1 barrel of oil equivalent (BOE) = 5,600 standard cubic feet (scf) of gas to 1 BOE = 6,000 scf. Oilex currently uses 5,800 scf = 1 BOE
BOPD	Barrels of oil per day.
bwpd	Abbreviation for barrels of water per day, a common unit of measurement for the daily volume of produced water.
Condensate	A natural gas liquid with a low vapor pressure compared with natural gasoline and liquefied petroleum gas. Condensate is mainly composed of propane, butane, pentane and heavier hydrocarbon fractions. The condensate is not only generated into the reservoir, it is also formed when liquid drops out, or condenses, from a gas stream in pipelines or surface facilities.
Core Analysis	Laboratory study of a sample of a geologic formation, usually reservoir rock, taken during or after drilling a well. Economic and efficient oil and gas production is highly dependent on understanding key properties of reservoir rock, such as porosity, permeability, and wettability. Geoscientists have developed a variety of approaches, including log and core analysis techniques, to measure these properties. Core analysis is especially important in shale reservoirs because of the vertical and lateral heterogeneity of the rocks. Core analysis can include evaluation of rock properties and anisotropy; organic matter content, maturity, and type; fluid content; fluid sensitivity; and geomechanical properties. This information can be used to calibrate log and seismic measurements and to help in well and completion design, well placement, and other aspects of reservoir production.
CO2	Carbon dioxide
Contingent Resources	Those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations by application of development projects, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingent Resources may include, for example, projects for which there are currently no viable markets, or where commercial recovery is dependent on technology under development, or where evaluation of the accumulation is insufficient to clearly assess commerciality. Contingent Resources are further categorized in accordance with the level of certainty associated with the estimates and may be sub-classified based on project maturity and/or characterised by their economic status.
Hydraulic Fracturing	http://www.energy4me.org/hydraulicfracturing/inside-fracturing/tour-fracturing-site/
OGR	Oil to gas ratio in an oil field, calculated using measured natural gas and crude oil volumes at stated conditions. The gas/oil ratio may be the solution gas/oil, symbol Rs; produced gas/oil ratio, symbol Rp; or another suitably defined ratio of gas production to oil production. Volumes measured in scf and bbls.
H2S	Hydrogen sulphide. An extraordinarily poisonous gas with a molecular formula of H2S. At low concentrations, H2S has the odor of rotten eggs, but at higher, lethal concentrations, it is odorless. H2S is hazardous to workers and a few seconds of exposure at relatively low concentrations can be lethal, but exposure to lower concentrations can also be harmful
LPG	(Liquefied Petroleum Gas) Gas mainly composed of propane and butane, which has been liquefied at low temperatures and moderate pressures. The gas is obtainable from refinery gases or after the cracking process of crude oil. Liquefied petroleum gas is also called bottle gas. At atmospheric pressure, it is easily converted into gas and can be used industrially or domestically. The term is commonly abbreviated as LPG.
mD	(Millidarcy) A darcy (or darcy unit) and millidarcy (md or mD) are units of permeability, named after Henry Darcy. They are not SI units, but they are widely used in petroleum engineering and geology. Like other measures of permeability, a darcy has dimensional units in length².
MSCFD	Thousand standard cubic feet (of gas) per day
MMscfd	Million standard cubic feet of gas per day.
MMbbls	Million barrels of oil or condensate.
MMBO	Million standard barrels of oil or condensate
MMSCFD	Million standard cubic feet (of gas) per day
MMscfe/d	Million standard cubic feet equivalent of gas a day (~172.4 bbls of oil per day using 5,800 scf per bbl)
MMscfe	Million standard cubic feet equivalent of gas (~172.4 bbls of oil using 5,800 scf per bbl)
PSC	Production Sharing Contract
psig	pounds per square inch gauge
MD	Measured Depth.
Prospective Resources	Those quantities of petroleum which are estimated, as of a given date, to be potentially recoverable from undiscovered accumulations.
Plug and Perf	The wellbore for a plug and perf job is generally composed of standard steel casing, cemented or uncemented, set in the drilled hole. Once the drilling rig has been removed, a coiled tubing unit or wireline truck is used to perforate near the bottom of the well, and then fracturing fluid is pumped. Then the coiled tubing unit or wireline truck sets a plug in the well to temporarily seal off that section so the next section of the wellbore can be treated. Another stage is pumped, and the process is repeated along the horizontal length of the wellbore.
Reserves	Reserves are those quantities of petroleum anticipated to be commercially recoverable by application of development projects to known accumulations from a given date forward under defined conditions. Proved Reserves are those quantities of petroleum, which by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be commercially recoverable, from a given date forward, from known reservoirs and under defined economic conditions, operating methods and government regulations. Probable Reserves are those additional Reserves which analysis of geoscience and engineering data indicate are less likely to be recovered than Proved Reserves but more certain to be recovered than Possible Reserves. Possible Reserves are those additional reserves which analysis of geoscience and engineering data indicate are less likely to be recoverable than Probable Reserves. P90 refers to the quantity for which it is estimated there is at least a 90% probability the actual quantity recovered will equal or exceed. P50 refers to the quantity for which it is estimated there is at least a 50% probability the actual quantity recovered will equal or exceed. P10 refers to the quantity for which it is estimated there is at least a 10% probability the actual quantity recovered will equal or exceed.
SCF/BBL	Standard cubic feet (of gas) per barrel (of oil).
Tight Gas Reservoir	The reservoir cannot be produced at economic flow rates or recover economic volumes of natural gas unless the well is stimulated by a large hydraulic fracture treatment, a horizontal wellbore, or by using multilateral wellbores.
Undiscovered in place volume	Is that quantity of petroleum estimated, as of a given date, to be contained within accumulations yet to be discovered