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AWE hits Oi problems

SYDNEY, Australia -- AWE, as operator of Petroleum Mining Permit 38158 offshore Taranaki, New Zealand, advises that due to operational challenges in managing near surface unconsolidated formations the Oi-1 exploration well will be abandoned and a new well, Oi-2, will be drilled from an adjacent location.

The semi-submersible rig Kan Tan IV has been moved 150 m to the new well location and preparations were being made to commence drilling the Oi-2 exploration well.
 
The Oi-1 exploration well was drilled to a planned depth of 1,507 m in a 17½ -in. hole. Installation of a 13 3/8-in. casing was not completed due to well bore instability at a shallow depth. Subsequent attempts to sidetrack the well were unsuccessful and, consequently, the JV decided to abandon the Oi-1 well.
 
AWE has revised the drilling program for the Oi-2 exploration well to further mitigate risks of near surface well bore instability and to then continue the program as previously planned. A 17 ½-in. hole will be drilled to a shallower depth of approximately 550 m and a 13 3/8-in. casing will be set to enable a drilling fluid system to be established and improve management of conditions in the well bore. A 12 ¼-in. hole will then be drilled to approximately 1,500 m before a 9 5/8-in. casing is set. An 8 ½-in. hole will then be drilled to a planned target depth of 3,881 m.
 
The Oi-2 exploration well is located approximately 12 km northeast of the Tui Area Oil Fields in water depth of approximately 120 m. The well objective is to evaluate the hydrocarbon potential of a 4-way dip closed structure similar to the producing Tui, Amokura and Pateke fields and it will target the same F10 reservoir sandstones.
 
The Oi prospect, in a discovery success case, represents a best estimate Prospective Resource of 11 MMbbl of recoverable oil. In the event of a commercial discovery, it is envisaged that any subsequent development of the Oi field would involve a tie back to the nearby Tui production facility, the FPSO “Umuroa”, where sufficient production capacity is available.
 
AWE is participating in the Oi exploration wells at a reduced equity of 31.25% and has the option to increase its equity participation in any future appraisal drilling and development to 57.5% by exercising existing buyback provisions. Gross dry hole drilling costs for the Oi program have been revised and are now estimated at $40 million. The Oi drilling program is now estimated to take approximately 46-48 days to complete.
 
The JV partners in PMP 38158 are: AWE Limited (via subsidiaries - operator) 57.50%; New Zealand Oil & Gas (via subsidiaries) 27.50%; and Pan Pacific Petroleum (via subsidiaries) 15.00%.
 
The JV partners in the Oi-1 exploration well are: AWE Limited (via subsidiaries - operator) 31.25%; New Zealand Oil & Gas (via subsidiaries) 18.75%; and Pan Pacific Petroleum (via subsidiaries) 50.00%.

06/10/2014

 

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