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Falklands Oil and Gas announces Loligo gas discovery

LONDON -- Falklands Oil and Gas Ltd (FOGL), an oil and gas exploration company focused on license areas to the south and east of the Falkland Islands, has announced that the Loligo exploration well is a gas discovery.

The Loligo well has proven a working hydrocarbon system in the northern part of the East Falkland basin. The results also demonstrate that Loligo is a viable stratigraphic trap. Initial well results indicate that the main hydrocarbon phase within the T1 to T5 aged reservoir objectives is gas, but it has not been possible to determine whether this gas has any liquid content.

Well 42/07-01 has been drilled to a depth of 4,043 m. FOGL is the operator of the well, holding a 75% interest. Its joint venture partner, Edison International Spa, holds the remaining 25% interest. The well penetrated six Tertiary aged reservoir objectives on prognosis. These comprise the T1, T1 deep, T2 (Trigg), T2 deep (Trigg deep), T3 (Three Bears) and T5 targets. These objectives had all been identified on the basis of their seismic amplitude responses. Very strong gas shows (C1 to C5) were encountered while drilling through each of these horizons. Analysis of the wireline log data indicates that all six targets comprise fine-grained sandstones, siltstones and claystones. 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-m vertical interval from 2,420 to 3,720 m. Petrophysical analysis of the T1 to T3 intervals, inclusive (2,420 to 2,885 m), indicates porosities ranging from 18% to 35% in the gas-bearing zones. 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 a net hydrocarbon-bearing reservoir of between 10 and 20 m.

Within the T5 target, two main hydrocarbon-bearing zones were encountered (3,462 to 3,558 m and 3,608 to 3,705 m). The net hydrocarbon-bearing reservoir in these two zones was 46 and 59 m, respectively. Porosities ranged between 23% and 30%, averaging 24%, and hydrocarbon saturations between 40% and 75%.

Attempts were made to obtain pressure data and collect fluid samples. This was unsuccessful, probably due to the fine-grained nature of sediments in the gas bearing zone and also, not having access to the specialized test equipment appropriate for this type of formation.

Further detailed evaluation of all the well data, together with the existing seismic is now required in order to better define reservoir distribution and more precisely map the channel systems. Determining the reservoir potential of the thin-bedded sandstones and siltstones using detailed petrophysical evaluation will be undertaken, once the sidewall core samples have been analyzed back in the UK. These studies will facilitate a better assessment of resource potential and also help define the work that will be required to further appraise this discovery over what is a large complex. The area of the previously mapped amplitude response at the target horizons, ranges from approximately 250 sq km at T2 to over 600 sq km at T1. The T5 hydrocarbon zones were better than expected, based on pre-drill estimates, but more work will now be required to define their areal extent.

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 US$200 million. A further announcement will be made, when the Scotia well is spudded.

09/17/2012

 

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