Coastal Energy Adds More Barrels Through The Drillbit Despite Complex Geology In The Gulf Of Thailand
oilbarrel.com
Coastal Energy, the Canadian E&P with operations in Thailand, has announced a discovery with its high impact Bua Ban North exploration well. This is significant as it confirms the extension of the play into the northern part of the company’s Gulf of Thailand acreage, although a key formation was found to be too tight to flow naturally. The shares retreated 36 pence on AIM to close at 420 pence on Thursday as the market digested news of the operational update.
First, the good news. The Bua Ban North well encountered 32 feet of net pay in the Miocene and 27 feet in the Upper Oligocene, with average porosity of 25 per cent. Pre-drill, these two formations were reckoned to have the potential to hold 15 million barrels each of unrisked prospective recoverable resources. Flow testing will get underway once facilities installation is complete.
The Eocene, however, was found some 700 feet deeper than expected and the 70 feet of oil-bearing sands encountered here are considered too tight to flow naturally. This formation carried a pre-drill estimate of 45 million barrels so its low permeability and porosity (about 14 per cent) is something of a blow to the volumetrics at Bua Ban North.
A second well on Bua Ban North has now spudded and will test Miocene, Oligocene, and Eocene targets similar to those in the first well in an upthrown fault block. According to CEO Randy Bartley, this well is in an area where the Eocene is believed to be significantly shallower and should exhibit higher porosity and permeability.
Bartley expressed himself “very pleased” with the results of the Bua Ban North well. “The discovery in the Miocene gives further evidence of a larger Miocene trend in the Songkhla basin,” he said. “The discovery of productive Upper Oligocene sands also opens up a new potential zone in the basin for exploration and development.”
The disappointment of the Eocene at Bua Ban North well is not the only reason for the muted market reaction. The company, which is also listed in Toronto, has also been having some production issues with its producing Bua Ban field, where output is running at 2,000 bpd from four wells. This is down from 4,000 bpd at the time of the Q3 results in November 2010.
Two wells, Bua Ban A-04 and A-07, are currently offline following frac stimulations and the installation of submersible pumps. At the time of last week’s update, the A-07 well was producing frac water at a rate of 450 bpd with a 60 per cent oil cut while the A-04 well was still shut-in for pump installation.
Bartley said the company was looking at ways to increase flow rates from the reservoir. “We are adding additional water supply to increase injection and improve reservoir performance as well as evaluating development of the reservoir with horizontal wells and fracture stimulation," he said.
The company’s main producing asset is the Songkhla field, which produces about 8,500 bpd (this is up from 7,500 bpd in January). Recent exploration and appraisal drilling here has added over 40 million barrels of oil in place in the so-called Oligocene Wedge, with porosities ranging from 15 to 20 per cent, and an additional 40 million barrels of oil in place in the Eocene, with porosities ranging from 16.5 to 21 per cent. These count as new discoveries because the geology is highly faulted with the reservoirs separated from the Songkhla Main reservoir by large faults.
A sidetrack of the Songkhla A-07 well has successfully appraised the recent discovery made by the A-09 well, encountering 45 feet of net pay in the Lower Oligocene (18 per cent porosity) and 33 feet of net pay in the Eocene (17 per cent). The well has flow tested at a rate of 800 bpd. The A-12 discovery well has been tied into production facilities and is producing 1,600 bpd while the A-11 discovery well is producing 150 bpd from the Eocene interval; the 44 feet of pay in the Oligocene will be perforated and brought into production using a workover unit.
The Benjarong field to the south is something of a wash-out. Following fraccing, the A-01 well is producing around 200 bpd of fluid with a 95 per cent oil while the Benjarong A-02 well appears to be non-productive. This is disappointing but it has always been the poor relation of the other two offshore fields.
There is more exploration work to come as part of a multi-well campaign that by June 2011 will have tested 150 million barrels of prospective resources. These include the test of the Miocene potential at Bua Ban South, which could hold 35 million barrels, and in Q2 the test of an unconventional oil shale play, the Lacustrine, the source rock between the Lower Oligocene and Eocene reservoirs.
Speaking at Oilbarrel.com’s January 2011 conference, Bartley was obviously excited by the potential of the Lacustrine, which will be tested at the Bua Ban Main reservoir where it was cored in the Bua Ban A-09 well. “The core was over 145 feet, it was bleeding oil and there was fracturing every foot and a half in the shale,” said Bartley. A horizontal well will be drilled late in Q2 to test this potential, which the company reckons could be a 50 to 100 million barrel resource. |
