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Tuesday May 16, 12:59 pm Eastern Time
Company Press Release
SOURCE: Digital Gas, Inc.
Digital Gas and Shengli Oilfield Agree to Expand Relationship
NEW YORK, May 16 /PRNewswire/ -- Digital Gas, Inc. (DIGG - Pink Sheets) today Digital Gas announced that its commercial relationship with Shengli Oilfield Petroleum Administration will expand to include international, in addition to domestic oil & gas production. The Shengli field is the second largest in China.
``Shengli and Digital Gas express their understanding of the important unique petroleum and gas technologies, techniques and expertise that each possess and wish to contribute to working together in mutual benefit and long-term cooperation both inside China and throughout the world,'' their agreement stated.
The agreement between Shengli and Digital encompasses the application of Digital's ``elite world class technology'' in drilling and completions, including underbalanced drilling, horizontal drilling and multilateral exploitation (offshore and onshore), reservoir enhancement, production optimization and new geological approaches. Production activity will begin this year in the Shengli field, located in China's Yellow River delta area on the Bohai Sea in Shandong Province. The Shengli Oilfield envelopes 28 counties and districts on both sides of the Yellow River estuary.
The partnership with Shengli will also involve Digital Gas sharing its international petroleum business negotiation and transaction strategies on a worldwide basis. The Digital Gas team has worked in over fifty countries, including, Indonesia, Venezuela, Brazil, Argentina, Colombia, Egypt, Scotland, England, Norway, Kazakhstan, Canada, United States, Peru, Russia, Malaysia, the former USSR and the Middle East.
Digital Gas, an advanced oil field technology and operational company, will advise Shengli in the expansion of its already proven petroleum and gas exploration and production technologies throughout China and the world. The partnership is also focused on advancing Shengli as a major ``service provider'' to the global oil & gas industry.
``This long-term agreement between Shengli and Digital is the result of a synergistic blending of compatible expertise, technology and production capabilities that will present highly beneficial opportunities throughout China and the world in the next several years,'' said John Kirk, the President and a Director of Qingdao Digital Gas. ``We are pleased and delighted to be in a partnership with the Shengli organization that has gained a world-class reputation for its accomplishments in the important
field of oil & gas production and technology advancement,'' added Mr. Kirk.
W. Brian Lunan, a Director of Digital Gas, is the leader of the technical team, as well is its Senior Reservoir Engineer
responsible for drilling practices involving over and underbalanced, vertical inclined and horizontal drilling, as well as problems involving O.O.I.P. reassessment conversion of existing logs to a Western style presentation. Mr. Lunan was formerly with Halliburton (HAL-NYSE), NL McCullough, NL Industries (NL-NYSE), Schlumberger Overseas, Phillips Petroleum (P-NYSE) and Uddeholms/D.N.N. in a variety of positions and has been involved in the drilling of 300 underbalanced wells, including major projects in North and South America, Europe and the Far East. Mr. Lunan was the Director of Training in Brazil and Argentina for Schlumberger (SLB-NYSE).
``From the work and communication conducted over the last year by Mr. Kirk and his staff involving numerous meetings with key decision makers from Shengli, our company has managed to gain and secure the trust of the Chinese oil and gas industry, and, in particular, the senior management of Shengli has been demonstrated by the expansion of the relationship between the two companies since last November. This basic trust has been cemented during the recent visits to China by working with the Chinese technocrats to demonstrate both Digital's technologies and methodologies, as well as the broader, cutting edge drilling techniques developed in the west. Digital Gas successfully demonstrated the significant benefits available to the oil and gas fields
of China and, in particular, the giant Shengli field. Our focus will be to implement advanced drilling and reservoir strategies and fully train key personnel of Shengli to work as highly motivated cross functional teams,'' added Mr. Lunan.
The Senior Petroleum Engineer on the Digital Gas team, who will be responsible for reservoir engineering, reserves evaluation and exploitation planning, is Chris Mothersele. Mr. Mothersele, was formerly with Gulf Canada Resources Ltd. (GOU-NYSE)as a Senior Staff Engineer and the person responsible for maintenance and quality of Gulfs reserves base. Mr. Mothersele is the recipient of three (3) Gulf CEO awards.
``The recent trip to China was successful beyond expectation and the team returns to China later this week for additional
technical discussions and to instigate our enhancement programs during a series of field visits. As an indication of the trust placed in Digital Gas, we have also been invited to evaluate, advise and, subsequently, to participate in additional business opportunities. To maximize this business in China in the near term, we are continuing to hold discussions with senior
management and representatives of other significant Chinese oil & gas companies. In a Memorandum of Intent with another
company, the stated objective of our cooperation is to enhance existing oil & gas production inside China and to accelerate our
potential partner's expansion into the international arena with Digital Gas as the preferred business and technology partner,'' said Christopher Mothersele.
The Senior Technical Analyst on the Digital Gas team, who will be responsible for the development and application of
chemicals for oil & gas production, including horizontal drilling, completions, production and EOR, is Lois McCorriston. Ms. McCorriston, an award winning chemist and a worldwide expert in advanced stimulations, formation damage evaluation and chemical optimization, was formerly with Gulf Canada Resources Limited as a Senior Technical Advisor until 1995 and recently with Halliburton Energy Services until 1999. She has numerous patents in her specialty area and was the recipient of the Pegasus Award in 1997, which was awarded by Mobil Oil for ``Outstanding Technical Work in Horizontal Wells.''
``From operations already conducted at Shengli, there exists the opportunity to exploit and produce bypassed pay. Following a review of the drilling practices conducted to date, it has become apparent that there exists the opportunity to improve on both the drilling and the formation evaluation process by applying new drilling technologies in an expedient manner to improve on
hydrocarbon recovery by drilling undamaged holes. Following a review of the Production and Completion practices conducted to date, we have agreed that there exists the opportunity to improve on these techniques by applying Western/Chinese technologies and methodologies to increase hydrocarbon recoveries. Following a review of the stimulation practices conducted to date, we have agreed that there exists an opportunity to improve production by using innovative Western/Chinese stimulation technologies and quality control to improve production. From the initial basic review of the Water and Gas Injection systems,
we have agreed that there exists an opportunity to improve hydrocarbon recoveries by introducing Western waterflooding,
miscible and gas flooding systems to repressure many areas of the Shengli field and to efficiently mobilize and recover more hydrocarbons. Following a review of the Basin in general, we have agreed that there exists the opportunity to do more exploration and development to exploit more hydrocarbons. The training of the Shengli personnel in all phases of the operations described above, will result in significantly improved production statistics. This will result because of the team's overall attention to detail allied to the correct and confident application of technologies in the field within highly motivated cross functional teams which are goal and result orientated,'' said Ms. McCorriston.
Digital Gas reports that it has already begun work analyzing the Yellow River Delta area of China, where there are a total of five depressions within an area of 65,000 square kilometers. Current development is mainly focused in the Jiyang Depression, with major production fields concentrated within an area of 10,000 square kilometers in the eastern part. Jiyang Depression is an oil/gas rich region, which management said hosts a major petroleum system. To date 17 types of reservoirs have been found. There are 18 types of pools such as structural, fault, hidden, as well as others. The enrichment is approximately 2 million tons per square kilometer. Over the past three decades more than 60 different oil/gas fields have been found and over 10,000
production wells have been drilled. The existence of a one million ton offshore oil field has also been established.
Commenting on the team's analysis of the Shengli field, Mr. Lunan stated that ``Our initial basic review of the logging operations and results conducted to date on the Shengli field indicates that there are hydrocarbon zones still behind pipe that have never been produced. There were also indications that many of the producing horizons were invaded and therefore damaged during the drilling process. By perforating and/or stimulating all these zones, i.e. removing this damage there will be increased
hydrocarbons from these formations. The level of recovery to be gained is still not certain, as very fast, thorough and efficient basic reservoir engineering work is still required to be conducted to determine the appropriate technologies required to enhance the Productivity Indices of these formations. In addition, improved basic drilling practices will improve hydrocarbon recoveries. Advanced drilling practices, such as Underbalanced Drilling, Horizontal and possibly Multilateral exploitation, will undoubtedly
vastly improve the recovery of the remaining hydrocarbon in the field. Initial improvement on hydrocarbon production by
application of UBD technologies can be up to 10 fold in terms of hydrocarbon flush production and up to 5 fold in terms of long term hydrocarbon production, when conducted as a horizontal drilling technology. Improving production and completion practices will entail simple measures for instance utilizing the Western technologies of improved artificial lift automation and Western advanced completion practices, including advanced cementing casing and liner design, perforating and production evaluation and optimization by running modern downhole sensors. Advanced Stimulation techniques using advanced quality control of the ingredients and field operations will improve the overall recovery of hydrocarbons by implementing and executing
advanced Acidizing and Fracturing technologies on existing and new wellbores. Detailed Vertex Simulation of individual wells and geological formations together with reservoir technology studies of the present Shengli field conditions will enable the joint teams to better plan, choose and implement advanced reservoir flooding strategies to improve overall field wide hydrocarbon recoveries.''
Jens F. Touborg, the Senior Geologist on the Digital Gas team, specializes in structural analysis, photogeology, remote sensing, integration of multiple geophysical/geochemical data sets with radar, LANDSAT, SPOT remote sensing data and taking photo-image enhancement to the field for use in detailed exploration follow-up. His field experience encompasses the following areas: Norway, Ghana, Zimbabwe, East and West Africa, Tunisia, Indonesia, Mexico, Greenland, Scotland, Western Alps, United States, the Middle East and throughout Canada. Mr. Touborg was a Senior Geologist at Urangesellschaft Canada, Marathon Oil and U.S. Steel (X-NYSE).
``After reviewing the Shengli Basin geology, I concluded that there exists the opportunity for new exploration approaches using integrated studies, such as high resolution airborne magnetics, satellite borne Radar and LANDSAT together with existing 3D and 4D seismic data sets. These will be utilized to map depth to basement, identify reactivated basement faults and subsidiary splays, Precambrian lithologies favorable for secondary porosity development and reservoir hosts and the detailed salt dome
tectonic patterns, as well as identify buried Precambrian hills and younger intrusive corridors. The multiscale
geological-geophysical approach will focus on developing new exploration guidelines and generate drill prospects around
existing fields and explore for deep basement targets,'' said Mr. Touborg.
``Training and building highly effective cross functional teams will be one of our most important commitments to Shengli. By teaching these advanced interactive training sessions in the classroom and in the field, the implementation of all new technologies and oil field processes in the Shengli fields will be efficient and cost effective. This will result in higher productivity and,
therefore, greater profitability,'' said Mr. Lunan.
For further information, contact Leo Murray at (212) 856-4496.
SOURCE: Digital Gas, Inc.
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