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Gold/Mining/Energy : KOB.TO - East Lost Hills & GSJB joint venture -- Ignore unavailable to you. Want to Upgrade?

To: Bearcatbob who wrote (11912)	9/20/2000 4:59:41 PM
From: kingfisher	Read Replies (1) \| Respond to of 15703

BKP hit $8.25 today.Fort Liard production problems? This from Purcell Web Site. ................................................. STATUS OF FORT LIARD K-29 WELL - SEPTEMBER 15, 2000 For several weeks, Purcell has received inquiries from shareholders about rumours of "water problems" at the Chevron et al K-29 well located in southwestern Northwest Territories. These rumours were prompted by water production at the Ranger et al P-66 well located nine miles north of K-29. The P-66 well is in a lower, separate pool from the K-29 gas pool and its performance has no bearing on K-29. Once the K-29 well reached stabilized production of 75 mmcf/d of raw gas, based on the original K-29 production test data, Purcell expected 6 barrels of condensate water to be produced per million cubic feet of gas. The K-29 well has produced over 8 bcf of raw gas since commencing production at the end of April, 2000. As previously reported (News Release - August 22, 2000), the substantial gas reserves attributed to the property were confirmed by the pressure buildup data gathered during a two week shut-in period in July (after cumulative raw gas production of over 4 bcf at that time). The pressure data also indicated that the K-29 gas pool does not have an active water drive (as did the Beaver River pool) and may not be connected to the M-25 well located 3.5 miles south of K-29. Production data for K-29 indicated a pressure drawdown at the reservoir of only 8% when the well is producing at 75 mmcf/d (compared to much higher levels for the Pointed Mountain wells). Water production at K-29 gradually increased over four months to a rate slightly over 8 barrels per million cubic feet by the first week of September. An unrelated disruption at the K-29 facility September 6th to 9th caused a shutdown of production. When production started up on September 9th water production increased to 12-13 barrels per million cubic feet of gas. What does this mean? The well is not "watering-out": The K-29 well has a gas column estimated at 1200 feet. With the low pressure drawdown of 8%, production at high rates is not "coning" bottom water. The K-29 flowing pressures will support water production of up to 150 barrels per million cubic feet of gas through the seven inch production tubing. Higher levels of water production can be managed by expanding water handling capabilities at the K-29 facility. This is not required at the present time. Currently, the operator of the K-29 well has restricted the well to 60 mmcf/d to investigate whether or not this impacts the water/gas production ratio. There may be several reasons for increased water production: The K-29 reservoir is highly fractured with good permeability and "vuggy" porosity. Pressure buildup data indicates secondary contribution from matrix porosity. Based on 3D seismic data, the K-29 well was drilled close to the leading edge of the fault at a structural high point. The K-29 producing zone was completed "open hole" which means production casing was not used. Casing was only run to the top of the Nahanni zone. This completion technique differs from the one used in the Pointed Mountain and Kotaneelee gas pools. In these pools, the wells were cased to the bottom of the zone and perforated in the upper fracture sections. In the K-29 well the entire zone is open which enables gas to flow from all fractures from the top to the bottom of the zone and, also, provides the opportunity for fractures at the bottom of the well bore to tap into bottom water as the gas is produced. Another possibility is that the K-29 wellbore is accessing pockets of trapped water within the Nahanni zone (sometimes called "perched water"). Based on log analysis, this is possibly the cause of the P-66 water production. Depending on future water production rates, a recompletion program could be done to run production casing to close off these fractures and reduce water production. Another possibility is that the K-29 open hole completion has encountered fracture stringers containing water. The K-29 well will continue to produce at high rates and generate substantial cash flow: Although water production can cause operating headaches, engineering solutions are available. In Purcell's opinion, we do not have a reservoir problem and substantial gas reserves will be produced from the well. We estimate K-29 production for the month of September will generate net operating income to Purcell (after all costs, expenses and royalties) of approximately $1.4 million.