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More Taranaki oil for TAG, but Kea’s Wingrove disappoints

More Taranaki oil for TAG, but Kea’s Wingrove disappoints

By Pattrick Smellie

Aug 12 (BusinessDesk) – Oil discoveries in the onshore Taranaki Mt Messenger formations continue to pile up for TAG Oil Ltd., but the first serious attempt to find oil and gas in the same structures by London-based Kea Petroleum have been abandoned.

TAG told the Toronto Stock Exchange overnight that it had completed flow testing on its Sidewinder-2 well in the Mt Messenger formation, had achieved strong gas flows and confirmed discovery of oil-bearing sands as being “of particular importance.”

TAG also confirmed the likely commerciality of the oil and gas discovery at its Cheal-1 well, with potential for it to produce at similar rates to its Cheal-B4ST well, which tested 360 barrels of oil and 240,000 cubic feet of gas per day.

“We continue to achieve excellent exploration results which indicate that TAG has potentially discovered a large oil and gas field at Sidewinder,” said chief executive Garth Johnson. In addition to the prolific main gas zone discovered, there are now two significant high-impact discovery zones to pursue in this acreage.

“This new Mt. Messenger oil discovery will add high net-back oil production to the around 5,000 barrels of oil equivalent of behind pipe awaiting commissioning of the Sidewinder production facilities," he said.

TAG said the Sidewinder-2 productive zones were in the shallow in the shallower Urenui formation and included oil-bearing sands found in the lower section of the Mt. Messenger formation, where the company recovered significant volumes of light oil during recent swab testing.

“Technical data suggests that this oil zone can produce at rates consistent with other established Mt. Messenger oil wells in the immediate area,” TAG said, and these sands would be a primary target for future exploration. In the meantime, TAG will commercialise oil production from the lower Mt. Messenger zone

Significant flows of dry natural gas were also achieved from the Urenui formation, at rates ranging from 1 to 2 million cubic feet of gas per day (167-333 barrels of oil equivalent per day).

TAG also had good news on its Cheal-1 exploration well, which intercepted oil-and-gas-bearing sands in the Mt. Messenger formation “producing substantial volumes of light oil during swab testing along with clean, dry gas at rates between 1.5 million to 3 million cubic feet per day,” the company said.

Cheal-C1 also encountered strong oil shows within a 73-metre-thick section of sandstone within the deeper Moki Formation. While commercial flow rates were not achieved, TAG said it believed the well had penetrated a "transitional zone.”

“Given the extensive oil shows recorded while drilling coupled with the excellent reservoir quality interpreted from electric logs, TAG will plan a new well that will directly target the Moki Formation prospect, drilled from a more optimal location on the structure,” the company said.

Kea told the London Stock Exchange its Wingrove-1 exploration well had found small quantities of oil, and had flow-tested at around 20 barrels a day, and would be abandoned.

While the company was “deeply disappointed” by the result, it was “in no way disheartened” and the board continues to believe the area to be oil charged,” pointing to the failure of early wells in the nearby Ngatoro and Cheal fields, which have since yielded commercial finds.

The Mount Messenger plays were also secondary to Kea's main play targets in the Tikorangi, Tariki and Mangahewa formations, with plans to drill an exploration well, Mauku-1, in the Felix structure in the first quarter of 2012.

“This target is estimated by the directors to have a resource potential, in the event of discovery, centred at approximately 600 BCF of gas, with approximately 20 million barrels of associated condensate (light oil, of high value),” Kea said.

(BusinessDesk)

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