NGI The Weekly Gas Market Report
Deep drilling in the southwest end of California’s central SanJoaquin Valley is awaiting more testing work to prove that backers’claims of substantial new oil and gas supplies below 15,000-footdepths are, in fact, commercially available.
Tri-Valley Oil & Gas Co., operator of the Project Ekho No.1well about 45 miles northwest of Bakersfield, says it isextensively evaluating procedures since California oil and gasfields have no history of fracturing at extreme depths, let alonethe high temperatures and pressures involved in Ekho.
Spurred on in part by the current sky-high natural gas pricesand prospects for them continuing to be well above historicaverages, Tri-Valley’s latest move is to attempt to fracture adeep-lying tight sand formation at the 18,100 to 18,600 level,according to Lynn Blystone, Tri-Valley’s Bakersfield-based CEO whojust returned from two weeks scouting longer term E&P prospectsin the Middle East.
An internal document from Tri-Valley called the fracturing “apioneering effort to disprove the old and outdated concepts of overtwo decades ago” that are skeptical about fracturing at theseexcessive depths, temperatures and pressures for which there isrelatively little precedent.
“There has never been anything done in California like this,”Blystone said. “It is not impossible; it is just going to require alot of (pre-drilling) modeling to give us a good first shot to doit.
“If we successfully fracture this well, we have a super giantoil field with a huge amount of associated natural gas.”
An experienced geological engineer who is familiar withCalifornia’s San Joaquin Valley said it has been commonly known inthe industry that formations at the super-depths “are tight and assuch, probably not producible.”
Hoping to complete the fracturing by year end, Blystone said thecurrent estimates for the Ekho No.1 well-the first of a seriesTri-Valley intends to drill with backing from a number of smallCanadian producers-envision up to 15 million barrels of oil andabout 18.3 Bcf of associated natural gas.
“When we frac[ture] this well we are going to have a field,”Blystone said. “Because when we drilled the well earlier we werelooking for a fractured formation already in place to get theproduction. This particular hole is not fractured, so we are intight sand. If we can show that the tight sand can be fractured,then we are okay.
“We’re looking at potentially $500 million (worth of oil andgas) out of this one hole; that is why we are really testing thiscarefully to get the right protocol.”
Blystone said the fracturing is a continuation of the ongoingtesting and will not drive up the E&P program’s budgeted cost.He maintains that even with the need to fracture on well No. 1,Tri-Valley’s costs will be “half the cost” of what a rivalCanadian-based deep-drilling effort is spending-per-well onneighboring acreage.
The California geological engineer/consultant said fracturing atthe extreme depths “will certainly add to the cost considerably,”noting that keeping fractures open below 15,000-foot depths becomesa real problem and the use of “gels” or special agents are appliedin response.
“Technically, it is possible,” the engineer/consultant said.”The real question is the economic viability. If gas prices stayhigh, though, I suppose it can be done.”
“As long as you know that you can get production by fracing,then no one is going to squawk at the added cost,” Blystone said.”We demonstrated with this well that the oil and gas we postulatedwas there is present. Now we just have to make it commerciallyavailable.”
In an internal document dated Sept. 28 and aimed at answeringskeptics on the Tri-Valley board, itself, Joe Kandle, Tri-Valleypresident, projects in oil alone that Ekho first well could bringin $600 million gross revenues, based on $40/barrel prices thatoccurred in recent months.
The internal communications said Tri-Valley has the potential todrill up to 50 locations in a 320-acre block tied to Ekho No.1.Extrapolating the bullish expectations for this first well for allof the additional ones, and the projections get into the billionsof dollars of gross revenues.
©Copyright 2000 Intelligence Press, Inc. All rightsreserved. The preceding news report may not be republished orredistributed in whole or in part without prior written consent ofIntelligence Press, Inc.
© 2020 Natural Gas Intelligence. All rights reserved.
ISSN © 2577-9877 | ISSN © 1532-1266 |