Bakersfield, CA-based Tri-Valley Oil & Gas Co., a subsidiary of Tri-Valley Corp., said last week that it is beginning operations to drill the Sunrise-Mayel No. 2 test well nearby Delano, CA, in its continuing plans to pursue what it believes may be the second largest natural gas field ever found on the West Coast. In April 2001, the company labeled its Sunrise Natural Gas Project as possibly “one of the largest onshore finds in more than half a century,” (see NGI, April 16, 2001).

The No. 1 test well encountered nearly 300 net feet of McClure Shale at 5,750 feet with an estimated 72 Bcf of gas in place in 160 acres surrounding the well site, as calculated by independent engineering firms. Tri-Valley said it has mapped approximately 6,600 acres of closure within its 8,300 leased acres, which would point toward an unproven potential in the range of 3 Tcf of natural gas in place for the project.

However, Tri-Valley said the zone permeability is low and the reservoir requires considerable stimulation to achieve commercial flow rates. The company pointed out that both ChevronTexaco and EOG Resources appear to have recently perfected a successful program that works in the oil phase of the zone approximately 2,000 feet down dip and 10 to 17 miles south of Tri-Valley’s discovery (see NGI, June 4, 2001).

The methodology involves drilling a horizontal leg well into the formation and then hydraulically fracturing the zone around the leg. “Unofficial reports of initial production rates exceeding 1,000 b/d of oil have greatly encouraged Tri-Valley since its Sunrise pay zone is five to six times thicker than the zones shown in the ChevronTexaco and EOG Resources publicly available well logs,” Tri-Valley said. “And natural gas typically moves more easily through a reservoir than liquids.”

A conventional vertical bore, the Sunrise-Mayel No. 1 was unable to sustain commercial flow rates from the zone, although it confirmed the presence of “substantial” natural gas. During the drilling of the No. 1, both ChevronTexaco and EOG Resources indicated they had achieved viable drill programs to exploit the “tight” McClure Shale, thus providing Tri-Valley and its drilling partners with an “extraordinary and timely” example of a successful project.

Tri-Valley said it plans to coordinate the drilling of the Sunrise-Mayel No. 2 with the removal of the Caza drilling rig from its present location some 15 miles southwest of the Sunrise drill site on the company’s Sonata #3-1 well, now awaiting a completion rig.

“These efficiencies minimize mobilization costs and are in the best interests of our drilling partners and shareholders,” said J. R. Kandle, president of Tri-Valley Oil & Gas Co.

The company said that due to the magnitude of the potential gas in place, it is eyeing the feasibility of a power generating plant in the area rather than just straight production sales into a nearby gas line. Such an arrangement could have a significant influence on the development potential of the Delano area from an agricultural employment base into a more industrial shaped economy.

“While we can never rule out risk in our business, it appears the horizontal/frac well approach could unlock a true company maker project with substantial rewards to our shareholders as well as our drilling partners,” said F. Lynn Blystone, CEO of Tri-Valley Corp., the publicly traded parent of Tri-Valley Oil & Gas Co. “This project is now past the exploration stage of risk and into the engineering development stage and we are very excited about the opportunity.”

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