Update Marts 10.
March 10, 2011
Question and Answer with CEO, Mr. David Worrall
Q) What is the process now since we hit Total depth ("TD")?
A) First we have to run wireline logs to obtain electrical measurements on the properties of the rocks and the fluid inside the rocks. This will identify the thickness of the gas column and the quality of the reservoirs present across the various intervals. It also tells us which intervals to focus on for the testing phase. Sometimes the log data does not provide a definite results and we need to flow the well and collect pressure data to assist in describing the properties of the rocks and the fluids.
Then we run the 7 inch casing from the bottom (around 3520m) up to the surface and then cement this in place. We pump liquid cement down the casing and circulate it back up the annulus between the casing and the wellbore, then let this thicken and harden for around 24 hours.
Then we can begin testing operations, by running 'tubing conveyed perforating guns' down opposite the reservoir section we want to test, plus downhole testing equipment and 2.3/8 inch tubing (with an internal diameter around 2 inches). We prepare the surface piping and the separator and then detonate the perforating guns to start the testing. We make sure the pressure inside the casing around the guns is lower than the reservoir pressure so that the gas will flow immediately. This is called 'underbalance' perforating.
The testing plan is to flow immediately for 12 hours, to see the performance of the well before we acidize. Then we stimulate with hydrochloric acid and some special chemicals that divert the acid into numerous parts of the rock. Then flow again for the main flow period of 48 hours to get stable flow rates and to prove the long term production potential. Then we shut the well for 48 hours to allow the pressures to recover and this data tells us more about the rock properties, and if the data quality is good enough, about the extent of the reservoir away from the well. Then we suspend the interval and move up the hole to the next interval of interest and repeat the testing procedure.
Q) As stated in the March 7, 2011 News Release, does the low porosity seen on the logs affect the potential of the field?
A) In fractured carbonate rocks the porosity is not so important for production performance as it is with sandstones. Gas flows into the well through the fractures rather than through the rock. As long as the fractures are open, then gas will flow and also we can pump hydrochloric acid into these fractures to dissolve some of the carbonate and physically increase the width of the fractures, which makes the gas flow increase. The field reserves depend on the porosities seem across the whole field and this can vary from area to area. The independent reserves report by Fekete Associates includes data form all the old wells and from the first Karl-101 wellbore and we do not expect the reserves numbers to change much.
Q) Why did we take so long to hit TD?
A) The drilling is very hard and even using good modern equipment we are only able to drill 1-2 m/hr, and the bits wear down in 2-3 days, so we have to pull out and install a new bit. Also the presence of gas slows down the progress, and when we get a big gas kick it takes between 1-2 days to settle things down and resume operations. We have also had some downtime with the rig.
Q) Has your expectations been met during the current drill program at the Karl 101? Please explain.
A) Very much in terms of the reservoir and strength of the gas shows. The drilling performance was slower than we hoped. The downhole motors and the bits did not perform as well as we expected and there is a lot of optimization engineering to perform in preparation for future wells.
Q) What will be the major factors driving success of Transeuro Energy Corps natural gas assets in the market?
A) After proving large commercial reserves we are confident of many consumers approaching us for long term offtake contracts. The main decision will be where to tie into the nearby pipeline that runs 400m from the well. The decision is due to the presence of a gas storage facility and LNG processing plant 10km further downstream. We can tie directly into the line and allow the LNG plant to process our production. Or we can run our own pipeline to the other side of the storage facility. Engineering design and negotiations on these options will start after we have proved commercial reserves.
Q) If testing shows a positive result how does Transeuro go about making contracts with its customers and when would you expect to deliver gas to the pipeline?
A) As for the contracts,we would have preliminary discussions with a number of gas marketing companies in Ukraine. Also we intend to approach some of the larger consumers of gas directly. As for when we expect to deliver gas; it depends on the test results and then on which of the export options is approved. Tying directly into the nearby pipeline will be quicker and should allow us to produce gas by early 2012.
https://www.transeuroenergy.com/s/Update.asp?ReportID=446901&_Type=Update&_Title=Question-and-Answer-with-CEO-Mr.-David-Worrall