"We have a genuine discovery in the McKee sands, which have good reserve potential across the whole structure," said chief executive Dave Bennett this morning.
"We are confident that a re-completion of the well will result in commercial flow rates from the McKee, substantially better than those we have achieved to date.”
Initial testing operations had now been completed at Cardiff-2A, with three Eocene-aged Kapuni gas zones having been jointly tested - the shallow McKee Sands, the K1A Sands and the deep K3E Sands.
The McKee Sands had consistently flowed gas at rates of 1-1.5 million cubic feet per day with an average 27% CO2 content and 30-35 barrels per million cubic feet of condensate.
But flow rates were inhibited by water production from the K1A, which loaded down the well stream flowed to surface through the 4½-inch tubing used for the earlier fraccing operation.
The water from the K1A Sands inhibited the flow potential of all zones. The K3E Sands had not flowed to the potential indicated by electric logs and by their early performance immediately after being perforated and hydraulically fracced. The reasons for this were not yet obvious, Bennett said.
Austral would now complete a workover of the well - pulling the 4½-inch tubing out and replacing it with 2 7/8 tubing and a packer assembly to isolate each zone - once a suitable rig and equipment became available.
“The workover will be designed to enable each zone to be flowed independently, and will optimise gas lift and remove the inhibitory effect of water loading," Bennett said.
”With respect to the deeper zones, the K1A is unlikely to be pursued further in this well, and will be isolated so that it does not impede the other zones. The K3E remains an open possibility, and may yet flow at good rates.”
Austral would early next year acquire a 3D seismic survey over the whole structure. This would help identify production 'sweet spots' in the McKee Sands and to the best sites for further production wells.
The survey would also assist in mapping the nearby shallower Cheal oil field and identifying further Miocene-aged Mount Messenger oil sands, which were encountered in the shallow section of the original Cardiff-2 well.
Drilling of Cardiff-2 started in late 2004. But a series of subsequent downhole problems, including the drilling of the Cardiff-2A sidetrack and blocked test zones, has meant the economic viability could not be established until now.
Meanwhile, the Cheal-A4 well has now been restored to optimal oil production with the successful commissioning of the gas-engine generator on the Cheal-A site, according to Bennett.
Cheal-1 would also be tied-in to the gas supply system to ensure back-up gas for the generator set and enable it to produce electricity at full capacity.
The Cheal joint venture was to meet shortly to approve forward work, including well workovers, site reconstruction for permanent production, Cheal-B site development, future development drilling and pipeline planning.
PEP 38738 shallow partners are Austral Pacific Energy (operator 36.5%), Cheal Petroleum (30.5%), International Resource Management Corporation (33%).
PEP 38738 deep partners are Austral (operator 25.1%), Genesis Energy (40%), Cheal Petroleum (15.1%), IRMC (19.8%).
