Austral told the New Zealand Stock Exchange this morning it was earning “very small amounts of revenue” from the sale of condensate from the onshore Taranaki deep-gas Cardiff field during production testing. The company earned $NZ20,887 from its share of condensate from the Cardiff-2A well during the March quarter.
The company did not expect to receive any significant revenue until production was re-established at the nearby shallow Cheal oil field, which not anticipated to occur until the third quarter of this year.
Last year Cheal produced about 31,000 barrels of oil, providing $NZ1.8 million of revenue. But testing stopped last December in anticipation of the partners approving a field development plan.
Austral said the first phase was an early production scheme that would enable limited production and accelerated associated cashflows before full field development started.
This initial phase would include workovers of the Cheal-A3X and A4 wells to enable access to the producing Mount Messenger interval and the isolation of the shallower Urenui interval.
“Following the Cheal-A site development, significant reductions in operating costs are expected, which will provide the company with improved net income per barrel,” said Austral.
A minimum of two further wells were planned from the A site and the appraisal of the northern portion of the field was planned by drilling the Cheal-B1 well. Further development wells would ultimately be required from the B site to fully develop the Cheal field.
Austral said a hot oil pumping facility, using conventional jet pumps or hydraulic piston type pumps downhole had been recommended for field production. This would reduce the pour point of the produced crude so that it became transportable.
Site design could accommodate production of 2000 barrels of oil per day (bopd) and 2 million standard cubic feet per day (mmscf/d) of gas. Excess gas would be exported as it was neither practical nor commercially viable to consider onsite power generation. Several gas pipeline routes were currently under consideration to nearby high-pressure gas networks.
Austral said it anticipated Crown Minerals granting a petroleum mining permit for Cheal “in the near future”, with full production achieved by the end of the year.
At the nearby Cardiff-2A well, a series of flow and pressure build-up tests on the main producing Eocene-aged interval, the McKee sandstones, had indicated an improvement in well productivity, reflected in flows exceeding 3 mmscf/d of gas and 100 bopd of condensate.
Testing flows indicated that the higher-pressure middle zone, the K1A, was not fully isolated from the uppermost (McKee) zone and water was inhibiting the flow rates from this zone, according to Austral.
The joint venture was optimistic that the inflatable plug, set downhole late last month, would fully isolate the middle and uppermost zones. The bottom zone, the K3E, would be isolated and tested following the test on the uppermost zone.
“Following this, commercial viability will be demonstrated and a mining permit issued over the Cardiff area,” Austral said.
The PEP 38738 shallow (Cheal) partners are: Austral Pacific Energy (operator 36.5%), Cheal Petroleum (30.5%), International Resource Management Corporation (33%).
The PEP 38738 deep (Cardiff) partners are: Austral (operator 25.1%), Genesis Energy (40%), Cheal Petroleum (15.1%), IRMC (19.8%).
