Austral told the NZX this morning that the Cheal-B1 well had reached a total depth of 1863m last Saturday and that the targeted Miocene-aged Mount Messenger sands had been intersected over a 27m gross pay interval, from 1700m-1727m.
Wireline logs indicated the sands were oil-bearing, said the company.
"We knew there was oil in the Cheal A area from previous production testing and we suspected there was oil in the more northern B area, based on geological and geophysical modelling,” Austral chief executive Rick Webber told PetroleumNews.net from Wellington this morning.
“But this was the ultimate test. We are delighted with Cheal B1 – the subsurface guys are very happy.”
Cheal-B1 is the first of four new development wells to be drilled back-to-back from the Cheal B site, by Ensign Rig 19, as part of the field development.
Following the running of production casing in Cheal-B1, Rig 19 will be skidded to an adjacent pre-installed conductor for the immediate drilling of the Cheal-B2 well. Webber said all four B wells had pre-installed conductors to ease and speed drilling.
After the completion of the B wells, Rig 19 will move to the Cheal A site to drill two more development wells. Ensign’s Rig 6 will then move to the B site and finish completing the B wells for commercial production.
First oil from permanent production facilities is expected to be about 1000 barrels of oil per day (bopd) from early 2007, with full production of about 1900 bopd achieved during the second quarter.
Webber said success at Cheal B1 did not mean an increase in total recoverable oil reserves, but it would mean a change in categorisation.
“When we get the wells into commercial production then we will get another independent assessment of total recoverable reserves, with more moving into the 1P category, being proved and developed,” Webber said.
But he did not know what percentage of 2P oil would become 1P.
The latest independent evaluation of total recoverable reserves – 3P (proved, probable and possible) – is 4.4 million barrels of Cheal oil.
Austral and its partner, Canadian listed independent TAG Oil, are spending $NZ25 million ($A22 million) developing Cheal.
Earlier this month Austral said it was acquiring all the shares of New Zealand privately held company Arrowhead Energy for $NZ17 million ($A14.8 million), which would almost double Austral’s stake in Cheal.
At the conclusion of the Austral-Arrowhead deal, the respective partners and shareholdings in PMP 38156 (Cheal) and PEP 38738-01 will be operator Austral (69.5%) and TAG Oil (30.5%), while the PMP 38153 (Kahili) partners will comprise operator Austral (85%) and TAG (15%).