Exploration: Big Jump In On-Shore Cheal Reserves
July 20th, 2010
Canadian explorer TAG Oil is reporting a 450% increase in recoverable reserves from the Mt Messenger formation, in Taranaki, taking known and probable remaining reserves to 651,000 barrels of oil and 258m cubic feet of natural gas. The increased reserves, based on a single fracture test in the Cheal mining permit, which TAG acquired last October, are estimated to have a net present value of $C29.43m. The Cheal oil pool presently produces solely from the Mt Messenger formation at an approximate depth of 1800 metres. Increased recovery, revised projected future well performance and revised oil price forecasts underpin _the re-estimation.
Canadian petroleum engineering consultants Sproule International conducted the test as part of TAG’s pursuit of conventional and unconventional resource potential from fractured oil shale in the East Coast Taranaki basin. TAG CEO Garth Johnson says the company is “very pleased” with the finding at the Cheal A-7 well, and TAG is undertaking additional fracture treatments in existing Cheal wells, as well as starting a horizontal drilling campaign, including multi-stage fracture treatments targeting proved and probable reserve areas. The goal of the program is to significantly boost recovery from the 10 million barrels of oil-in-place already defined.
The Company also plans to drill a series of step-out exploration wells to test numerous multi-zone prospects defined on the permit-wide 3D seismic set and test numerous additional fault blocks within the lightly explored Cheal acreage area. Activities at Cheal have been concentrated to just an 8% area of the 7500 acre Cheal permit area. TAG plans to initiate permit-wide exploration with a goal to capture new reserves in multiple zones.
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