Harvest embarks on new exploration program after hitting dry holes
Wednesday, March 7 2012 - 02:41 AM WIB
Houston-based Harvest Natural Resources Inc, which is listed on the New York Stock Exchange, said it is now planning to embark on additional exploration programs for Budong Budong PSC in West Sulawesi after hitting dry holes in previous drilling programs.
Last year, the company drilled two exploration wells, Lariang LG-1 and Karama KD-1 wells.
?Based on the multiple oil and gas shows encountered in both the LG-1 and KD-1, we are working on an exploration program targeting the Pliocene and Miocene targets encountered in the previous two wells,? it said.
Harvest Natural Resources said it expects to record dry hole combined expense of US$ 40 million in the fourth quarter of 2011 to reflect results of the Lariang LG-1 and KD-1 wells within Budong-Budong PSC, West Sulawesi.
Drilling program evaluation
The company said since January 2012, after completion of drilling of the KD-1, all information gathered from the drilling of the LG-1 and KD-1 was evaluated in connection with plans for the Budong PSC and overall corporate strategy.
?Based on this evaluation, it was determined that the original LG-1 well bore would not be used for re-entry. Since plans for the Budong PSC no longer include re-entry of the LG-1 well bore, the drilling costs of $14.0 million related to the drilling of the LG-1 have been expensed to dry hole costs as of December 31, 2011,? Harvest said.
The Lariang LG-1 well in Budong-Budong PSC in West Sulawesi was spud on January 6, 2011 and drilled to a depth of 5,311 feet. Multiple oil and gas shows were encountered within the secondary Miocene objective.
Wireline logs and samples of reservoir fluids have confirmed the presence of hydrocarbons, trap and seal thus greatly de-risking the exploration potential of the license. Due to high formation pressures and losses of heavy drilling mud into the formation, the well was plugged and abandoned for safety reasons on April 8, 2011 , the company said.
The primary Eocene targets had not yet been reached, as the well was planned for a total measured depth of approximately 7,200 feet.
The results of the Karama KD-1 exploration well drilling were also discouraging. The drilling of the well, which was spud on June 20, 2011 was aimed to test the stacked Miocene and Eocene targets within a thursted anticline. The well was initially drilled to a depth of 9,633 feet and sidetracked after the drill string was severed.
The sidetrack KD-1ST was initially drilled to a total depth of 11,880 feet and logged. The evaluation of cuttings, logs and sidewall cores demonstrated the presence of oil over a 200 foot section of low permeability and low porosity clastic rocks in the Miocene. The oil shows have proven the existence of a working petroleum system in the Karama Basin .
On a sole risk operation basis, Harvest elected to deepen the well to a final total depth of 14,437 feet to explore for the main Eocene objective. As the drilling operations reached the BOP pressure limits, the well encountered both Oligocene and Eocene stratigraphy; however, the primary Eocene reservoir target had not yet been reached.
The company said biostratigraphy indicates the section at total depth to be Eocene deep water shales. Nearby within the basin are a number of Eocene outcrops with known fluvial reservoir and source rocks, along with oil and gas seeps. The well was plugged and abandoned. Harvest expects to expense a dry hole cost of $26.0 million in the fourth quarter of 2011.
Tately Budong-Budong N.V. is the operator of the Budong-Budong Block. Harvest owns a 64.4 percent working interest in the Budong-Budong PSC.
Editing by Roffie Kurniawan