Sydney-based oil and gas company Empire Energy Group is one step closer to production. The company has recently put its Carpentaria-3H well through its paces by testing flow pressure and now are sealing the off the well to increase those numbers and recovery over the life of the well. Empire has the largest acreage holding in the giant Beetaloo Basin gas province in Australia’s top end.
The company recently flow tested the Carpentaria-3H, or C-3H, well for 27 days straight and now begins the ‘shut in’ process for ‘soaking’ after ‘fracture stimulation’.
This is oiler speak to explain a series of complex processes to increase the flow pressure of well.
Fracture stimulation is where the wellbore is filled with high pressure fluids to create fractures in the rocks. The fluid composition is most often 99 per cent water combined with a matrix of chemical additives, the kind found around the house and a small amount of sand and clay. The sand and clay find their way into the rock fractures which prop them open and allow the gas and oil to seep out over time.
Soaking plays an important role in increasing well pressure in the long term and it’s this method that saw Empire produce excellent flow results for Carpentaria-2H.
The most recent flow test from C-3H is currently averaging 2.6 million standard cubic feet, or “mmcf” per day. Flow rate for C-3H is yet to be optimised, however it is likely to improve after the soaking period is complete.
Empire says twice as much water was pumped into C-3H than C-2H to stimulate fracture. Despite the higher volume, the company expects the shut in and soak to be successful for C-3H. If not, Empire has other alternatives to pursue to increase well flow that will be funded by cash at the bank.
Whilst the market waits for further news on Carpentaria-3H, Carpentaria-2H continues to be fruitful for Empire.
C-2H was recently brought back online after a five-month long soak with impressive results. The well has reopened and is reportedly offering a sustained average gas flow rate of 3.24mmcf per day.
Pressure inside C-2H the wellhead is at 336 psi, double the wellhead pressure in previous periods. The reasoning behind this is to protect the life of the well. A lower pressure would increase short term flow rates however Empire believes a high pressure now to carefully manage flowback will improve overall gas recovery.
Independent third part analysis from Subsurface Dynamics, a reservoir engineering and geoscience company based in North America, supports Empire’s thesis, with the US firm suggesting higher wellhead pressure today will likely lead to a higher gas content recovered over the life of the well.
More to the point, the company’s slow and steady approach Empire is taking with C-2H will be applied to C-3H, potentially increasing the likelihood of success later in the year.
From here, Empire will now continue to flow test C-3H and will incorporate this data into the front end engineering and design for the pilot program, all of which leads to a final investment decision that is expected later this year.
Management notes the success of C-2H allows the company to progress talks with nearby pipeline operators and customers as the company works towards commercialisation of its projects.
Empire Energy Managing Director, Alex Underwood said: “This result has significantly de-risked EP187 and propels us towards a final investment decision on our pilot project later this year. We are rapidly optimising how to drill, stimulate and complete the Middle Velkerri B shale, and expect further improvements as we drill future pilot wells that, along with C-2H and C-3H, will generate production
revenue.”
Empire still have over $18 million in the kitty with an untouched $15 million line of credit, along with many eager customers willing to pay for energy with the gas market facing a structural deficit.
The International Energy Association recently forecast China will be increasing their LNG demand by 35 per cent this year as Covid restrictions end. This reopening of the Middle Kingdom’s economy is going to put further pressure on already strained gas supplies.
Whilst Empire is yet to lock in a production date, the advancing projects and view to commercialisation in the face of a tight gas market should provide a strong tail wind for the company.
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