Stage 2 – Explore & Appraise Additional Play Types
The Stage 2 exploration and appraisal drilling program will evaluate the potential of the liquids rich gas fairways in both the Kyalla and Velkerri shales to determine the most commercially prospective play to be targeted during Stage 3.
For details of Stage 2 please refer to the updates outlined below.
Stage 3 – Work Program Overview
Stage 3 objective is to achieve commercial production flow rates.
Drilling operations include the drilling and hydraulic fracture stimulation of two horizontal wells targeting one of more of the three plays:
- Velkerri B shale gas play
- Kyalla shale and hybrid liquids rich gas plays
- Velkerri shale liquids rich gas play
2019 Updates
9 October 2019 – Spudding of the Kyalla 117 N2-1 Appraisal Well
On 9 October 2019, Falcon announced the spudding of the Kyalla 117 N2-1 appraisal well in the Beetaloo Sub-Basin.
Highlights:
- Kyalla 117 N2-1 is the first well in the Stage 2 drilling programme to target the Kyalla shale liquids rich gas play.
- Located within Exploration Permit 117 approx. 32 kilometres north of the Beetaloo W-1 well.
20 November 2019 Drilling data from Kyalla 117 N2-1 Vertical Well Very Encouraging
On 20 November 2019 Falcon announced that drilling of the vertical section of the Kyalla 117 N2-1 appraisal well in the Beetaloo Sub-Basin, Australia had been completed to a vertical total depth of 1,895 metres.
Preliminary drilling data from the vertical section of the Kyalla 117 N2-1 appraisal well confirmed:
- The continuation of the regionally pervasive Kyalla Fm between the Beetaloo W-1 and Amungee NW-1H wells.
- Elevated gas show with relatively high C3, C4 and C5 components were observed across the carbonaceous shales.
Other work carried out as part of this drilling operation included:
- 45 metres of conventional coring was acquired in each of the Upper and Lower Kyalla reservoir sections.
- Sidewall cores and extensive wireline logging have been acquired.
10 December 2019 – Kyalla 117 N2-1 – Horizonal Drilling Commenced, Evaluation of Vertical Well Advances
On 10 December 2019 Falcon announced that drilling of the horizontal section of the Kyalla 117 N2-1H appraisal well in the Beetaloo Sub-Basin, Australia had commenced, along with the advancement of the vertical well evaluation.
2020 Updates
13 January 2020 – Kyalla 117 N2-1H Horizontal Well Operational Update
The vertical section of the Kyalla 117 well was successfully and safely completed in late November 2019. Drilling of the horizontal production hole section with a target length of 1,000 to 2,000 metres, commenced in early December.
However, after reaching a horizontal length of 700 metres, operational challenges were experienced in maintaining adequate clean hole conditions and stability over portions of the horizontal production hole section appropriate to complete operations.
The initial horizontal production hole section will now be plugged in line with regulatory requirements. This will then be followed by sidetracking and drilling a new horizontal production hole section.
Plugging back and drilling a new horizontal section from an existing vertical well is not uncommon in an exploration drilling program such as this.
With the drilling rig and equipment on-site and in position, drilling operations will recommence on the new horizontal well section within the next month.
Fracture stimulation activity will only occur after the successful completion of drilling and the integrity of the well is tested and verified.
Results obtained from operations to date in the target shale formation demonstrate good reservoir continuity, conductive natural fractures, and continuous gas shows. The JV remains positive about the potential of the Lower Kyalla Formation, resulting in the decision to continue with drilling operations.
30 January 2020 – Kyalla 117 N2-1H ST2 Horizontal Well Operational Update
On 30 January 2020 Falcon announced the commencement of the sidetrack to drill the new horizontal production hole section of the Kyalla 117 N2-1H ST2 well.
20 February 2020 – Successful Drilling of Kyalla 117 N2-1H ST2 Horizontal Well
On 20 February 2020 Falcon announced that drilling operations, including casing and cementing, on the Kyalla 117 N2-1H ST2 well had been successfully completed.
The well was drilled to a total measured depth of 3,809 metres, including a 1,579 metre lateral section (from 90 degrees) in the Lower Kyalla Formation. Preparatory work, including the drilling of water impact monitoring bores – a new requirement of the Code of Practice for onshore petroleum activities in the NT – will commence in the coming month ahead of the next stage of operations.
26 March 2020 – Kyalla 117 N2-1H Horizontal Well Operational Update
On 26 March 2020 Falcon provided the following operational in light of COVID-19.
Given the unprecedented circumstances brought about by COVID-19, the JV made changes to its operations to protect the health and well-being of Origin Energy Limited employees, contractors and communities across the Northern Territory. Adhering to the latest guidelines and advice from the Northern Territory and Federal Government on health and safety and social distancing are of the utmost importance to the JV and all present on site observing health authority requirements.
Following the implementation of the necessary control procedures, the JV elected to temporarily pause activities at the Kyalla 117 site, reducing those on site to essential personnel only, whilst ensuring the required regulatory and environmental management conditions to monitor and maintain the site can be met. The JV planned to resume activities in the latter half of 2020 and during this interim period the JV will use Northern Territory based employees and contractors to undertake civil and other works in preparation for the resumption of activities.
The JV remains committed to the Beetaloo project which, if successful, has the potential to deliver long-term economic and social benefits for the Northern Territory, Australia and is encouraged by the positive results to date. However, the circumstances presented by COVID-19 led the JV to conclude that the focus must be to protect the people and communities of the Northern Territory.
7 April 2020 – Beetaloo Farm-out
On 7 April 2020 Falcon announced that its c. 98% subsidiary, Falcon Oil & Gas Australia Limited (“Falcon Australia”), had executed an agreement which includes a restated Farm-Out Agreement and Joint Operating Agreement (collectively “the Agreements”) with Origin to farm down 7.5% of Falcon Australia’s 30% participating interest (“PI”) in the Exploration Permits. Full details are outlined above.
21 September 2020 – Beetaloo Operational Update
On 21 September 2020 Falcon noted that operations had recommenced at Kyalla 117 N2-1H ST2 with the fracture stimulation of the well.
02 October 2020 – Beetaloo Technical Update
On 02 October 2020 Falcon provided a technical update on the Beetaloo project regarding the hydraulic stimulation of the horizontal Kyalla 117 N2-1H ST2 well.
Highlights of the preliminary results from the Kyalla 117 well:
- Completion of 11 hydraulic stimulation stages along the 1,579-metre horizontal section in the Lower Kyalla Formation
- Stimulation treatments were successfully executed
- Activities have commenced in preparation for the flowback and extended production test
- Early stage gas flow rates are expected in the coming weeks
04 November 2020 – Operational Update
On 4 November 2020 Falcon noted that operations continued following the hydraulic stimulation at Kyalla 117. Following a short initial flow back of hydraulic fracture stimulation fluid to surface the well was subsequently shut in and production tubing was successfully installed and tested. Flow back operations recommenced in late October, with the well flowing back fracture fluid at a rate of approximately 500 bbl/d with minor gas breakthroughs observed to date.
25 November 2020 – Operational Update
As announced on 4 November 2020, flowback operations of the fracture stimulation fluid commenced in early October before Kyalla 117 was shut in and production tubing was successfully installed, with flowback operations recommencing in late October.
Kyalla 117 continued to flow back fracture stimulation fluid, with some gas shows; however, a measurable gas breakthrough that would allow the commencement of extended production testing to assess the extent of the resource that may be present had yet to occur.
Data collected and analysed to guide ongoing operations showed greater pressures in the horizontal section of Kyalla 117 than in the surrounding reservoir, due to the saline content and density of the flowback fluid and the hydrostatic column weight of this fluid in the vertical section. This pressure difference can prevent the flow of gas from the reservoir into the fractures and then to surface and it is not unusual in shale plays to observe the salinity and density of the flowback fluid to increase as salt easily migrates from the formation.
Operations were planned to re-enter Kyalla 117 with coiled tubing and apply nitrogen lift techniques to lower pressures in the Well and assist with achieving and sustaining gas breakthrough that, if successful, will allow extended production testing to commence. This technique is not uncommon and was applied to the successful Amungee NW1-1H well in 2016.
The timing of coiled tubing activities and the nitrogen lift were considered as the wet season approaches, with health, safety, environment and cost considerations in mind.
As is the nature of exploration and appraisal, Falcon and Origin, continually respond to the data gathered through operations to inform ongoing activities.
Other data collected to date remains positive. In particular, core analysis indicates mature hydrocarbons and good permeability (natural pathways for gas to flow) and mud logs indicate liquids rich gas. The fracture stimulation of the well was successful and the integrity of the well remains.
10 December 2020 – Operational Update
The JV decided to execute operations without delay with all of the necessary equipment and consumables for the nitrogen lift being prepared to mobilise to the well site.
24 December 2020 – Operational Update
The coiled tubing unit and all necessary consumables have arrived at the wellsite and the rigging up of the equipment were in progress.
2021 Updates
19 January 2021 – Notification of Discovery – Kyalla 117 N2-1H ST2
19 January 2021 Falcon announced that Origin, has submitted a notification of discovery and an initial report on discovery (“Notification of Discovery”) to the Department of Industry, Tourism and Trade of the Northern Territory (“DITT”) on the Kyalla 117. The Notification of Discovery is a requirement under s64(1) of the Petroleum Act 1984 (Northern Territory) and the NT Guidelines for reporting a petroleum discovery.
Details of the Notification of Discovery from Origin to the DITT are as follows:
- The Notification of Discovery is supported by preliminary production test data and petrophysical modelling.
- This follows the introduction of nitrogen to lift the fluids in Kyalla 117, which has enabled Kyalla 117 to flow unassisted for a period of seventeen hours.
- Unassisted gas flow rates ranging between 0.4-0.6 MMscf/d over seventeen hours were recorded.
- Flow back of hydraulic fracture stimulation water to surface over the same period, averaged between 400-600 bbl/d.
- Initial analysis suggests a liquid-rich gas composition with less than 1% CO2.
- Condensate shows were also observed.
Further Information
- These early-stage flow rates are preliminary indications of well performance, and an extended production test (“EPT”) will be required to determine the long-term performance of Kyalla 117.
- Longer-term measures will be put in place to flow back sufficient hydraulic fracture stimulation water to allow Kyalla 117 to flow continually without assistance and enable an EPT to continue in the coming months during the dry season.
22 January 2021 – Gas Composition Data Confirm Kyalla Liquids Rich Gas Play
On 22 January 2021 Falcon announced details on the first gas composition data obtained during the 17-hour unassisted flow period of Kyalla 117.
The initial analysis of natural gas by gas chromatography confirms a liquids-rich gas stream low in CO2 as follows:
- C1 = 65.03 mol%
- C2 = 18.72 mol%
- C3 = 8.37 mol%
- iC4 = 1.29 mol%
- nC4 = 2.03 mol%
- C5+ = 2.73 mol%
- CO2 = 0.91 mol%
- N2 = 0.92 mol%
The elevated C3+ gas component of 14.42 mol%, meets pre-drill expectations, confirms the Lower Kyalla Shale as a liquids-rich gas play. Gas composition data also support the view that the Kyalla gas stream will have elevated LPG and condensate yields.
As announced on 19 January 2021, longer term measures will need to be put in place to flow back sufficient hydraulic fracture stimulation water to allow the Kyalla 117 to flow continually without assistance. This work is expected to commence at the start of the dry season in Q2 2021 and if successful would allow an extended production test (“EPT”) to commence.
19 March 2021 – Planned 2021 Work Programme – Beetaloo Sub-Basin
On 19 March 2021 Falcon provided details of the 2021 work programme.
The 2021 work programme is expected to include the following:
- Resume clean-up operations of Kyalla 117 and commence an EPT
- Drill Velkerri 76 S2-1 vertical well (“Velkerri 76”)
- Perform a production test at Amungee NW 1H
2021 Work Programme Detail
Kyalla 117
- Resumption of reservoir clean-up operations using an artificial lift technique.
- If the Kyalla 117 clean-up is successful, progress to an EPT.
Velkerri 76
- Drill a vertical pilot well to acquire core and log and run diagnostic fracture injection test data across the Velkerri.
Amungee NW 1H
- A production test to be carried out to determine if all frack stages contributed to the initial EPT conducted in 2016.
22 June 2021 – Commencement of the 2021 Work Programme – Beetaloo Sub-Basin
On 22 June 2021 Falcon announced the commencement of the 2021 work programme, starting with operations at Kyalla 117.
On-site operations at Kyalla 117 begun, with rigging up complete, and clean-up operations resumed. These operations, if successful, will result in an EPT being carried out to determine the expected longer-term performance of the well.
20 July 2021 – 2021 Work Programme Update– Beetaloo Sub-Basin
As noted on 22 June, operations recommenced at Kyalla 117.
Activity has focused on the continued clean-up of Kyalla 117 in preparation for extended production testing, using nitrogen to support operations.
This has allowed the Kyalla 117 well to begin flowing again without assistance for intermittent periods, however, production has not been sustained and there is evidence of a potential downhole flow restriction.
Operations will now be temporarily paused while the cause of the restriction is investigated, the results of which will inform the development of a new go-forward plan for Kyalla 117.
In the meantime, the JV’s focus will continue on other elements of the work programme. The JV remains on track to drill the Velkerri 76 well and commence a further extended production test at Amungee NW 1H in the coming weeks.
9 August 2021 – Amungee NW-1H 2021 Work Programme
09 August 2021 – Falcon announced the commencement of production testing operations at Amungee NW-1H (“Amungee”) in the Beetaloo Sub-Basin. On-site operations at Amungee had begun with all equipment on site and preparatory works complete. A production test is underway to determine whether all eleven frack stages contributed to the initial extended production test in 2016.
12 August 2021 – Spudding of the Velkerri 76 S2-1 well
12 August 2021 – Falcon announced the spudding of the Velkerri 76 S2-1 well (“Velkerri 76”) in the Beetaloo Sub-Basin. Velkerri 76 is targeting the Velkerri play along the south-eastern flank of the Beetaloo Sub-Basin, which is predicted to be in a liquids rich gas window.
The principal objectives for the drilling of Velkerri 76 are to:
- drill a vertical pilot well to acquire core and log and conduct a diagnostic fracture injection test data across the Velkerri;
- penetrate the Velkerri formation to assess hydrocarbon maturity, saturation and reservoir quality;
- provide further information on the areal distribution of the Velkerri formation; and
- collect data for potential future horizontal drilling, completion, stimulation and production testing, including ability to flow liquids rich gas.
3 September 2021 – Amungee NW-1H – Normalised Gas Flow Rate Equivalent to 5 MMscf/d per 1,000m Horizontal
On 3 September 2021 Falcon provided the results of the production log test at the Amungee well. The results suggest a normalised gas flow rate equivalent of between 5.2-5.8 MMscf/d per 1,000m of horizontal section.
Details of Amungee Testing
- The well was successfully put back on production testing on 7 August 2021.
- Initial flow rates during the first 48 hours of testing ranged between 2 – 4 MMscf/d with rates averaging 1.23 MMscf/d over the first 23 days.
- A production logging tool (“PLT”) was run on 19 August 2021 to 3,098mMD, just prior to the casing deformation at 3,112mMD.
- The PLT data confirms that:
- Only 5-15% of the production came from stages 1-7 beyond the casing deformation point at 3,112 mMD.
- 85-95 % of the production came from stages 8-11 spanning a 200m horizontal section, prior to the casing deformation.
- The low contribution from stages 1-7 is likely the result of a restriction caused by the casing deformation or the plugs having not milled out, or both.
- Conclusion: stages 8-11 may be representative of the deliverability that can be achieved within the Middle Velkerri B Shale at Amungee.
- The PLT test results equate to a normalised gas flow rate of between 5.2-5.8 MMscf/d per 1,000m of horizontal section.
- A typical future production well would be likely to have a horizontal production section up to three kilometres.
- The result validates the decision to undertake a second EPT in order to run a PLT.
14 September 2021 – Kyalla 117 Update
On 14 September 2021 Falcon announced that operations have resumed at Kyalla 117. As noted in the Company’s press release on 20 July 2021, while Kyalla 117 flowed liquids rich gas without assistance for intermittent periods, production was not sustained and there was evidence of a potential downhole flow restriction. Current operations, if successful in resolving the restriction, will result in an extended production test being carried out to determine the expected longer-term performance of the well.
7 October 2021 – Kyalla 117 Update
On 7 October 2021 Falcon noted that production testing was completed and the well shut in at Kyalla 117. As noted in the Company’s press release on 20 July 2021, while Kyalla 117 flowed liquids-rich gas without assistance for intermittent periods, production was not sustained and there were indications of a potential downhole flow restriction.
On 14 September, coil tubing operations recommenced at Kyalla 117. No apparent restriction or blockage was identified in the production casing. Following a nitrogen lift, the well was able to flow unassisted at rates between 0 (i.e. rates too small to measure) and 1.5 MMcsfd for five days before loading up with water. Gas compositions data are not yet available but gas specific gravity data is similar to that measured during the previous phase of testing. Trace condensate was also observed.
Further analysis will be undertaken, including additional core analysis and well design considerations, to enable a conclusion to be reached on the results from operations at Kyalla 117, which will inform the future approach to further drilling and testing of the Kyalla play in the Beetaloo Sub-basin.
The purpose of the current exploration campaign was to collect data across the three primary plays within the permits: Velkerri dry gas, Velkerri liquids rich, and Kyalla liquids rich. Despite the challenges, the Kyalla remains a viable target within the Beetaloo. Kyalla 117 was the first horizontal well targeting the Kyalla and achieved its primary technical objective of demonstrating liquids rich gas flow potential of the Kyalla.
For details of the gas composition – please refer to the information from 22 January 2021 set out above.
15 October 2021 – Preliminary Results from Velkerri 76 Very Encouraging
Falcon announced that drilling of the Velkerri 76 vertical appraisal well was completed, with the well drilled to a vertical total depth (“TD”) of 2,129 metres with JV partner Origin.
Preliminary evaluation of the Velkerri-76 well is very encouraging and confirms:
- The presence of four prospective intervals within the Amungee Member (formerly known as the Middle Velkerri), the A, AB, B and C shales, as established in the Amungee NW-1 / 1H, Beetaloo W-1 and Kalala S-1 wells.
- The continuation of the regionally pervasive Amungee Member within the Velkerri Formation towards the eastern flank of the Beetaloo Sub-Basin approximately 78 kilometres from the Amungee NW-1H and 73 kilometres from the Beetaloo W-1 wells.
- The Amungee Member is likely within the wet gas maturity window as evidenced by mud gas data during drilling.
93 metres of continuous conventional core was acquired in the Velkerri B and AB shales and extensive wireline logging data was collected to enable detailed formation evaluation of the prospective zones within the Amungee Member. The diagnostic fracture injection test (DFIT) is to be carried out shortly and will provide further understanding for future appraisal of the Velkerri wet gas play.
12 November 2021 – Preliminary Petrophysics and Mud Gas Composition from Velkerri 76
Falcon provided details on the preliminary petrophysical interpretation and mud gas composition data from Velkerri 76.
On 15 October 2021, the Company announced that drilling of the Velkerri 76 well had been completed and preliminary evaluation of the results had been very encouraging.
The preliminary petrophysical interpretation of the Velkerri-76 wireline logs has now been carried out, which has confirmed positive indications in particular from the B shale of the Amungee Member (formerly known as the Middle Velkerri). Other intervals within the Amungee Member, also show positive indications, and further analysis will now be undertaken to confirm these results.
The Amungee Member B shale was the principal area of focus with Falcon’s operations at Amungee NW-1H and the results obtained to date compare very favourably to some of the most commercially successful shale plays in North America. The Amungee Member B shale is also the focus of activities in the neighbouring Santos and Empire Resources operated blocks.
Mud gas composition data also provides evidence that the Amungee Member is within the wet gas maturity window and contains good LPG yields and high heating gas value.
Key information with respect to the preliminary petrophysics and mud gas composition of the Amungee Member B shale are included in the table below:
|
Amungee Member B Shale |
| Gross thickness (metres) |
53.9 |
| Total Porosity Ave. (%BV) |
7.7 |
| Total organic carbon Ave. (TOC, %wt) |
4.3 |
| C1 (mol%) |
79.65 |
| C2 (mol%) |
16.49 |
| C3+ (mol%) |
3.86 |
The results of preliminary petrophysical interpretation confirm:
- The prospectivity of the Amungee Member B shale.
- Reservoir quality of the B shale (TOC, porosity and gross thickness) compares strongly with commercial shale plays in the United States.
- The Velkerri 76 S2-1 well provides yet another robust data point for the joint venture to consider various commercialisation options across its permits.
Additional analysis of the conventional core acquired during the drilling of Velkerri 76 will be required to confirm the preliminary petrophysics interpretation outlined above and will take place over the coming months.
Laboratory analysis of gas samples collected during drilling will be carried out to further refine gas composition data within the Amungee Member shale intervals.
Full details of the respective updates outlined above can be located under press releases within the investor center -> click here to access
