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. Field activities planned for 2019 will include the drilling of one vertical well and the drilling and hydraulic fracture stimulation of two horizontal wells.
An early commitment to Stage 3 capital expenditure during 2019 was also agreed, enabling an efficient transition from Stage 2 to Stage 3, in the case that Origin and Falcon agree to proceed to Stage 3.
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
21 January 2019 – Rig Contract Signed
On 21 January 2019 Falcon announced that Origin had signed a rig contract with Ensign Australia Pty Ltd. for Rig 963 for the 2019 Stage 2 Beetaloo drilling programme, with an option to extend the contract into 2020.
Subject to relevant approvals, and implementation of the exploration recommendations of the Inquiry into Hydraulic Fracture Stimulation in the Northern Territory, the JV will evaluate the potential of the liquids-rich gas fairways in both the Kyalla and Velkerri plays. Exploration and appraisal activities include the drilling and hydraulic fracture stimulation of two horizontal wells. Together with the Velkerri B dry gas play discovered in 2016, this allows for the assessment of three plays, enabling the most commercially prospective play to be targeted for Stage 3 drilling during 2020.
As of 21 January 2019 work had already commenced at some well sites, including water bore drilling and water monitoring, with drilling targeted to commence in June 2019.
3 May 2019 – Kyalla 117 N2 Exploration Well EMP Accepted for Assessment
On 3 May 2019, Falcon announced that the Environmental Management Plan (“EMP”) for the Kyalla 117 N2 Exploration well, for the planned 2019 drilling, stimulation, and well testing prepared by Origin on behalf of the JV, has been accepted for assessment by the Northern Territory Department of Environment and Natural Resources (“DENR”).
The EMP provides detail on how Origin will ensure the environmental impacts and risks associated with its activities are reduced to a level that is as low as reasonably practicable and acceptable. The EMP has been prepared with reference to regulatory obligations and relevant Inquiry recommendations that have underpinned the Code of Practice for Petroleum Activities in the Northern Territory.
22 August 2019 – Kyalla 117 N2 Horizontal Appraisal Well EMP Approved
On 22 August 2019, Falcon announced that the EMP for the Kyalla 117 N2 horizontal appraisal well, had been approved by DENR.
Kyalla 117 N2 Horizontal Appraisal Well
- The well is targeting the Kyalla shale liquids rich gas fairway
- Construction of the well pad and related civil works is nearing completion
- Drilling operations will commence in September
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.
- 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.
- A vertical pilot hole will target a total vertical depth of approximately 1,750 metres into the Kyalla Formation.
- A subsequent horizontal section is planned for approximately 1,000 metres that will be drilled, completed, stimulated and production tested in the prospective Kyalla shale reservoir interval.
- Origin Energy B2 Pty Ltd (“Origin”), as Operator, will drill the Kyalla 117 N2-1 well.
- Origin hold a participating interest of 70% and Falcon Oil & Gas Australia Limited hold the other 30% participating interest over the Beetaloo Exploration Permits, 76, 98 and 117.
The principal objectives for the drilling of the Kyalla 117 N2-1 well are to:
- Penetrate the Kyalla Formation to assess hydrocarbon maturity, saturation and reservoir quality.
- Provide further information on the areal distribution of the Kyalla Formation.
- Collect data for subsequent horizontal drilling, completion, stimulation and production testing; including ability to flow liquids rich gas.
Formation evaluation, including reservoir characterisation, will be carried out through petrophysical interpretation, geo-mechanical studies and core analysis.
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 confirms:
- 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.
Horizontal drilling, stimulation and testing:
- The JV is now preparing to drill the horizontal section within the Kyalla formation.
- Horizontal drilling will commence following the final evaluation of the vertical well results.
- Once completed, the horizontal section will be fracture stimulated, and production tested.
- The JV has prepared for continued operations during the wet season.
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 has commenced, along with the advancement of the vertical well evaluation.
Drilling of the Kyalla 117 N2-1H horizontal well has commenced
- The JV has elected to land the horizontal well within the Lower Kyalla shale, at a depth of ~1800mTVD.
- The horizontal section will be drilled for approximately 1,000-2,000 metres.
- On completion of drilling, the horizontal section will be fracture stimulated and production tested.
Evaluation of the Kyalla 117 N2-1 vertical well advances
- Three source rock reservoir (“SRR”) sections are identified within the Kyalla Shale Formation, characterised as the Lower, Middle and Upper Kyalla.
- The thickness of the entire Kyalla Shale Formation measured almost 900 metres.
- Gross thickness of each SRR interval is between 75 and 125 metres.
- Each SRR exhibited elevated gas shows with relatively high C3, C4 and C5
- Diagnostic fracture injection tests (“DFITs”) were performed on each SRR.
Ongoing analysis of conventional cores acquired in each of the Upper and Lower Kyalla reservoir sections, along with sidewall cores, DFITs and extensive wireline logging, will enable a full-scale evaluation of prospectivity of the Kyalla Formation in the central part of the Beetaloo Sub-Basin.
13 January 2020 – Kyalla 117 N2-1H Horizontal Well Operational Update
On 13 January 2020, Falcon provided the following operational update on the drilling of the Kyalla 117 N2-1H well in the Beetaloo Sub-Basin, Australia.
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.