Stage 3 – Work Program Overview
Falcon provided details of the Stage 3 work programme on 4 May 2022.
As noted in Falcon’s press release published on 25 January 2022, this year will see Falcon and Origin progressing to the Stage 3 work programme of the restated Farm-Out Agreement. Following discussions with Origin, in order to maximise the impact of Stage 3 operations the joint venture has agreed to modify the Stage 3 programme announced previously, which will now include a step out location for one well.
Stage 3 Planned Work Programme includes:
- Acquisition of a 58km line of high spec 2D seismic on the Amungee NW-1H well lease area;
- Drilling one ~1,000 metre horizontal well on the Amungee NW-1H pad, targeting the Amungee Member (formerly knowns as the Middle Velkerri) B Shale;
- Step out location approx. 10km from the Amungee NW-1H pad, drilling a vertical pilot and a ~1,000 metre horizontal well also targeting the Amungee Member B shale;
- 15 stage fracture stimulation on both horizontal wells;
- Extended production testing of between 90 and 180 days on each well;
- As previously announced there will also be:
- follow up core and log analysis of the very encouraging preliminary evaluation of the 2021 Velkerri 76 well results; and
- further evaluation of the results of the Kyalla 117 N2-1H well to better understand the issues encountered during testing in 2021.
Stage 3 Drilling and 3D Programme Objectives:
- The primary objective of the two wells is to:
- Obtain a production rate over the first 30 days of between 2-3 MMscf/d to support a multi-well pilot programme in 2023/24.
- Secondary objectives for the Stage 3 programme are to:
- Achieve a drill duration of less than 45 days;
- Characterise natural fracture network and complexity; and
- Integrate well data with seismic data and assess merits of future 3D seismic surveys in the Beetaloo.
Stage 2 – Explore & Appraise Additional Play Types
The Stage 2 exploration and appraisal drilling program was designed to 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.
Amungee NW-1H
09 August 2021 – Falcon announced the commencement of production testing operations at Amungee NW-1H (“Amungee”). On-site operations at Amungee had begun with all equipment on site and preparatory works complete. A production test was underway to determine whether all eleven frack stages contributed to the initial extended production test in 2016.
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.
- 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.
Velkerri 76 S2-1
Falcon announced the spudding of the Velkerri 76 S2-1 well (“Velkerri 76”) on 12 August 2021. Velkerri 76 would target 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.
Falcon announced that drilling of the Velkerri 76 vertical appraisal well was completed on 15 October 2021, 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 was very encouraging and confirmed:
- 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.
Falcon provided details on the preliminary petrophysical interpretation and mud gas composition data from Velkerri 76 on 12 November 2021.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.
Kyalla 117 N2-1H S2
Spudding of the Kyalla 117 N2-1 appraisal well in the Beetaloo Sub-Basin took place on 9 October 2019 with completion of drilling of the vertical section to a vertical total depth of 1,895 metres announced on 20 November 2019.
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.
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.
On 13 January 2020 it was announced that the initial horizontal production hole section would be plugged in line with regulatory requirements and would be followed by sidetracking and drilling a new horizontal production hole section. The commencement of the sidetrack to drill the new horizontal production hole section of the Kyalla 117 N2-1H ST2 (“Kyalla 117“) took place on 30 January 2020 with drilling operations, including casing and cementing successfully completed by 20 February 2020.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.
Following the implementation of the necessary control procedures Falcon announced that the JV elected to temporarily pause activities at the Kyalla 117 site given the unprecedented circumstances brought about by COVID-19, 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.
By 21 September 2020 operations had recommenced at Kyalla 117 with the fracture stimulation of the well. A technical update provided on 2 October 2020 confirmed the completion of 11 hydraulic stimulation stages along the 1,579-metre horizontal section in the Lower Kyalla Formation with the successful execution of stimulation treatments.
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 could 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.
The JV decided by 10 December 2020 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. The coiled tubing unit and all necessary consumables had arrived at the wellsite and the rigging up of the equipment was in progress by 24 December 2020.
19 January 2021 Falcon announced that Origin had 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 would need to 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.
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.
Operations at Kyalla 117 commenced in June 2021 following the wet season. Activity focused on the continued clean-up of Kyalla 117 in preparation for extended production testing, using nitrogen to support operations. This allowed Kyalla 117 to begin flowing again without assistance for intermittent periods, however, production was not sustained and there was evidence of a potential downhole flow restriction. Operations were temporarily paused while the cause of the restriction investigated, the results of which would inform the development of a go-forward plan for Kyalla 117.
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.
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. 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.
On 7 October 2021 Falcon noted that production testing was completed and the well shut in at Kyalla 117.
Full details of the respective updates outlined above can be located under press releases within the investor center -> click here to access
