Eme annuals just published. Reservoir porosity
of between 4 -10 % in the shallow formation.
Sugarloaf Hosston Project
"This attractive farmin agreement with Texas Crude Energy Inc. was announced by
Empyrean on 6th April 2006 and mentioned briefly in the last Annual Report. The
Farmin Agreement by which Empyrean would be earning a 7.5% interest before
payout (reverting then to a 6% working interest) involved participating in the
drilling and testing of a 21,000 feet well. The primary objective was the
Cretaceous Hosston sandstone reservoir and the four way closure over an area of
at least 20,000 acres was estimated to have an upside potential of several
trillion cubic feet of gas. The mean reserves potential had been calculated at
800 bcf of gas.
Drilling commenced on 17th August 2006. First significant gas shows were
recorded at 11,895' in the secondary objective, the Cretaceous chalk and
limestone. These shows continued to 12,240' where they abruptly ended.
Preliminary log estimates show 92' gross column of gas with a reservoir porosity
of between 4 -10 %.
As planned, 9 5/8" casing was set at 14,480' and a 7 5/8" liner cemented at
17,000'.
Significant gas shows reappeared at 18,190' following the interception of the
primary objective, the Hosston sandstones at 17,950'. These gas shows continued
intermittently throughout the sequence until the total depth (T.D.) of 20,896'
was reached on the 28th November 2006. The logs run at TD show a net pay of
between 90 - 140' over an interval 1,700' (19,700' - 18,000') using a 6%
porosity cut-off. The most prospective sand was 17' thick showing a calculated
porosity of 9%.
Based on these log results and gas shows during drilling, the operator proposed
setting pipe at 19,000'. Perforations over 10 separate intervals between 19'630'
- 18'973' in the lower Hosston sands were successfully executed but no gas flow
resulted.
The well was cemented up to 18,900', and perforations were then made over 7
higher intervals between 18,199' - 18,689' where significant gas peaks had been
encountered during drilling. These fine-grained sandstone intervals were then
subjected to a fraccing procedure. On 12th March it was announced that the
fraccing had achieved only minor gas recovery at a rate too small to measure.
There are several reasons which can explain the absence of significant gas flow,
despite the shows during drilling. The most likely explanation is the lack of
sufficient permeability due to the fine-grained nature of the sandstones. The
deleterious effects of using heavy mud weight (15.6 lbs/gal) by necessity could
also have played a role in impeding gas flow.
The next operation will be to test the much shallower Cretaceous chalk and
limestone which provided good gas shows and encouraging electric log response. A
definitive testing programme is being finalised and it is anticipated that
operations will recommence in the near future.
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