Australian oil and gas company Empire Energy Group has turned the tap back on at its Carpentaria-2H (C-2H) gas well in the Northern Territory’s world-renowned Beetaloo sub-basin.
The company says its new rate in the March quarter of 2.81 million standard cubic feet (mmscf) per day at its first horizontal well, represents a normalised flow rate of more than 3mmscf a day per 1000m of horizontal section and a 17 per cent improvement on initial tests.
Fracking (short for hydraulic fracturing) is a technique for recovering gas from a prospective shale rock. Companies can maximise gas production rates by optimising the placement of a well’s fractures along the target zone by piercing the reservoir with a chemical mixture known as “fracking fluid”.
A 927m-long horizontal section of C-2H, Empire’s first horizontal well into the Beetaloo sub-basin, was fracture-stimulated over 21 stages using a host of hydraulic fluids including crosslink, slickwater and a hybrid blend of both formulations, along with a high-viscosity friction reducer.
Empire says using multiple fluids in a single wellbore is not common practice in the industry. Management says it is on a steep learning curve at Beetaloo and is developing basin-specific fracture stimulation methods to optimise gas flow.
The company, which boasts the biggest holding in the giant Beetaloo Basin gas province in Australia’s Top End, believes the results validate its soaking strategy - where a well is “shut-in” to allow gas pressure to build-up.
During production testing at C-2H, the company shut-in its Carpentaria-3H (C-3H) gas well to monitor pressure build-up and to evaluate the impact of soaking.
The company’s second gas well, C-3H, is the longest horizontal well section drilled in any onshore basin in Australian history, running in at 2632m. The well has been fracture-stimulated across 40 stages along a 1989m horizontal section.
A third hole, Carpentaria-4V (C-4V) was completed in January this year, after targeting the neighbouring fault block that houses the historical Carpentaria-1 well, in addition to C-2H and C-3H.
Interestingly, C-4V has proven the continuity of the prospective Carpentaria shale play into the adjoining Carpentaria East fault block and suggests the thickness of the stacked shale sequence is consistent over the EP187 tenure.
Independent analysis says the company’s development wells could generate 6.2 billion standard cubic feet (BCF) of gas per well on a conservative P50 basis and 8.1 BCF gas on a P10 basis.
The P50 basis signals at least a 50 per cent probability that the quantities recovered will equal or exceed the best estimate, while P10 means there should be a minimum 10 per cent chance that the amount recovered will equal or exceed the estimate.
After crunching the numbers, Empire believes its development wells at 2-H and 3-H in the pilot phase can be drilled and fracture-stimulated to be ready for production for between $15 million to $20 million per well. The numbers show an indicative cost of about $2-$3 per gigajoule in any future development scenario.
The company is neck-deep in the front-end engineering and design and regulatory approvals process for the Carpentaria pilot project, which will underpin a final investment decision slated for later this year.
Empire filled its coffers to the tune of $15.1 million in the March quarter after getting its hands on a further $5.6 million, courtesy of the Federal Government’s Beetaloo Cooperative Drilling Program. An additional $15 million credit facility with the Macquarie Bank remains firmly intact.
With global markets recently enjoying a rollercoaster ride, management says it is focused on minimising capital expenditure while the pilot project planning progresses.
At the nearby Western Betaloo project, Empire has recommenced work on the environmental management plan needed for it to get approval to undertake further ground-based activities.
Pending the approvals process and tidying up the last of the land access agreements, plans are afoot to gather 376 line kilometres of 2D seismic and construct up to six well pads with six horizontal stimulated wells.
Earlier this week, the Australian government released its final consultation paper for the mandatory code of conduct (Gas Code), which seeks to secure more gas at reasonable prices for Australian consumers feeling the heat for turning up the heat.
Under the code, small gas producers will be exempt from the price cap, currently set at $12 per gigajoule, if they supply only the domestic market – a win for small gas producers like Empire.
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