Kenai Loop - Project & Geological Setting
Buccaneer Energy Limited (“Buccaneer” or “the Company”) is pleased to provide the following detailed information on the Kenai Loop project located on the eastern side of the Cook Inlet basin near the city of Kenai, Alaska.
The Company has a 100% working interest in 9,009 acres, the prospective area is on a structural ridge extending from Cannery Loop Field, see map contained in ASX announcement.
The Cannery Loop Field has produced approximately 175 BCF gas. There were 11 wells in the Cannery Loop Field. One well produced from the Sterling Formation which is not a target in the Kenai Loop # 1 well. The remaining 10 wells produced from the Beluga and Upper Tyonek which are the two Formations targeted by the Kenai Loop #1 well.
The closest wells to the Company’s Kenai Loop # 1 well are the Cannery Loop # 3 and # 4 wells in Cannery Loop Field. These wells were drilled from the same surface location approximately 6,325 feet (1.2 miles) from the Kenai Loop # 1 well location.
The Cannery Loop # 3 and # 4 wells produced a combined 25.5 BCF from pay zones whose equivalents are expected to be present in the Kenai Loop # 1 well, but separated from the Cannery Loop Field by geological deposition rather than fault or structure.
The Company therefore considers the Kenai Loop # 1 well is a low risk attempt to extend the Cannery Loop Field.
Multiple Stacked Pay
The Kenai Loop # 1 well is expected to encounter multiple, stacked pay sands between 5,000 and 10,500 feet from equivalent reservoirs that are found in the Cannery Loop Field. The structural interpretation, based on the control wells and 200 miles of 2D seismic data, is that the reservoirs at the Kenai Loop # 1 well are structurally high to the “lowest known gas” for the Cannery Loop Field. Therefore, the risk of finding of a dry hole is considered to be less than 10%.
The principle risk of the Prospect is expected to be reservoir quality. The reservoirs are expected to be present and gas bearing however the permeability of the reservoirs, and thus their flow rates, are yet to be demonstrated. With this in mind, the probability of finding gas reservoirs able to produce gas at commercial rates is thought to be approximately 70%.
It is estimated that the Kenai Loop #1 well will require 20-25 feet of net pay and the draining of around 160 acres to produce enough gas to reach ‘pay out’. Log analysis of the closest productive wells (Cannery Loop #3 and #4) indicate that hundreds of feet of net sand in the Beluga and Tyonek intervals (prospective reservoirs in the Kenai Loop # 1 well) are likely to be encountered. This provides a high level of confidence that the well will encounter more than the minimal amounts of net pay and drainable acreage to be commercially successful. Initial producing rates are expected to be in the 5.0 million cubic feet per day range.
In the event of success, a significant up-side opportunity will be established as the limits of the existing gas accumulation in the Cannery Loop area will be demonstrated to exist beyond its currently recognized limits.
If successful, the estimated resource potential for the well is 5.0 BCF and the in-house estimated reserve range for the Prospect is between 35-78 BCF. Most likely reserves of 52.0 BCF are assigned to the immediate vicinity of the Kenai Loop #1 well.
The other features of the Kenai Loop project are as follows:
- One drilling location has been granted, an additional two drilling locations are in the process of being permitted;
- Kenai Loop # 1 is expected to spud in mid April 2011;
- 1 mile to the nearest gas sales pipeline; and
- Strong local market for gas in the area, recent gas contracts have a US$7.00 / MCF floor and US$10.00 / MCF ceiling.
For further information please contact Dean Gallegos on 0416 220 007 or 02 9233 2520, alternatively visit the Company’s website at www.buccenergy.com.
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