Final Preparations for Oil & Gas Production at Ash Creek Underway
HIGHLIGHTS
? Injection of water in Trusler #9 well has received final statutory approval
? Erection commenced on building to weatherproof infrastructure at site
? Water injection facilities and building now scheduled for delivery before the end of December, 2010
? Permanent power to the field scheduled to coincide with facility completion
? Commissioning of the facilities is expected before the end of December, 2010
? Permanent production set to commence immediately after the commissioning is complete
? Total recoverable oil targeted by the full re-development and chemical flood program is over 4.5 million barrels
OVERVIEW
Elk Petroleum Ltd (ASX Code: ELK) has made significant progress as it moves to establish production from its Ash Creek oil project, in Wyoming, USA.
Elk Petroleum Managing Director and Chief Executive Officer Bob Cook said the Company has identified the Ash Creek project as being capable of delivering near-term cash flow generation and is targeting in excess of 120 barrels of oil per day (bopd) from the site by the second half of 2011.
The Underground Injection Control (UIC) approval has been granted by the Wyoming Oil and Gas Conservation Commission. This allows produced water separated from Ash Creek production to be injected into the Trusler #9 well and thereby initiate the waterflood of the Lower Shannon Formation to recover incremental oil.
The production facilities at Ash Creek are nearing completion with the delivery and erection of the building that will allow the critical components of the production equipment to be heated through the severe winter period. Please see image 1 of the ASX announcement.
The separate produced water injection facilities, including an injection pump, filters, controls and other equipment, will be similarly housed, to minimize winter disruptions.
The skid-mounted injection facilities are expected to be delivered and placed on site before the end of December. Commissioning of the facilities will commence once the injection facilities are installed. When the commissioning is complete, production from Trusler #1 and Trusler #8 wells can commence and separated produced water re-injected into Trusler #9. This is now expected to in January, weather permitting.
Power cables have been run to the production wells and the facilities to expedite connection to permanent power which is anticipated to be run into the field in the coming weeks. Should the power company's installation schedule slip, the option of employing leased generators will be implemented.
ASH CREEK BACKGROUND
The Ash Creek oil field is located in the northern Powder River Basin on the Wyoming/Montana state line and was discovered in 1952.
Two sandstone reservoirs in the Upper Cretaceous age Shannon Sandstone Member produced 35 degree API Gravity oil from an average depth of 4800 feet. The structural trapping mechanism is a south plunging faulted nose or anticline. The field was completely plugged and abandoned in 1998. Peak oil production was almost 2000 barrels per day (BOPD) and cumulative production from the entire field has been just over 6 million barrels of oil from a maximum number of 25 production wells. After 1998, all of the oil and gas leases within the field expired.
Elk's field re-development plans for Ash Creek, the potential oil volumes being targeted by this program, and forward plans were provided to shareholders and the market in an ASX release dated 15th April 2010.
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