Atikwa has completed the initial phase of drilling operations at its Porcupine Hills well in Alberta. The Company has now begun the casing and cementing of the build section of the well and anticipates being able to drill out and begin testing the zone of interest by Friday October 21, 2011. As part of the operation associated with the drilling of the build section the Company entered the zone of interest before pulling out of the hole to set casing. From a geological perspective everything appears to be consistent with the Company's initial assessment of the play; the zone was present at the anticipated interval; the cuttings are a medium to coarse grain sand and pebble conglomerate with porosity in a range of 8 to10%; the reservoir pressure is 33,000 Kpa and gas was detected when the zone was entered.
Last fall the Company completed the re-entry, flow-testing, and pressure build up analysis of the original vertical well bore that the Company is now drilling horizontally out of. During the flow-test in October of last year, the well produced at varying rates, with initial rates of 4.0 to 9.0 million cubic feet per day with associated liquids of 30 barrels per million cubic feet of gas, which translates into approximately 600 to 1500 boepd with 125 to 270 barrels of that being natural gas liquids. Natural gas liquids are attractive because they are commonly priced in relation to crude oil prices. During the flow-test initial production rates are believed to have decreased as a result of down-hole near wellbore blockage. A more detailed analysis by the Company of the pressure data and down hole sampling suggests that the well had higher than expected near wellbore formation damage associated with the original 1981 drilling fluids from the well reacting with the natural clays inherent in the reservoir.
To address this issue, the Company has commenced the current program, which entails drilling horizontally out of the existing wellbore and out into virgin reservoir, away from any formation damage associated with the original well. The plan is to then conduct a flow and build up test in preparation for putting the well on production.
The Company holds a 100% working interest in the well and seven contiguous sections of land in the area. The well should qualify for the "Alberta New Well Royalty Rate", which provides a maximum 5% Crown royalty rate during the first full year of production.
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