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MEO to Start Production Testing at Appraisal Well Offshore Indonesia

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MEO Australia said Wednesday in a statement that it is preparing to start production testing at its Gurame SE-1XST appraisal well, drilled by the Hercules 208 (200' MC) shallow water jackup, offshore northern Sumatra.

Circulation was lost at a depth of 10,318 feet (3,145 meters), which MEO interpreted to be due to natural fractures in the top of the Belumai sands. The company also disclosed that high background gas readings were noted from thin sands within the Lower Baong shale.

"The detection of gas within the Lower Baong shale with no indications of carbon dioxide or hydrogen sulfide indicates the shale as the likely hydrocarbon source for the adjacent Boang and Belumi sands. Evidence of natural fractures in the Belumi sands will enhance the potential of this interval to be a productive reservoir," MEO's Managing Director Jürgen Hendrich said.

MEO is at present plugging back the seven inch liner prior to production testing the Boang sands.

Gurame SE-1XST lies in MEO's Seruway Production Sharing Contract (PSC), which contains multiple existing oil and gas discoveries as well as undrilled prospects. According to a technical supplement published by MEO, the P90 assessments for the Baong and Belumai reservoirs stand at 168 and 105 billion cubic feet respectively. The company had described the Seruway PSC as having "significant potential for commercial development" in its third quarter report published in September.

Indonesia is closely being watched by industry players given the country's interest in developing its natural gas assets. As Indonesia grapples with decreasing oil production in the last decade, the government's focus has turned increasingly to natural gas as an alternative fuel source, especially for power generation. The country, ranked eighth in world gas production, has recently given the regulatory nod to BP for expansion plans – worth $12.1 billion – for its Tangguh LNG project in the Papua Barat province in eastern Indonesia.

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