Gas2Grid Updates on Oil Testing at Malolos-1 Well in SC 44 in Cebu

Gas2Grid Limited disclosed Monday that swabbing operations at the Malolos-1 well in Malolos oil field in Service Contract 44 in Cebu in the Philippines have resulted in almost 100 percent oil recoveries but in the process the perforations in the wellbore through which the oil is produced have become clogged. Remedial work is currently being undertaken to unblock the perforations.

Swabbing fluid from the production tubing and lowering the fluid level reduces the back-pressure on the oil bearing formations and it has resulted in the percentage of oil being recovered increasing to almost 100 percent. This result has confirmed that the Malolos-1 sandstones being tested are oil reservoirs.

During the swabbing operations small amounts of fine grained clay has also been produced with the oil and this clay has plugged the perforations through which the oil is produced, from the reservoir sandstone into the wellbore. This situation is a common condition with some sandstone reservoirs and it is technically termed “migration of fines”.

Current operations at the well are focused on clearing the plugged perforations. Once the perforations are cleared oil testing will resume.

The extended oil production testing program aims to gather sufficient technical information to confirm commerciality of the Malolos Oil Field to justify the Department of Energy awarding a 25 year production period and leading to full field appraisal and development. Proving commercial production at Malolos Oil Field will have a very significant impact on the value of the Company and will benefit the Philippine economy.

On Jan. 29, the Company reported a “Contingent Resource” of oil in the two productive sandstones for the Malolos Oil Field between a “Low Estimate” (1C) of 6.8 million barrels and a “High Estimate” (3C) of 68.1 million barrels, with a “Best Estimate” (2C) of 20.4 million barrels of “Total Oil Initially in Place”. This Contingent Resource is in addition to  the Unrisked Prospective Resources released to the ASX Jan. 29.

Migration of Fines

“Fines migration refers to the motion of naturally existing particulates in the pore system caused by high fluid shear rates. Generally this is more of a problem in clastic formations (sandstone), due to the higher concentration of potentially transportable materials (such as clay). Fines migration is usually only apparent when the wetting phase (in our case oil) of the reservoir (which wets and encapsulates the fines) is in motion.


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