Junior oil and gas firm Northern Petroleum reported Tuesday that testing of its 102/11-30 well in northwest Alberta has produced oil but not at an economic rate.
Northern said that the well was drilled and tested as planned, and that a significant reef section was encountered. Two zones were isolate with the lower zone proving to be water wet and the upper zone producing oil "but with too high a water cut to be economic in the current oil price environment".
The well has now been suspended for further evaluation.
Elsewhere in the company's Alberta operations, its 102/15-23 well produced intermittently on natural flow during January. A pump is now being installed at this well to establish stable production.
Three other wells that are yet to be tied in have been shut in to release expensive rental equipment, Northern added. The 16-19 well will be brought back into production following the purchase of a production package that is currently being negotiated.
Northern CEO Keith Bush commented in a company statement:
"This well result means that we will need to re-evaluate our understanding of drainage in the Keg River reefs. However, the well has confirmed our seismic interpretation at the reef edge which is an important step forward in the overall development. Integrating the results of this well and monitoring the performance of the producing wells over a longer period of time will provide a better understanding of how to economically produce the oil held within our acreage.
"The temporary shut in of our first three production wells has been necessary to change the operating cost structure under which they were producing. We believe we've found an economic solution on 16-19 and will continue to work on the other two wells. Maximising the net cash flow contribution from our production will always be a priority. We have seen the start of a reduction in service costs and expect this to continue after the winter drilling season."
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