The Talisman Seneca Brazion b-60-E /93-P-5 well (80% Talisman, 20% Seneca Energy Canada Inc.) tested at a stabilized, restricted rate of approximately 40 mmcf/d, with a flowing tubing head pressure of 3700 psi. The well was drilled on a previously untested structure. Based on flow rates and pressure data current indications are that this well could have upwards of 200 bcf of original gas in place.
"This is a significant and exciting new discovery," said Dr. Jim Buckee, President and Chief Executive Officer. "Over time, the deep play at Monkman could be as prolific as the Triassic play where 2 tcf has been produced to date. The Monkman deep play is another example of our successful North American natural gas strategy and illustrates the shift towards selectively pursuing more high impact exploration prospects."
The well is currently being tied in to existing Talisman infrastructure. Although capable of producing at rates in excess of 75 mmcf/d the well will initially flow at 40 mmcf/d. Incremental production will depend on reservoir performance and available processing capacity.
Talisman acquired 3,800 hectares of deep gas mineral rights at the October 20, 2004 British Columbia land sale for $7.9 million (100% Talisman). This land is along trend to the north and west of the 60-E discovery. Talisman has been the leader in evaluating the deep gas play at Monkman and has built a strategic deep rights land position of approximately 134,000 gross hectares (approximately 446 gas spacing units) with an average working interest of about 57%.
To date, three out of the six deep exploration wells drilled by Talisman at Monkman have been successful. The Company plans to drill four Paleozoic wells at Monkman in 2005. This will include a follow-up well on the Brazion structure and two wells on untested structures at Bullmoose and Boulder. Talisman has identified 30 potential drilling locations and is looking for targets of 35 bcf per well or greater, although the estimated size of the b-60-E discovery enhances the upside potential of this high impact exploration play.
Talisman announced its first discovery in the area in July 2002 with the b-79-J well (TLM 40%). The d-50-C deep well was drilled on the b-79-J structure, eight miles to the southeast of 60-E, and should be tied in next month. Talisman's natural gas sales from the Palaeozoic are forecast (on a risked basis) to increase from 2 mmcf/d currently to approximately 50 mmcf/d by 2007. Production has a low acid gas content (combined CO2 and H2S at 60-E is estimated at 13%) and the 60-E well is eligible for a deep gas royalty holiday. The deep play is in close proximity to Talisman operated infrastructure that connects to the Pine River gas processing plant. Prices received by Talisman at Pine River have averaged over $6/mcf this year and operating costs for deep gas are expected to be in the range of $0.75/mcf (lower than existing operating costs in the area). Well depths average between 4,000-5,000 meters with drilling costs ranging between $12-15 million.
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