The 12,500 foot (3,810 meter) deep BG Webb #1 K well will spud in the next week and will test multiple Frio sand targets between 6,500 and total depth (ie Margulina sand, 8,200 series sands, J series sands and K series sands) in the Flour Bluff Field itself, a large upthrown, 3 way dipping fault closure.
The well is specifically targeting 19 BCF ("billion cubic feet") of gas potential in the J and K sands in the drainage capture of the well, ie undeveloped 2P reserves of 9.22 BCF of gas (Ryder Scott 2004 reserve report) and additional potential of 9.78 BCF of gas. Historically wells have produced up to 20 BCF of gas in this field.
The BG Webb #1 well will also test the overview concept of the existence of a potential 160 BCF of gas in multiple J and K Frio sands below current 3P reserves of 67 BCF of gas in the deep portion of the regional structure of the field.
Following the drilling of the well the rig will be used to drill two wells (EFB D-10 and EFB D-24) on the East Flour Bluff Field which lies in a downthrown 4-way dipping structural closure eastern adjacent to the Flour Bluff Field. East Flour Bluff Field has a present 3P reserve of 22 BCF of gas with further upside potential of 44 BCF of gas, in all 66 BCF of gas.
The Flour Bluff Project is considered to be a relatively low risk, large gas development with major upside from the exploration of deeper sands in a major giant gas field which has produced to date some 1.3 TCF ("trillion cubic feet") of gas and 65 MMBO mainly as condensate and has extensive established production facilities and pipeline infrastructure. It offers Sun Resources a unique opportunity to grow with its 12.5% share of the present 3P categorized 92.5 BCF gas reserves with a realistic upside to 300 BCF from further exploration success.
The aim of the programs in 2005-06 is to bring project gas production from the current level of 3.2 MMCF/day to 40 MMCF/day on the 3P reserve base and if strong exploration upside is confirmed to an eventual 80 MMCF/day.
Gas production is an attractive business in the USA as prices are high. Gas prices are up to three to four fold flat Australian prices (US$6-8 compared with $US2.00-2.25) and will continue to hold at these levels. Gas price is a reflection of the country's current (and growing) 4 TCF pa of gas imports over 19 TCF pa of gas production (in all 23 TCF pa of gas consumption) that is also being underpinned by the prospect of increased importation of liquefied natural gas (" LNG") to satisfy demand.
Participants in the Flour Bluff Project are Texas Crude Energy as operator with 37.5%; Sun Resources with 12.5%; Victoria Petroleum with 12.5%; Tony Barlow Limited with 12.5%; King Ranch Energy with 12.5% and Davis Gulf Coast with 12.5%.
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