Great Northern and its partners have completed a 72-hour production flow test on the Terra et al Tower 7-8-81-17 W6M gas well (ie. the "7-8 Well"). This well was drilled late in 2006 as an exploration well targeting the Triassic Age formations, including the Halfway and Doig zones, and reached a total depth of 1,988 meters. The 7-8 well was logged and cased in December 2006, and has remained standing until the recent completion operation last week. The logs indicated approximately 9 meters of Doig pay with average porosities of 9.5% in the one interval tested.
The 7-8 well was completed in early March 2007 and a seventy-two hour production test was conducted March 14 through 17, 2007. After fracture stimulation the final test rate was 3.5 mmcf/day at a flowing pressure of 7,700 KPag.
In the absence of historical production information, it is difficult to estimate the actual size of the new gas pool or how the 7-8 well will actually perform when placed on production. Great Northern, and its partners, are proceeding with plans to participate with Terra as Operator to drill additional wells to the south of the 7-8 well in an effort to delineate the size of the pool. The location of the 7-8 well was originally selected because it was projected as the highest and the most northerly location on the defining seismic anomaly. The first follow-up location is being planned in Section 5 of the same township, with a second follow-up location currently under review.
Upon receipt of the results of drilling additional delineation wells, Great Northern and its partners will be in a position to announce a full field development plan for the Eight Mile North Field. Terra has commenced scouting of a pipeline right-of-way to connect the Eight Mile North Field to its planned central compression and dehydration facility in the Tower Field. This would involve the construction of approximately five miles of pipeline, and would be subject to regulatory approvals and completion of a pipeline crossing of the Peace River.
The 7-8 well was part of a farmout arrangement entered into by Great Northern with Terra Energy Corp. ("Terra"), on or about October 12, 2006, along with two industry partners comprising Regal Energy Ltd. and Park Place Energy Inc. whereby the Group committed to approximately 80% of the cost of two farmin wells, with a view to earning approximately 48% of the working interest in two sections per well. The farmout arrangement includes a rolling option to continue drilling and earning on the same basis in the total 22 Sections making up the Eight Mile North Field. Great Northern is paying a 20% cost share with Terra retaining a carried Gross Overriding Royalty. The interest of the Corporation reduces to 12% once it has achieved payout.
The new gas pool discovery at the Eight Mile North Field represents a separate and distinct Triassic Doig play. The adjoining Eight Mile South Field is scheduled to be placed on production as early as September 2007.
Great Northern's President and CEO, David Lane said:
"The discovery at our Eight Mile North project has revealed results that are most impressive. This bodes very well for Great Northern and provides the opportunity for rapid growth of the Corporation thus enhancing Shareholder value. Great Northern looks forward to announcing other projects which have been recently acquired and, in addition, will be supplying timely updates on Eight Mile North."
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