Solana Resources Limited announced that the Costayaco-4 well, a 540 meter crestal step out to the north of the Costayaco-2 well, has been successfully drilled, cored, logged and cased as planned. Initial evaluation indicates that Costayaco-4 has in excess of 200 feet of potential net oil pay, which is over 25% more than any of the previous three wells in the field.
The Costayaco field was discovered in the second quarter of 2007 and is located in the Chaza block, Putumayo Basin, southern Colombia. The field is currently producing approximately 7,000 barrels of oil per day ("bopd") gross, 3,730 bopd net of royalty to Solana.
Solana holds a 50% working interest in the Chaza block with Gran Tierra Energy Inc., the operator, holding the balance. This block is subject to an Agencia Nacional de Hidrocarburos contract.
ostayaco-4 was drilled directionally from the Costayaco-2 well site and reached a total measured depth of 8,884 feet, total vertical depth of 7,344 feet, on May 24, 2008. Cores were obtained from the two primary reservoirs; 48 feet from the Villeta T and 30 feet from the Caballos.
Hydrocarbon shows and lithology similar to Costayaco-1 and Costayaco-2 were encountered. Solana's initial log interpretations, combined with core samples and hydrocarbon shows, indicate reservoir quality sandstones with 16 feet of potential oil pay in the Rumiyaco Kg, 18 feet in the Villeta U, 38 feet in the Villeta T, and 134 feet in the Caballos.
A testing program to evaluate the hydrocarbon reservoirs encountered during drilling is currently being designed. Testing operations are expected to commence in late June and to take approximately one month.
The Pride-17 rig used to drill Costayaco-4 was released on June 7, 2008, and is currently being moved to the Costayaco-5 location. Costayaco-5, a field delineation well, is located approximately 1,120 meters west of Costayaco-2 and 1,060 meters north west of Costayaco-1. This well is targeting down dip portions of the productive reservoirs on the western flank of the field in an attempt to determine an oil water contact in the Villeta T reservoir, and to further define the Costayaco field reserves. Drilling is expected to commence in late June and be completed in late July.
The partners have embarked on a continuous Costayaco drilling program which will include Costayaco-6 and Costayaco-7 in 2008. Production from the Costayaco field is currently trucked to the offloading facilities at Uchupayaco which is connected to existing pipeline infrastructure. The 10 kilometer, eight inch pipeline from the Costayaco field to Uchupayaco, which will replace trucking operations, is currently under construction with a forecasted in service date of early August 2008. Once connected to existing infrastructure, plans are to ramp up Costayaco production to approximately 10,000 bopd, gross, overcoming the downstream Santana to Orito pipeline bottleneck by trucking approximately 3,000 bopd across this pipeline segment. The opportunity to possibly truck a further 3,000 to 5,000 bopd, gross, north to Neiva is being investigated. Additional infrastructure expansion to accommodate the anticipated increase in production from the continuing Costayaco drilling program and to negate the need for trucking is advancing.
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