Bronco Energy's Production Bucks Higher in August

Bronco Energy Ltd. has announced an update on production and drilling operations.

With the inlet tanks repaired in June, Bronco was able to refocus its efforts on process controls and commissioning of the treater in July. Production was limited for July as instrumentation settings, level controls and process enhancements were performed to calibrate the treater. August has seen a significant improvement in facility and well performance with average production rates of approximately 800 bopd on a calendar day basis and approximately 1,600 bopd when factoring in downtime for the period August 1 to 10.

Pipelined sales volumes to the Pelican Lake lateral from August 1 to August 10 exceeded a cumulative 8,000 barrels, including a blend of approximately 10% condensate. This volume includes four days of little or no sales volume primarily due to additional commissioning calibration activities, which required the wells to be turned down or shut in for approximately 50% of the time. The largest single day delivery of sales oil exceeded 1,900 barrels. On August 12, the treater processed intermittent clean oil rates of up to 2,200 bopd with a 24 hour average rate of 1,480 bopd.

To date, the high emulsion and water volumes have limited the number of producing wells to 19 of the 48 that are ready for production. Bronco will continue to monitor and improve facility performance to enhance the operational effectiveness of the Battery and is expecting to see continued increases in run time, producing well count, oil production and sales volumes in the near term. Bronco has secured a second treating vessel and expects it to be operational in Q4 2008 to assist in the treating of all of Bronco's existing and future wells on the East Block of the Bigstone Reserve.

The individual wells continue to trend with performance as expected upon achieving near optimized annulus fluid levels. The best six producing wells have an optimized average oil cut exceeding 85%, with the best well having a most recent test production rate in excess of 200 bopd with an 84% oil cut. Six additional wells are close to transitioning to high oil cuts, at which time additional wells will be brought on stream. Contingent on existing unoptimized wells being pumped off and transitioning to high oil, the plan is turn on 2-3 additional wells per week to increase well count near-term.

Bronco's recent guidance targets of 3,000-5000 bopd by the end of Q3 2008 assumed an optimized production level of 100 bopd from 30 to 50 producing wells, and that the battery will perform as expected and reach its optimal commissioned operational capacity. Bronco reaffirms its single well guidance. Total field guidance is expected to be achieved once 30 wells are pumped off with optimized oil cuts. The timing of achieving Q3 2008 guidance will be a function of the rate of increase of well and facility optimization, both of which continue to improve.

Consistent with other operators offset well performance in the area, Bronco's first well in a new area typically withdraws 40,000-50,000 barrels of water before the well is pumped off and the transition from water production to oil production occurs. Subsequent infill wells typically withdraw 3,000-10,000 barrels of water before the transition to significant oil production occurs. Assuming continuous run times, the length of time for the first well in a new area to dewater is 4-6 months and 2-8 weeks for subsequent infills. The source of the water is insitu water within the reservoir and will become an important resource when the field is converted to polymer waterflood in early 2009. There is no underlying water zone immediately below the Wabiskaw formation.

Drilling operations have continued with Bronco Rig #1 with the drilled horizontal well count currently at 61 horizontal wells. To date, 48 wells have been completed, equipped and tied in to the gathering system and have or are capable of sending fluid to the battery. Recent wells drilled were geologically rated as good to excellent based on gamma count, with 100% reservoir capture and strong oil returns to surface while drilling.

The Wabiskaw reservoir continues to demonstrate excellent characteristics for the long term development and production of the field, including polymer waterflood. The combination of pressure, solution gas, permeability, viscosity, porosity, and oil saturation provide for the energy and qualities necessary that results in the current high fluid inflow on Bronco's wells. Reservoir pressure on Bronco's wells is excellent at approximately 335 psia. The reservoir is aided by a solution gas drive while on primary production, as the pressurized solution gas provides the energy required to produce the oil emulsion.

Bronco's wells are currently producing solution gas volumes of approximately 1,000 mcf/d, in conjunction with the production of oil emulsion fluids. Future solution gas in excess of that used to power the facility will be compressed and sold, commencing in the coming weeks. Cores from Bronco's vertical wells in the present development area indicate that the permeability is 7 Darcies, the porosity is 31%, and that oil saturation is 70% with a 30% water saturation. From third party laboratory analysis, producing oil viscosities from Bronco's wells have measured values of approximately 1,000 to 5,000 centistokes at 25 to 37 C. Extrapolated estimated values are approximately 7,000 to 18,000 centistokes at a 16 C reservoir temperature. These estimates are within acceptable values required for successful primary production and are ideal for future polymer waterflood, as the target water polymer injection viscosity will be 15,000 centistokes to match the estimated oil viscosity.

The massive Wabiskaw resource is expected to continue to become more valuable as the Bronco/Bigstone partnership continues to exploit the resource. Due to the early stage development, reserves are only assigned to one third of the area of the resource. It is anticipated that reserves will continue to increase over time, and categories will shift upwards, as Bronco drills and produces additional horizontals and also drills vertical stratigraphic test wells on the West Block, where no reserves are currently assigned.

Bronco President and CEO, Mr. Brian Alford stated, "Significant Company milestones have been achieved and Bronco eagerly anticipates positive third quarter results as it continues to ramp up production and cash flow. This is just the beginning. These are 25 year production profile wells, with upwards of 80% of the value derived from Polymer waterflood. The Bronco/Bigstone joint venture looks forward to continuing the proving up of this world class resource."


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