VAALCO Energy, Inc. announced that the consortium responsible for drilling a gas prospect on Block 48/25c in the British North Sea has elected to abandon the well. As previously announced, VAALCO had a 25% interest in the exploration well, which was an offset to a former Shell gas discovery made in 1987. The exploration well was drilled to a total depth of 7,910 feet.
The consortium's decision follows analysis of core samples and the electric log. A substantial gas column was present but with low permeability and porosity. The gas/water contact was observed higher than expected thereby decreasing the size of the potential reservoir. While it is believed that there are approximately 25 bcf in place on the jointly held acreage in block 48/25c, the consortium deemed this to be non-commercial and is in the process of abandoning the well.
"Although gas was present in the prospect, the consortium determined that recoverable reserves were not sufficient to merit a completion on the jointly held acreage," said Robert Gerry, Chairman and CEO of VAALCO. "Notwithstanding this disappointment, we are making progress on VAALCO's 100% owned and operated exploratory well onshore Gabon in the Mutamba concession (N'Gongui-1). I am pleased to report that we commenced drilling this well on March 23, as planned, and are on track to complete the well towards the middle or end of April. Given the supporting data for this well, we remain optimistic about its success."
VAALCO expects to incur approximately $8.2 million of expenses in the first half of 2009 related to its interest in the North Sea well.
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