Norwood Tests Positive Oil Flows at San Bartolo ST in Nicaragua

Norwood Resources has completed testing on the San Bartolo-1X2 sidetrack well. The well reached total depth of 6428ft on January 31, 2010. Each of zones 11b (5932'-5965'), 9 (6060'-6083' and 6093'-6110'), 7 (6249'-6295'), and 6 (6370'-6428') had indications of oil with zones 7 and 9 yielding quantities sufficient to consider fracture stimulation or horizontal drill holes to obtain commercial production rates.

On January 29, 2010 the Company completed a long term swabbing test of zone 7 of 404 hours over 35 days. The test resulted in 1289 bbls of fluid of which 241 bbls was 38.5 API oil and the remainder interpreted to be formation and drilling fluid coming from the sidetrack via a fracture connection to the 2007 San Bartolo-1 wellbore some 65' away. Water chemistry, vertical fracture impressions on packer elements and drill pipe debris in the suspended sediment support this conclusion. Flow rates over the test period averaged 99 bbls fluid per day of which 13.5 bbls per day were oil. Oil percentages averaged 30% in the stabilized part of the flow period. Pressure transient analysis indicates the zone has permeabilities ranging up to 31 millidarcies. Reservoirs with these rock characteristics are suitable for fracture stimulation to increase production rates to commercial levels.

The Company deepened the SB-1X2 sidetrack on January 30, penetrating the Zone 6 sand from 6370' to total depth near the base of the sand unit. Although oil fluorescence was observed in samples from 6395' to TD, subsequent isolation and testing of the sand yielded no inflow indicating lack of effective permeability in this sand at this location. Zone 9 tested 18.3 bbls of pure oil on a limited test on December 5 and 6 2009 as previously reported. Zone 11b recovered 60 bbls of oil during well cleaning operations in 2008.

With completion of the testing program at San Bartolo, the Company is plugging and abandoning the Las Mesas, Maderas Negras and San Bartolo wells in accordance with government environmental regulations. The Company is pursuing strategies for drilling a new well near San Bartolo that would be capable of fracing to potentially obtain commercial production from various zones that have been shown to contain high quality light oil under swabbing production procedures.

While attempts to achieve commercial production rates from basic production techniques were not achieved, the drilling of the side track well operations provided valuable data confirming the presence of producible hydrocarbons in several zones. The Board and Management of the Company believe that these results overcome the stigma of the testing failure during the 2008 program and are pursuing several options to capitalize on the significant potential of the Concession in order to develop commercial oil production in Nicaragua.


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