Gulfsands Petroleum provided the following update on the Company's operations at Block 26, Syria where Gulfsands holds a 50% interest and acts as operator.
Hanoon-1 Exploration Well Completed
Operations have concluded on the Hanoon-1 exploration well, the second well in the 2010 exploration drilling program.
The Hanoon-1 well, located approximately 8 kilometers to the north of the Khurbet East field, targeted the Cretaceous Shiranish and Massive Formations, the latter being the producing formation in the Khurbet East field. The well targeted a structure with pre-drill estimated reserves of 5-15 million barrels of oil ("MMbbls").
Hanoon-1 encountered the top of the Cretaceous Shiranish Formation at approximately 1885 meters Measured Depth ("MD"), or 1440 meters True Vertical Depth ("TVD") below mean sea level ("bmsl"), approximately 30 meters deeper than the pre-drilling prognosis. A few meters below this depth hydrocarbon gas was detected and oil shows were observed on drill cuttings. On the basis of these oil and gas shows drilling operations were suspended and two sequential coring operations were undertaken. 24 meters of core were recovered which were intermittently coated with viscous oil. The well was then open hole tested, however no hydrocarbons were recovered to surface.
Drilling operations resumed and the well was deepened to the top of the Massive Formation which was encountered at 1975 meters MD (1530 meters TVD bmsl), also 30 meters deeper than the pre-drilling prognosis. The presence of oil shows and oil on drill cuttings shakers between 1989 and 1992 meters MD (1544 and 1547 meters TVD bmsl) prompted a further coring operation to be conducted, and an additional 3.5 meters of core were recovered. The formation generally consisted of tight dolomite and limestone with spotted viscous oil shows. It is considered likely that the quantities of oil observed at surface had emanated from oil filled natural fractures that were detectable from wireline logs. Further testing operations were then conducted in open hole over the Shiranish and Massive Formations combined, inclusive of acidification of both intervals with lift assistance provided via nitrogen injection. These operations recovered non-commercial amounts of viscous oil to surface along with formation water.
Consequently, the Hanoon-1 well has been interpreted as having a non-commercial oil reservoir and has been plugged and abandoned. The cost to Gulfsands for its 50% share of the Hanoon-I exploration well is estimated at approximately US$2.0 million before cost recovery and approximately US $700,000 after cost recovery.
Khurbet East-15 Development Well
Following the completion of operations at Hanoon-1, the rig will be moved to the Khurbet East-15 ("KHE-15") well location. KHE-15 will be a horizontal production well that will target the Cretaceous Massive Formation in the north central crestal area of the Khurbet East field, with the dual objectives being provision of additional well capacity for reservoir management purposes, and further development of field reserves.
Khurbet East Field Oil Production
Average daily gross oil production at the Khurbet East Field continues at a rate of approximately 16,700 barrels per day with the result that cumulative gross oil production has exceeded 8 million barrels, with minimal water production and minimal pressure depletion being observed to date.
Ric Malcolm, Gulfsands CEO, said, "The results of Hanoon-1 will now be evaluated in order to understand the implications for future exploration in the area north of the Khurbet East field. We are continuing to finalize drill targets on structures identified to the south and east of the Khurbet East and Yousefieh Fields and elsewhere on Block 26. We are pleased to be able to report the passing of yet another production milestone at the Khurbet East Field."
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