Blugrass announced several updates within the Cave Pool Unit to date. Twenty one (21) oil wells have undergone pressure testing to ensure both casing and tubing integrity testing on these leases. This will determine what wells Blugrass will decide to re-work first due to the expectation of lower costs initially such as not paying for additional tubing and rods, as well as bypass any costs associated with repairing any wells with potential casing leaks.
Additionally, environmental remediation has begun on these leases to remediate approximately 12 wells that the New Mexico State Oil Conservation Division deemed to be out of compliance. These remediation's are expected to be completed within approximately 2-3 weeks whereby potentially satisfying all state requirements. The majority of the out of compliance wells are typically associated with stripper wells that were drilled decades previously that have had either exhibited minor oil leaks from flow lines or from a leak via the actual wellhead itself during a routine pump repair or work-over. Further minor oil spills may occur from leaking stuffing boxes that can accumulate significant asphaltines around the wellhead over decades of production which could also potentially harm the environment.
The reason why the company is focused on the immediate remediation of these 12 wells is due to the fact that the State will not approve any new drilling applications on these lease until such remediation is deemed to be complete as well as it wishes to comply with all state regulations as it would potentially foresee acquiring additional oil and gas assets within the state of New Mexico.
Furthermore, we are currently focused on bringing online several of the wells that are currently shut in, in order to capitalize on the current price of crude. There is still much work to accomplish on these assets prior to realizing any significant monetary gain but based on offsetting well production and the extensive geological work that we have performed to date, within the Artesia Vacuum trend, we are very excited about this development plan on a go forward basis. We expect numerous near term operational updates as there will be much to report once the State approves the remediation project as well as the expected positive results from the work-overs.
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