Ivanhoe Estimates Up to 1Tcf of Gas at Guan Structure

Ivanhoe announced better-than-expected reservoir characteristics at Sunwing's Zitong-1 gas well in southwest China based on an analysis of logs from the Xu5 and Xu4 shallower target formations.

"The results of this evaluation significantly increase the upside natural gas potential in the 70-square-kilometer Guan structure to approximately 0.8 to 1.0 trillion cubic feet, double our previous view of 0.3 to 0.6 trillion cubic feet," David Dyck said. "This is also very encouraging information relative to our view of the entire Zitong block where we see the potential for several trillion cubic feet or more of natural gas. As we proceed with drilling, logging and testing operations, we aim to demonstrate this upside potential."

The Xu5 and Xu4 formations, originally considered as secondary targets to the deeper Xu2 formation, were encountered at depths between approximately 3,500 meters and 3,800 meters. The two formations were logged and casing has been successfully cemented in place. Drilling has resumed towards the deeper Xu2 formation at approximately 4,150 meters.

Guan is the largest known structure on Sunwing's 2,669-square-kilometer block located in the heart of the prolific Sichuan gas basin.

Log data on Xu5 and Xu4 formations at Zitong-1

Data from the open-hole logs indicate the Xu5 and Xu4 formations most likely share the same pressure regime, with a total sand shale sequence of 357 meters, from 3,445 meters to 3,802 meters. Within this sequence, up to 58 meters (190 feet) of primary sand package has been identified in four sand packages between 3,841 meters and 3,564 meters in the lower Xu5 formation with porosity ranging up to 13%, and an additional 22 meters (72 feet) of secondary reservoir sand in three sand packages between 3,592 meters and 3,801 meters in the Xu4 formation with porosity up to 8.5%.

Log data indicate that gas shows were present throughout the Xu5 and Xu4 formations. Gas also was observed in the mud at surface while drilling through these formations. Sunwing encountered significant pressures while drilling through the Xu5 and Xu4 formations. High pressures potentially are a very positive characteristic of the reservoir, increasing flow rates and reserve quantities of any potential gas discovery.

Next steps at Zitong-1 well

Drilling at Zitong-1 will continue to a planned total depth of approximately 4,500 meters (14,764 feet). Horizontal drilling options will be determined after testing of the vertical wellbore is completed. Sunwing expects to reach total depth by the end of November.