1. Most Discussed
  2. Gainers & Losers
PCL 0.4¢

Huinga NZ interview

  1. FallGuy

    2,070 posts.
    TRANSCRIPT OF AUDIO Q&A WITH DR. DAVID BENNETT, PRESIDENT AND CEO OF INDO-PACIFIC ENERGY.

    Republic Communications:

    Welcome to Republic Communications Investors Q&A with Indo-Pacific Energy President and CEO, Dr. David Bennett.

    Dr. Bennett, thank you for providing your time with Indo-Pacific shareholders and Republic Communications, we've received numerous phone calls and email inquiries from shareholders on a number of issues, many having to do with the Huinga-1B. On July 18th there was a news release updating us on the status of the Huinga-1B, of which indo has a 12.5% interest. Of particular note was the reference to the open hole interval. Is there any chance that you can elaborate on this test and what significance you may attach to the data so far?

    Dr. Bennett:

    Well, we've got the hole cased with steel casing down to four thousand three hundred and seventy one meters, and beneath that, the hole is not cased, it's open down to 4500 meters, which is the TD of the well. What we did was put our test pipe down to the base of the casing and essentially sucked on the open hole beneath to see what came out. And that's the nature of an open hole test.

    It's not as good as a cased hole test where you actually have steel casing over your test zone, you perforate it, you fire holes in the casing, over selected intervals so that you can do a more quantitative flow test.

    So this was in the nature of a preliminary test to verify that indeed oil would flow from those sands. Now we're going one step further and setting casing across that interval and lining ourselves up to carry out long term flow testing now we know that we can produce oil.

    Republic Communications:

    The interval that was referenced in the news release 750 ft., based on your experience in the Taranaki and having regard to wells that were successful in the region, or in that basin, how significant is that as it relates to some representations made by Bligh Oil and Minerals in terms of the size that they think this well is?

    Dr. Bennett:

    Well, whether we have a 750ft oil column is something that is yet to be proven. If indeed we do then that's a very major oil column. The structure as we identify it now, certainly the basin overthrust was somewhat thicker then we expected but underneath it we have mapped quite a large structure. So potentially this is quite a significant result but there's a lot of 'ifs' yet to be answered.

    Republic Communications:

    So now that comment specific to questions still to be answered leads me into my third question- having regard to the geology in this area; can you provide a laymen's explanation into the type of geology or the complexities that were encountered on the Huinga-1B.

    Dr. Bennett:

    We're drilling an overthrust structure on a mountain front, it's not an unusual situation, the Rockies of course, a lot of the oil is found in similar overthrust situations but they are very typically problematic. They're problematic from the point of view of being able to define what you're looking at. They're problematic from the point of view of being able to map them seismically, They're problematic from the point of view of drilling them because you tend to get such problems as we've encountered, mainly hole instability, due to faulting and shearing of the rocks. Essentially what we've got is a very large slab several thousand meters thick of what we call basement or well, broadly speaking; older rock of no reservoir potential which has been thrust over the rock of younger rocks which are the ones that we're going for. It took us longer to get through that overthrust block of old rock, that basement , then we expected. and we didn't get over that until well over 14,000 ft. But underneath it, we got into the Kapuni formation which are rocks roundabout 40 million years of age, and we drilled a sequence of sandstones and mudstones very typical of the Kapuni formation; some quite big sandstones we think.

    We were in a position where we were tabled to get as good information about the well as we would have liked. The reason for that is that we were losing our drilling mud into the formation, into fractures of the formation, at a great rate, we lost over 28,000 barrels of drilling fluid into the formation which is a tremendous amount and that caused significant problems in evaluating the hole, we're not getting cuttings returns of course, if the mud isn't coming back to us it's not bringing up the entrained rock cuttings. And so when we reestablish circulation we get a mass of cuttings which we don't have a very clear idea where they come from . Similarly with the problems of the hole deforming the carbonaceous clay stones of the Kapuni formation are of course under tremendous pressure due to the presence of this overthrust block. .

    Republic Communications:

    I'm sorry to interrupt, but is that something you would characterize as the seal of this well?

    Dr. Bennett:

    Yes it is, it is. Except that of course within that sort of great massive seal we have encountered some very significant fractures to which as I said, we lost some drilling fluid at a great rate. And those fractures in themselves appear to have been flowing oil at us as well. And we think that what happens as we get near to the contact between the basement over thrust and the Kapuni formation beneath you enter into a zone of more intense fracturing and those fractures are in connection with the oil reservoired within the Kapuni formation sandstones. That would be a nice scenario because it would mean that when we flow test the fractures we're effectively flow testing the oil out of the Kapuni formation reservoir via a fracture system which fracture systems can flow at enormous rates.

    Republic Communications:

    I guess the fractures in no way affect the seal on the formation?

    Dr. Bennett:

    They can do, and it depends how far they go if indeed we've had fracturing up and out into some shallower reservoir sequence then we can have a lost our oil charge. However I'd have to say that it seems that we still do have our oil charge here and therefore the opinion is that the fractures are relatively local to the compact between the basement overthrust and the younger rocks underneath. And hopefully have not breached the trap.

    Republic Communications:

    So I guess the next question that seems to be the natural one is what are the next steps for the Huinga-1B?

    Dr. Bennett:

    Right now we're setting a 5 inch liner, a 5 inch diameter steel pipe, across the open hole interval that we've just flow tested. It's not an easy process because the hole is deforming on us, and the clay stones are still sort of squeezing in on us. We hope to have that in place very shortly. After that we will perforate, that is fire bullets through the casing at selected intervals, both across the interval of the Kapuni sandstones and across the intervals of fractures higher up. And then we will set in the hole test, a production string as we call it, which is basically tubing with packers on it, gauges, and a sliding sleeve, a zone selecting sliding sleeve assembly that enables us to test either or both of the Kapuni sandstones at the bottom or the fractures above them separately. We can either test the Kapuni sandstones or we can test the fractures, or we can test the both together. This will allow us to do rather more scientific if you like, analytical flow testing program than this open hole test allowed us.

    This takes quite a time, we'll then demobilize the rig, it's a big rig and a pretty costly rig, and so we'll be able to get it off site after we've set that production tubing in place and at our leisure, flow test this well for a long time. It probably will take a long time because apart from anything else there's 28,000 barrels of fluid that we don't want that has gone in there, and that's going to come back at us, it's the first thing to come back at us.

    Republic Communications:

    When you say a long time what does that entail? A week? A month?

    Dr. Bennett:

    Oh no, months. We'll test this for months.

    Republic Communications:

    The question of pay zones has come up a couple of times in the Huinga-1B, is it fair to say that oil that would flow from fractures would be characterized as a different pay zone than the Kapuni?

    Dr. Bennett:

    Yes it is, although as I said earlier on, it may well be that those fractures actually link back to connect up with the Kapuni.

    Republic Communications:

    Very complicated geology. It sounds like it is a very challenging well.

    Dr. Bennett:

    It certainly is. It's a big well, and a difficult well. We've had a very interesting result so far, I think that there's good reason to hope that we can go on from here to establish some success.

    Republic Communications:

    We hope so too. In a hole of this complexity, and having regard to the number of joint venture partners involved, have there been any challenges or "corporate culture clashes" amongst the joint venture partners as it relates to gaining a consensus on what to do next and any other type of consensus building efforts that have to be undertaken in this type of situation?

    Dr. Bennett:

    There have been differences of viewpoint, naturally. There always are in joint ventures. In this particular situation which is very complex, the correct course of action has been something which has... there have been some relatively divergent views as to what to do. However, all in all it's a very smooth working JV with a good relationship between the parties.

    Republic Communications:

    This is the second well drilled in this area, is it true that you initially mapped this structure some time ago?

    Dr. Bennett:

    I personally? yes that's right. 7 years ago which was when this acreage was originally made available by the government for application, I put together a group of companies, and completed for them an analysis and a mapping of this entire margin in order to identify possibilities. Huinga was what I mapped at that time as what I considered to be the best opportunity along the trend, rightly or wrongly. As a consequence of that our group bid for and won the acreage in which the Huinga prospect sits.

DISCLAIMER:
Before making any financial decisions based on what you read, always consult an advisor or expert.

The HotCopper website is operated by Report Card Pty Ltd. Any information posted on the website has been prepared without taking into account your objectives, financial situation or needs and as such, you should before acting on the information or advice, consider the appropriateness of the information or advice in relation to your objectives, financial situation or needs. Please be aware that any information posted on this site should not be considered to be financial product advice.

From time to time comments aimed at manipulating other investors may appear on these forums. Posters may post overly optimistic or pessimistic comments on particular stocks, in an attempt to influence other investors. It is not possible for management to moderate all posts so some misleading and inaccurate posts may still appear on these forums. If you do have serious concerns with a post or posts you should report a Terms of Use Violation (TOU) on the link above. Unless specifically stated persons posting on this site are NOT investment advisors and do NOT hold the necessary licence, or have any formal training, to give investment advice.

Top