.

Fingers crossed the bugger flows at circa 4000 bopd next week.

That would be a fantastic result - so keep those fingers crossed for something near to 4000 bopd.

A lot of people talk about points on the chart but that does not matter in my opinion. Oil stocks are news and sentiment driven. And this time some potentially very big news is coming.

This time a proper flow test will occur, which if it works out well at around 3000 to 4000 bopd then the "C" word might be issued. Yes, they may state "commercial".

Commerciality only requires 60 MMBO recoverable at 60 US$ oil price in the Falklands.

As of yet there has been no proper stable flow test performed (just a quickie flow or no flow last time), this is being alleviated at the moment.

So given 14-10/2 and 14-10/4 and 14-10/5 are all in communication and now we are getting a proper stable flow test done it should mean the "C" word is possibly used this time.

Future drills 14-10/6 and flow test of lower fan, along with 14-10/7 and 14-10/8 should prove up a commercial P90 size of 225MMBO to 250MMBO to go into the new CPR in Q1 2012.

Of course upside on those figures is large but a lot in the market will want only to see the P90 case.

4000 bopd would be a fantastic result for a pure vertical well, and from the data they collect they can extrapolate that and calculate theoretical flow rates if they used horizontal completions on production wells.

Quite simply the higher the flow the less wells you need to drill the lower the capex is and the quicker the ROI is.

So 4000 bopd from a vertical would be fantastic.

The very best possible would be perhaps 20% over management expectations, so if Sam Moody is targeting 4000 bopd then at very best you can expect just under 5000 bopd - but 5000 bopd would be a result far in excess of management expectation.

I will be jumping up and down with excitement if anything over 4000 bopd and personally I expect a figure in the 3000 to 4000 bopd range.

Talking of flow tests, as some people have been raising XEL and comparing.

You cannot compare as XEL did a flow test with a horizontal completion, this for RKH will only be on a vertical, but production wells would have a horizontal completion.

To show what a difference this can make lets look at XEL.


Vertical flow test in 2009 = 150 bopd

http://www.investegate.co.uk/Article.aspx?id=200804301400094386T


----------------------------------------

Horizontal completion in 2010 = 2900 bopd


http://www.investegate.co.uk/Article.aspx?id=201012210700083389Y




So this is why production plans will likely be based on a multiple of the coming flow test. If RKH can get 4000 bopd from a vertical it should mean with a horizontal completion that well over 10,000 bopd can be planned as production rates for field development (likely between 10,000 and 15,000 with a horizontal).

So all we need for now, from this vertical completion, is around 3000 to 4000 bopd at a stablised rate. That would be great. If we get 4000 bopd its a fantastic result.

and if we get 2000.......

....it's a result! Less and it's a poor result

No. 4000 bopd is the target.

As was seen with Bowleven, just over 2000bopd at a stable rate is commercial.

Anything over 2000 bopd is commercial for RKH.

If we manage to hit the target of 4000 bopd then its fantastic. If we get 3000 its a good result.

If we get 2000 its ok.

Anything less than 2000 would be a poor result.

don't get too excited flow test results not due till around end of june.

that's only 2 weeks away

cynic as you know a lot can happen in one week let alone two.... keep building the spaceships!

will do! ..... in fact, i took profits in half this afternoon, not least because i do not like the feel of the markets at all and am also in brazil from monday night for the rest of the week

cynic wise move... enjoy the salsa etc...

Post from Stu255 over at III.



"Many folk here still seem to think I'm bearish about this test Although I haven't said that once. I'm simply stressing the need to keep your feet on the ground and to ignore the fantasy figures that people have been touting. This is the business end of the P90 appraisal. This is the final operational step to booking P1, P2 and P3 reserves.

Finally after 10 months of waiting here we are Sea Lion Well Test Mark-II.


The aims?

Having already declared Sea Lion as commercial, RKH will now demonstrate the ability of the reservoir to produce oil on an industrial scale.


The FEED planning is well underway and we can expect that RKH are ready to act on the tendering process for the FEED study.
All that remains is the final few reservoir parameters which will soon be fully understood.

Hand in hand with this will come a brand new CPR (no waffy 'reserves report'), the CPR will move the P90 figure to P1.
If RKH successfully drill the western wing of Sea Lion next then the P50 figure can be moved to P2.

RKH will raise bank finance against the P2 figure which could be anything from 150MM bbl to 400MM bbl (if they can demonstrate a decent recover factor this week and 14/10-6 is a success).


RKH have designed this test to overcome all of the issues we saw hamper the previous test. The use of an ESP will eliminate any risk of waxing.

I have previously stated my opinion that the drilling results carried 90% of the risk and the well test 10%.
Well having seen the drilling results come in so strong, the well test risk has been further mitigated.


The drilling results for 14/10-5 beat best expectations by a good margin with 94m of net pay. On top of that there are streaks of very good permeability, these intervals of 1 Darcy will produce at a significantly greater rate than the 100-200mD intervals, but the high permeability intervals have the effect of dramatically increasing the sectional flow area for the greater formation.

That is to say the 100-200mD intervals will drain into the 1000mD intervals which will in turn drain into the wellbore.


Everyone should expect this well to unload and to comfortably produce a stable flow of crude, I fully expect it to.


An ESP will be operated to maintain a THP of 1,300psi which is the hydrostatic equivalent of where they had problems with 14/10-2. The ESP will quite literally lift this problem out of the well.
Insulated tubing will help keep the produced fluids warm the sole purpose of this is to keep viscosity much better than 14/10-2 and to also keep the wax in the solution.


For this test RKH have conquered the engineering issues I was so vocal about during the run up to the last well test.



All the gremlins have been slain.



I believe RKH will demonstrate that the reservoir can produce oil in accordance with a highly lucrative field development model.

RKH will learn a great deal about Sea Lion from the data collected during this test.

That data will allow:-

1). The establishement of the optimal well design for production wells.
2). The selection of optimal well locations for producers.
3). The selection of the optimal enhanced recovery method (ESP's, water injection, gas injection, etc)

4). The commissioning of a brand new 'Field Development CPR'
5). The establishment of the actual recover factor.
6). The upgrading of contigent resources to proven reserves.

7). The negotiation of raising bank credit and financing from a position of strength.



This test is the acid test for the entire Falklands Oil story.
This test is 10 months overdue, having realised the raft of engineering requirements that need to be in place to bring RKH to this pivotal moment.


This test is the absolute key to everything that comes next.
Plenty of people expect it to be a success, as do I.

At some point in the next few days, this venture will move from a speculative and frustrated exploration/appraisal operation to a full blown field development.


No oilfield of this size goes undeveloped.


2,000bbl/day from an exploration well through a vertical reservoir section of 94m flowing into a 3.5" test string is a commercial flow rate all by itself ($750m life-time production per well X 24 wells).

Then consider a production well, a horizontal completion of 1,200m flowing into a 5.5" production tubular, most likely enjoying pressure support from nearby water injection wells."

A lot has been talked about potential flows with no real definition of what permeability there is at Sea Lion.

In general it can be said with reference to oil reservoir rock that :

Poor Permeability 1-10 mD.
Fair Permeability 10-100 mD.
Good Permeability 100-1000 mD.
Excellent Permeability >1000 mD

14-10/5 encountered good average permeability in the range of 100 mD to 200mD with spikes up to excellent permeability at 1000 mD.

http://www.investegate.co.uk/Article.aspx?id=201106010700076329H



Therefore with 79M of net pay in the Main Fan to be flow tested the real risks are purely down to ensuring the velocity of the oil to surface remains constant to prevent waxing. Nothing out of the ordinary its pretty basic stuff.

They have an ESP down there to ensure velocity is constant and is not erratic. This will mean they can keep flow at a constant rate and with the use of insulated (heated) tubing (and any chem. injection) this will eradicate any chance of waxing.

It should be highlighted again and again that the ESP is not down there to pump maximum flow, it is there to give a steady and stable flow so that velocity is constant to therefore enable full control of the oil up the pipe to being flared.

The target is stable flow at 4000 bopd but that is not a cut off, that is simply the target. Lower is fine and commercial, more is great as it will give rise to the need for less development wells hence less capex required.

Also they are only testing a vertical well, which will have lower flow rates than any horizontal well that would be used in future development plans. As was highlighted in the past XEL tested Bentley with a vertical a couple of years back and got 150 bopd. With a horizontal completion recently they got nearly 3000 bopd.

This will be similar to Sea Lion where whatever this vertical flow test produces one can be certain that horizontal completions used in future production wells will flow at multiples of what the vertical result produces. However at this stage where the well will be P&A'd they do not need to drill an expensive horizontal completion to prove it, all they need is the vertical flow data and they can then work out what a horizontal completion would deliver in terms of flow.

Big difference is that one is heavy crude and this is light or medium.

Yes, so if XEL got 150 bopd from a vertical and RKH get around 4000 bopd from a vertical you can see the difference between heavy and medium.

So if XEL got 2900 bopd from the recent horizontal then we can expect on future production wells around 15,000 bopd from RKH.


All we need for now is around 3000 bopd to 4000 bopd from this vertical well test.

Starting to move.

I really would not expect news until Monday 20th earliest.

IF the flow test started yesterday it would run for 24 hours, then it would be shut down for 24 hours to measure pressure build up and then it would be flowed again for another 48 hours.

So thats 4 days, and 4 days from Tuesday = Saturday.

So news should be next week sometime, all being well. Might not be Monday as they might want to make further measurements and data checks.

long time to hold your breath!

Nice fathers day prezzy though....

One of the rare steady risers.....