Falcon Oil & Gas announce that Origin Energy Resources, Falcon's 35% joint venture partner, has submitted the results of evaluation of the discovery and preliminary estimate of petroleum in place for the Amungee NW-1H Velkerri B Shale Gas Pool (Report) to the Northern Territory Government.
The submission follows the completion of extended production testing at the Amungee NW-1H exploration well of the "B Shale" member of the Middle Velkerri Formation.
In addition, Origin undertook a resource study based on the Amungee NW-1H well results and other key wells in the Beetaloo Basin including regional seismic data to determine a 2C contingent gas resource estimate for the Middle Velkerri B Shale Pool within EP76, EP98 and EP117.
Key Details of the Discovery Evaluation Report
The Report was submitted in compliance with Section 64 of the Northern Territory Petroleum Act (2016) and as per the Reporting a Petroleum Discovery Guideline.
The Report follows the initial submission of the notification of discovery and an initial report on discovery in October 2016. The Report provides the following volumetric estimates and recovery / utilisation factor for the B Shale member of the Middle Velkerri Formation within permits EP76, EP98, and EP117.
Understanding the factors controlling deliverability and recovery as well as spatial variation within the gas play/shale pool are in their infancy. A quantitative assessment of the aggregated estimated recoverable resource of the gas play that can handle these complexities will require a statistically significant number of wells testing the gas play. As there is only a single production test within the gas play Origin decided upon a qualitative assessment approach instead to estimate the technically recoverable resource.
Factors considered in the qualitative assessment of technically recoverable hydrocarbon resource in the gas play were the SRV recovery factor range, the subsurface utilization factor range and surface utilization factor range.
Origin's Contingent Gas Resource Estimates for the Middle Velkerri B Shale Pool within EP76, EP98 and EP117
Origin has prepared a contingent gas resource estimate using probabilistic methods and reservoir evaluation data, in addition to regional seismic data.
As noted in Origin's press release the "The contingent resource estimates contained in [their] report are based on, and fairly represents, information and supporting documentation that have been prepared by Alexander Cote who is a full-time Origin employee and a Qualified Reserves and Resource Evaluator. Mr Cote is a registered professional engineer with specialised unconventional gas resource characterisation and development experience. Mr Côté has consented to the form and context in which these statements appear". Mr Côté is a member of the Association of Professional Engineers and Geoscientists of Alberta.
Suspension of Drilling Operations
On 14 September 2016, the Northern Territory Government introduced a moratorium on hydraulic fracturing, and subsequently established an independent scientific inquiry. Pending the outcome of this independent inquiry, Origin has requested a suspension of all drilling operations with the DPIR. We await their formal response to the request.
Philip O'Quigley, CEO of Falcon, commented:
"The submission of a discovery evaluation report supporting the existence of a material gas resource in the Beetaloo Basin coupled with Origin's best estimate assessment of a gross contingent gas resource of 6.6 TCF for the Middle Velkerri B shale pool surrounding and adjacent to the Amungee NW-1H exploration well are exciting developments for Falcon.
Additional exploration and appraisal activity will be required to refine the pool size and better assess the recoverable resource range and ultimately the commerciality of the play.
However, it is interesting to note that in Origin's opinion the Marcellus and Barnett Shales in the USA are analogous, commercially-productive fields that are similar to the Middle Velkerri B Shale reservoir."