 North Helper Gas Project
The North Helper Gas Project is located along the northern edge of the Helper
Field on the same Ferron Coal-Bed Methane trend as the Drunkards Wash Field
in Utah, North America. Drunkards Wash is the largest producing gas
field in Utah, averaging 5.4 billion cubic feet of gas (“BCF”)
per month in 2005 and having produced to date over 540 BCF.
Figure 1:
Drunkards Wash, Helper and NHGP Location
Map.
The project area initially comprised 5,023 acres, consisting of the 3,000
acre Blackhawk Lease and Farmout Agreements (“FOA”) covering
an additional area of approximately 2,000 acres. The Company is also
party to an Area of Mutual Interest (“AMI”) covering approximately
180,000 acres surrounding the Blackhawk Lease, that enables Odyssey to participate
in any acquisition that Marion Energy enters into within this area.
The primary
objectives at the Helper Field are the Ferron Formation sands and coals which
are encased within the Upper Cretaceous Mancos Shale. The
Ferron coals are both source and reservoir rock, with the interbedded marine
Ferron sands also productive. Wells commonly contain three to six coal
beds over a stratigraphic section of 100-250 feet.
Drilling and Testing
Results
Six wells have now been drilled to the Ferron objective in
the North Helper Gas Project area, with all intersecting the offsetting productive
sands and coals, and exhibiting comparable gas shows.
Of these wells, four
have been completed and flow tested to date, with Kenilworth Railroad # 1
tested at a rate in excess of 1.3 mmcfgd, Kenilworth Railroad # 2 tested
at rate in excess of 1.1 mmcfgd, Ball Park Canyon #1 tested at a stabilised
rate of 2.0 mmcfgd (and peak flow rates in excess of 4.0 mmcfgd), and Cordingly
Canyon #15-1 tested at a rate in excess of 2.0 mmcfgd.
Figure 2: Cross-Section through NHGP Ferron wells.
Figure 3: Location of tested wells and pipeline infrastructure.
The Independent Geologist (to Odyssey’s IPO Prospectus dated 18
October 2005) estimated the gas in place (“GIP”) for the Ferron
coals and sands in the NHGP area to be 3.0 BCF to 3.7 BCF for each 160
acre well spacing, with recovery factors difficult to project in early
testing, but historically, 50% of the GIP for initial CBM production considered
acceptable and demonstrated.
Since discovery in 1997, the wells in the adjacent
Helper Field have achieved an average production rate of 304,000 cubic
feet per day (0.3 mmcfd), with wells typically reaching peak production
within three years and then expected to gradually decline.
The test results
achieved to date in NHGP (flow rates in all Ferron wells in excess of 1.0
mmcfgd) are considered in part due to an aggressive completion program
incorporating a high density of perforations and multi-stage fracture stimulation
program, together with enhanced permeability in the Ferron due to secondary
fracturing of the reservoirs.
Accelerated Drilling Program
In June 2006 a 15-well drilling
program at NHGP commenced, which is now expected to be completed in the
March 2007 quarter. This accelerated program is based on the encouraging
results from drilling to date, and represents an effective doubling of
the activity initially proposed for the area as documented in the Company’s
IPO Prospectus (10 wells drilled in the first 18 months).
The new drilling
program is planned to be completed in two stages (on a trouble free basis),
with the first phase consisting of eight wells; the vertical Ferron and
Mancos Shale Cordingly Canyon #11-1 and #15-5 wells, followed by six wells
which will be drilled directionally from the existing Kenilworth Railroad
#1 & #2, Cordingly Canyon #15-2 and Ball Park #1
drilling pads.
Figure 4: Wells in current 8-well program highlighted in yellow.
Drilling of these multiple wells from existing pads will necessitate
the shut-in of pre-production operations while the wells are drilled. Since
the planned 15 well program will ultimately involve drilling three wells
from each drill pad, production from individual wells may be interrupted
until all wells planned for each location have been drilled.
Three wells
in this program have been drilled to date: the Cordingly
Canyon #11-1 well, which is a vertical test of the Ferron sands and coals
to the northeast of Cordingly Canyon #15-2, and the Cordingly Canyon
#15-5 and #10-1 wells.
Cordingly Canyon #15-5 is a vertical well drilled
off the same pad as Cordingly Canyon #15-2, and designed to specifically
target the Mancos Shale. This unit, which overlies the Ferron throughout
the project area, was highlighted as a potential objective in the Independent
Geologist’s
Report in the Company’s IPO Prospectus, and exhibited gas shows
in both the Cordingly Canyon #15-1 and #15-2 wells.
In Cordingly Canyon
#15-5 the Mancos was over 4,000 feet thick, with numerous gas shows observed
during drill string connections and possibly associated with interpreted
fracture sets in the shale. This interval
has not been specifically targeted and tested in previous wells in the
project area, but is based on analogue production from the Douglas Creek
Arch in the adjacent Piceance Basin in Colorado.
Figure 5: Location of Douglas Creek Arch Mancos production.
The third well drilled in the current program, Cordingly Canyon # 10-1,
was originally designed as a directional test of the Ferron from the
Cordingly Canyon # 15-2 drilling pad. After drilling through the
Ferron section, the well developed hole problems associated with swelling
clays at the top of the Ferron, and will now be completed and tested
as a second Mancos Shale well. Future Ferron directional wells
will include a set of intermediate casing designed to isolate this reactive
clay section immediately after drilling.
Expanded Project Area
In July 2006 the Company significantly
increased its acreage position in Utah by acquiring leases comprising
22,798 acres on-trend with the existing NHGP acreage. Odyssey’s
Working Interest in all of the new leases is 30%, consistent with the
Company’s move in
March 2006 to a 30% Working Interest in the original 5,023 acre project
area.
Figure 6: New North Helper Gas Project Leases highlighted
in yellow (22,798 acres).
The primary objective of exploration and appraisal activities in this
northern area will also be the Ferron sands and coals. Secondary
objectives include the Mancos Shale, which is currently being targeted
by dedicated drilling in the original NHGP area, and a series of shallower
objectives which may come into play as the Uinta Basin stratigraphy
thickens and the Ferron and Mancos Shale sections deepen to the north.
Additional
objectives in the new acreage include;
- The Cretaceous Blackhawk sands and coals, which currently produce
gas from both the Castlegate and Soldier Fields directly adjacent
to the extended project area;
- The shallower Cretaceous and Tertiary Mesaverde, Wasatch and Fort
Union Formations which are currently being exploited in acreage to
the east of the new licenses; and
- The deeper Cretaceous Dakota Formation, which also forms a secondary
objective in the original 5,023 acre project area.
Figure 7: Primary and Secondary Objectives for exploration
and appraisal activities in the expanded NHGP area.
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