Sacramento Gas Basin Tulainyo Gas Discovery
- California Resources Production Corporation (Operator) 41.67%
- Cirque Resources LP 25.00%
- Gas Fields LLC 33.33%
Equity interests are assumed post full earning via a staged farmin requiring funding of three wells. Gas Fields is managed by and owned 40% by Pancontinental.
Early Cretaceous rocks normally at greater depths beneath the traditional gas producing layers of the Basin, are brought near to surface by compressional structuring that is continuing present day. This structuring, similar to that seen in the fold belt of PNG, creates high stress in the rocks and high formation pressures.
The Tulainyo-1 drilling program in late 2014 – early 2015 encountered high pressure gas in a number of reservoirs but could not be tested due to mechanical difficulties. Good quality E-log data was however matched to extensive adjacent outcrop within the Coastal Ranges indicating that the reservoir section thickens and will continue at depth within the structure. There is potential for all the reservoirs within some 10,000` (+3,000 metres) of vertical mapped closure to be gas filled, creating a potentially giant-scale gas resource.
Over 11 TCF of dry gas has historically been produced from Late Cretaceous and younger sandstone reservoirs in the Sacramento Gas Basin. In the Northern part of the Basin, Pancontinental believes the gas is sourced from the older Cretaceous section like that beneath the Tulainyo structure. The region is characterised by extensive gas production infrastructure.
Through the acquisition in July 2017 of Bombora Natural Energy Pty Ltd, the Company has acquired an evolving asset position in the Sacramento Gas Basin in north-central California.
California is a very large user of natural gas, consuming between 7 and 11 Bcf of gas per day. Most of this gas is imported from outside the State. As a result local producers achieve a premium price for their gas compared with most other states in the USA.
Pancontinental has finalised and secured a range of gas projects in the Sacramento Gas Basin, mostly at the post-discovery phase. In other words gas has already been found in these projects but has not yet been proved commercial. This is designed to reduce technical risk and through positions relative to infrastructure and gas markets, support rapid transition to production with any drilling success.
The Company continues with its partners to actively acquire additional prospects and acreage on trend with its existing projects. This will provide follow up growth opportunity.
The Tulainyo Gas Discovery
This asset is held in a 40% owned subsidiary of Pancontinental and ultimately the Company’s effective ownership of the project at completion of the farmin will be equivalent to 13.33%.
The Tulainyo Farmin Agreement was executed by Gas Fields LLC on 21 March, 2017 with parties holding a 152 km² (close to 40,000 acres) net lease position over the large Sites (Tulainyo) Anticline on the west side of the prolific Sacramento Gas Basin, California.
The Tulainyo Joint Venture includes project operator California Resources Production Corporation, a subsidiary of California Resources Corporation (NYSE: CRC) and Cirque Resources LP, a private company based in Denver, Colorado. California Resources is the largest oil and gas producer in California on a gross-operated basis.
The Tulainyo-1 discovery well and side track wells were drilled on the Sites Anticline in 2014 to 2015, discovering gas in a series of stacked sandstone reservoirs at relatively shallow depths of less than 1,700 m. High gas shows of 1,000 to 5,000 units were recorded against elevated mud weights. The sands could not be tested due to mechanical difficulties.
Historic drilling, including the most recent well, indicates that the entire anticline could be gas charged.
Recoverable Gas Potential Tulainyo Gas Discovery
Based on its net position in the project, potential recoverable gas resources have been estimated for the Tulainyo Gas Discovery as follows (per PCL ASX released dated 23 June 2017).
Cautionary statement: The Company confirms that it is not aware of any new information or data that materially affects the information included in the relevant market announcement and that all the material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed.
Funding has already been provided for the Tulainyo-2 appraisal well which should commence in October 2017. The well will drill to a target depth of 1,707 metres (5,600 feet) and has been designed to drill back to and test gas sands intersected but not tested by the Tulainyo-1 drill programme. As such it is a proof of mechanical concept well.
Following the Tulainyo-2 well, the company will have the right to drill a further two wells on a staged basis in accordance with the farmin agreement to fully earn its interest in the project.