Kenai Loop Project Update
Sydney, Mar 1, 2012 AEST (ABN Newswire) - Buccaneer Energy Limited (
ASX:BCC) is pleased to give the following update in respect to its 100% owned Kenai Loop project located onshore Cook Inlet, Alaska.
The Kenai Loop #1 well commenced production on 14 January 2012 (US time). Since that time normal equipment commissioning issues have been encountered and rectified, including the installation of additional equipment that was required due to high flowing pressures that the well is exhibiting and abnormally cold conditions in Kenai.
The well has been on continuous production for approximately two weeks and is currently producing at 5.1 million cubic feet per day ("MMCFD") on a 5/64" choke, flowing tubing pressure continues to build.
Based upon the available information the Company is confident that the well can be produced reliably at higher rates. The current production rate will be monitored over the next 30-60 days and if appropriate at that time a decision will be made to increase production rates.
During the period of production the Company has sold gas into both the ENSTAR winter daily auction and the ConocoPhillips gas sales contract. ENSTAR has informed the Company that it is currently on track to commence injecting gas from the Kenai Loop #1 well into its new CINGSA gas storage in early April 2012. The Company's gas sales contract with ENSTAR entails the Company delivering a minimum of 5.0 MMCFD and a maximum of 15.0 MMCFD on the commencement of the CINGSA facility, at an annual weighted average price of US$6.24 / MCF.
3D Seismic Program
The Company contracted Weems Geophysical Company to conduct a 25 square mile 3D Seismic shoot over the entire Kenai Loop project. As at the current date approximately 900 of 1300 shot holes have been drilled and loaded with explosives. The program is on track to be completed by the end of March 2012.
The primary intent of the seismic program is to identify low risk drilling sites for future Kenai Loop development wells. With improved seismic imaging the Company believes it will be possible to rapidly drill and place on line a number of wells from existing drilling pad sites.
Kenai Loop Drilling Program
Based on the currently available information, it is anticipated that the next well at Kenai Loop will be drilled from Drill Pad #1, which is also the location of the Kenai Loop #1 well. The final bottom-hole location of the next well will be derived as a result of the interpretation of the 3D seismic data.
The Company is currently in negotiations to secure a rig to drill its next well at Kenai Loop. As previously advised the Company believes that this well will be drilled in the April / May period.
Buccaneer Director Dean Gallegos said:
"To date the performance of the Kenai Loop #1 well has been pleasing. Each 5.0 MMCFD generates approximately US$8.5M in annual cash flow to Buccaneer, so we are keen to maximise production at Kenai Loop #1 and drill additional wells"
"An independent engineer has estimated that the 340 acre aerial extent around the Kenai Loop #1 well contains Proven Reserves of 31.5 BCF, at a US$6.24 gas price this Proven Reserve has significant value to the Company"
"We also hold 100% of 9,308 acres at Kenai Loop that we think could hold additional significant reserve potential, the 3D seismic will assist in sub surface mapping so future drilling locations can be optimised."
Contact
Mr Dean Gallegos
Director
Buccaneer Energy Limited
T: +61-2-9233-2520
http://www.buccenergy.com
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