Excellent view from the ADVFN thread on the background gas...

Excellent view from the ADVFN thread on the background gas readings as the author clearly know the industry :-


"Gas would be returned to surface regardless of the mud weight, rate of release from the reservoir would be determined by the gas saturation levels immediate reservoir pressure and extent of the show. Gas would be returned as the mud is circulated back up the well regardless of weight. The higher the pressure the more gas is released. There has been no comment on an over pressured well or flow back of gas so we may assume that the results as similar to SL-1 vert and that the well is probably being drilled close to normal balance, maybe sightly over-balanced. What we are getting is similar to SL-1 where we have gas spikes well above background, so there is gas in there again somewhere. They are choosing the best saturated and most ideal section to flow from the logs. Clearly the 40-100 spikes to 40-300 spikes will be showing increased pressure as its deeper, maybe higher gas saturation, they may have increased mud weight to counter gas spikes but that is an assumption at this point. I reckon we have something similar to SL-1 in this well, flowing gas will make this look so much more positive. I'm wondering at this point why they refer to testing only the lower Chalks in SL-1, are they stalling there for some particular reason, not testing the other zones? Hmm.

Gawler (ASX) tested two wells offshore Texas recently at about 10,000ft, flow was 8-9MMcfd with about 200-300bcpd, that's the kind of result we will be hoping for from these block B wells, may be 10-11MMcfd on a good well. JV-1 with the flares and pressure could be more in the region of 12-16MMcfd if its successful. We need a well now that shows that these gas spikes have enough surrounding porosity and permeability to sustain more than gas released into the mud while drilling. I think it was the Aurora well in Canada that was drilled to about 20,000ft and flowed about 40MMcfd from several hunderd feet of gas shows only to fizzle out several days later because the premeability was poor and limited the drainage radius of the well. So gas shows aren't everything, but a completed flowing horizontal well could be a damn fine start. The vertical fraccing and testing could have shown that the permeability of the vertical wells could be poor due to a compartmentalised reservoir, a horizontal may fix this issue. Makes the Kennedy well important for Sugarloaf and may explain the stalling after fraccing of SL-1. Perhaps the horizontal wells on Block A have further emphasised the compartmentalisation as that well spiked from flares over different sections of the horizontal.

All just my own thoughts on current operations, without hard facts, logs and other data it is very much guess work given the little evidence we have so far.

Its all hanging on JV-1 and Kennedy results now.

Bondi will start soon, it alone has the capability of transforming EME, we know the gas strike rate from the shallow wells and the reliability of the 3D and AVO there. Looking forward to that one. The share price is looking a bit dire, but we have lots of opps to reverse the current situation."