September 18, 2013Norwest Energy Modifies Its Completion Plans...

September 18, 2013

Norwest Energy Modifies Its Completion Plans To Advance Key Testing Programme At Arrowsmith-2

The astonishing surge in shale gas and oil production in North America means it can be easy to forget just how difficult it is to actually develop a shale play. “Fracking” is a catch-all term that belies the complexity and sophistication of the engineering effort required to release the oil and gas from the tight rocks. As a number of small caps have discovered to their cost, this can take time and money, a lot of money: think Aurelian in Poland, Nighthawk's initial efforts in Colorado and Oilex in India.

Norwest Energy, the Australian oil junior, is also riding the shale gas learning curve. It has the distinction of drilling the first shale well in Western Australia with its breakthrough Arrowsmith-2 well, a proof of concept well that the company says has exceeded all its expectations.

The well was drilled as a vertical hole in the summer of 2011 to a depth of 3,340 metres to test four target zones, the Kockatea, Carynginia, Irwin River Coal Measures and the High Cliff Sandstone. The intersected shale and tight gas horizons stretched over 1,000 metres, with 450 metres in the Kockatea, 250 metres in the Carynginia, 330 metres in the Irwin River and 22 metres in the tight sandstones of the High Cliff.

In September 2012, it was fracked in five zones, all of them flowing gas to surface, with testing of the shallowest, the Kockatea, taking the company by surprise when it yielded waxy oil. A period of flowback over the summer months has seen the well deliver a total of almost 1.7 million cubic feet per day, not bad for a vertical well that is still cleaning up.

This is only the beginning of starting to work out the deliverability and scale of this discovery, however. In August 2013 Norwest restarted completion operations on the Arrowsmith-2 well, designed to establish flow rates for the High Cliff Sandstone, the Irwin River Coal Measures and the Carynginia Formation and high grade the intervals to help with development planning.

There have been a few hiccups in recent weeks, with the company having to reduce the TD in order to install a completion packer to isolate the High Cliff; the well will now be completed at 2,545 metres. The modified completions programme means it is going to take longer to build a full picture of the potential here as the company needs to clean up the Irwin River Coal Measures and Caryginia zones before it can fully understand the deeper High Cliff Sandstone formation.

The delays aren't significant and the company has reassured it is still within budget. This is important because the big issue going forward will be funding the kind of work programme required to appraise and drill up a resource of this scale. Investors will be impatient for the next update from this material well, in which Norwest has a 27.945 per cent interest alongside Bharat Petroleum and AWE with 44.252 per cent.

Some positive results from the key testing stage will go a long way to not only move ahead with Norwest's plans for fast-track commercialisation but also put this discovery on the radar of bigger players looking to bag exposure to Western Australia's emerging shale plays. Interesting times for shareholders.

http://oilbarrel.com/news/norwest-energy-modifies-its-completion-plans-to-advance-key-testing-programme-at-arrowsmith-2