Ivanhoe unit starts drilling for tight gas in China

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, June 17 -- Ivanhoe Energy Inc. said its wholly owned subsidiary, Sunwing Energy Ltd., has started drilling at Zitong-1, a 1,031-sq-mile gas exploration block in China’s Sichuan province, targeting the Guan structure in the center of the block.

Ivanhoe said Zitong-1 will target tight gas in fractured formations using horizontal drilling and established multistage fracing technologies similar to those that have led to gas developments in North American tight gas projects.

Each target in the Guan structure is estimated to have potential of 300-500 bcf of gas, Ivanhoe said. It added that plans call for the Zitong-1 well to reach 4,500 m.

Drilling and testing the well will take as long as 6 months, at a cost of $14.5-17.5 million, which includes plans to drill, test, and case the well.

Meanwhile, Ivanhoe said preparations for Sunwing’s second well location, Yixin-2, on the Zitong block, also are under way. Sunwing expects to start drilling this well in July.

Yixin-2 is being drilled as a twin of Yixin-1, a well drilled by Sunwing in 2007 that generated flow rates of up to 4 MMcfd before being shut down due to equipment failures during the testing program.

Ivanhoe said Yixin-2 will be drilled directionally to allow the second wellbore to be within 67 m of the Yixin-1 at total depth.

While Zitong-1 and Yixin-2 are targeting structures with gas potential ranging 300-500 bcf, any gas test with a minimum flow rate of 700 Mcfd for 8 hr will allow Sunwing to declare a commercial discovery.

Sichuan is one of the most prolific gas producing regions of China, according to Ivanhoe which said Sinopec and PetroChina have made significant gas discoveries from the Xu2 formation in blocks adjacent to Sunwing's Zitong block.

Analyst BMI noted that Ivanhoe's announcement “highlights the range of companies including Western majors, independent explorers, and oil field service companies that have moved into domestic Chinese unconventional gas exploration.”

Earlier this month, Baker Hughes Inc. said it had been awarded a contract by PetroChina to utilize its fracing technology to develop tight gas deposits at the Changqing field in north-central China.

Under the 1-year contract, Baker Hughes will supply 77 multistage openhole fracture completion systems for horizontal wells in the tight gas sands of the Changqing field, where PetroChina is expanding its horizontal well, multistage fracturing activities to increase gas production.

Contact Eric Watkins at hippalus@yahoo.com.

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