Tag starts up Taranaki well, sidetrack

Aug. 3, 2006
Tag Oil Ltd., Vancouver, BC, has started production from the Cheal-4 well in Cheal oil field and begun exploratory sidetrack work in the watered-out Radnor-1 well on a separate permit in New Zealand. Both wells are in the onshore Taranaki basin.

By OGJ editors
HOUSTON, Aug. 3 -- Tag Oil Ltd., Vancouver, BC, has started production from the Cheal-4 well in Cheal oil field and begun exploratory sidetrack work in the watered-out Radnor-1 well on a separate permit in New Zealand. Both wells are in the onshore Taranaki basin.

The Cheal-4 came on stream at average rates of 350 b/d of sweet crude and 150 Mcfd of natural gas. The gas is fueling the generation of electricity for the Cheal operation and for sale in the local power grid.

Tag acquired a 30.5% interest in Cheal field when it bought three South Pacific Lease Operations Ltd. subsidiaries, including Cheal Petroleum Ltd., earlier this year (OGJ Online, May 15, 2006).

The New Zealand Ministry of Economic Development has granted Petroleum Mining Permit (PMP) 38156 covering Cheal field (formerly PEP 38738-S) and the Cardiff deep gas prospect (formerly PEP 38738-D).

On PMP 38157, Tag began Radnor-1A sidetrack operations with plans to set a whipstock at 10,265 ft in the original wellbore then directionally drill to TMD of 14,347 ft to a bottomhole location 1,600 ft southwest of the Radnor-1 location.

Tag Pres. Drew Cadenhead said the company has identified a crestal target updip from the Radnor-1 and older Stratford-1 discovery. Radnor-1 produced an average 6 MMcfd of gas and 350 b/d of light oil. The Stratford-1 produced 3 MMcfd of gas and 140 b/d of condensate before water influx.

Participants in the sidetrack include Tag, operator with 33.3% interest, and Bridge Petroleum Ltd., 33.3%. On a sole-risk basis under a joint operating agreement, Tag holds a further 33.3% interest in the well and can recover 1,500% of costs associated with the sole-risk interest before revenue reverts back to a partner not participating in the operation.