Nonproducing Paraguay to get rare wildcats

G. Alan Petzet
Exploration Editor

Exploratory drilling is to start this summer on one of two large, lightly explored tracts in the Chaco-Parana basin of nonproducing Paraguay.

Spectrum Oil Corp., Bakersfield, Calif., plans to start drilling in July 1997 on the Alto Parana Block, one of two blocks that cover a combined 21,000 sq miles. This is more than one eighth of Paraguay's land area and one of the world's largest onshore concession areas. The first wells will aim at Devonian and Carboniferous targets.

Spectrum formed a joint venture with Abasubong Overseas Oil SA, Biarritz, France, formerly of London. Abasubong will put up $10 million for drilling and buy 5.65 million shares, one third of Spectrum, for $5 million.

Spectrum has spent $11 million reinterpreting Pecten and Texaco seismic data and acquiring new seismic data. The company only got good data on one half of 1% of the total area but believes it has 17 drillable targets, said Sam Higgins, president. Spectrum plans to acquire more seismic data in May.

The Alto Parana Block is held by a Sept. 1, 1995, farmout between Spectrum 50% and Guarani Exploration & Development Corp. SA (Gua- pex) and Exploraciones Petroliferas (Expesa) of Argentina 50%. Spectrum holds all of the San Pedro Block (Fig. 1 [75475 bytes]).

Exploration history

Previous operators have recorded about 15,000 km of seismic data in the Paraguayan Chaco-Parana basin since 1945.

Forty seven exploratory wells have been drilled since 1947 in Paraguay ( Fig. 2 [120809 bytes]), and 16 of those had oil shows, reports Byron R. Ayme, a Bakersfield consulting geologist and geophysicist.

Distribution of the shows was three in Ordovician-Silurian, 11 in Devonian, four in Permo-Carboniferous, and one in Cretaceous. Six wells had gas shows: three in Ordovician-Silurian, seven in Devonian, and five in Carboniferous.

The report said three deep wells have been drilled on the two blocks, and all had oil shows.

Four wildcats in the Brazil part of the basin flowed gas from Permo-Carboniferous sandstones. Closest to the Alto Parana Block are the 2-CB-1-SP, at about 22° S. Lat. and 52° W. Long., which flowed about 3 MMcfd of gas on a 4 hr open hole test and the 2-RP-1-PR at about 25° S. Lat. and 52.5° W. Long., which flowed 700 Mcfd.

Dr. Fernando Wiens, Geo Consultores, Asuncion, reported in May 1996 that oil shales at the lower Permian Irati formation (San Miguel formation equivalent) are surface mined for hydrocarbons in Sao Mateus do Brazil in Parana state.

Geologic setting

The Chaco-Parana basin covers most of Paraguay and parts of Brazil, Uruguay, Argentina, and Bolivia.

The main source rocks in the western part of the basin are the Vargas Pena shales (Silurian/Sakmarian Llandoverian) with up to 2% TOC, the Lima shales (Devonian Emsian to Famen- nian), a radioactive formation with up to 4% TOC, and the Tacuary/San Miguel shales (Permian/Kazanian) with up to 4.5% TOC.

The main reservoirs are the Cariy sandstones (Silurian/Llandoverian to Ludlovian) and the Santa Elena sandstones (Devonian/Pragian) with porosities of 6-9% and 9-19%, respectively; Coronel Oviedo channel sands (Permo-Carboniferous/Stephanian to Sakmarian) with porosities of 12-22%; and the San Miguel deltaic-fluvial sandstones (Permian/Saskmarian to Kungurian) with 20-23% porosities, Ayme reported (Fig. 3 [32085 bytes]).

The oil window in the western Parana basin is at 6,500-14,750 ft. The section is normally pressured, and migration from source to reservoir is assumed to be lateral or vertical.

The main pay zones are expected to be the Cariy and Santa Elena sandstones sourced by the Vargas Pena shales. Secondary but equally important pay zones are the Permo-Carboniferous channel sands sourced by the Lima shales. The third pay zone is the San Miguel formation sourced by either San Miguel or Tacuary shales.

Alto Parana Block

The block has 980 km of seismic Texaco acquired in 1989, 250 km Trend acquired in 1977, and three wells. Texaco drilled one well in 1990, and Guarani drilled two in 1994.

Texaco's Mallorquin 1, TD 9,811.5 ft, is a continuously cored slim hole. It TDd in Carboniferous 500 ft short of its Devonian objective due to rig limits.

Seven zones in Permian San Miguel had oil shows. The main zones were at 2,328-2,464 ft and 2,474-83 ft. Four discrete intervals in Permo-Carboniferous, some 227 ft between 4,460-4,790 ft, had gas shows. The well also encountered 2,877 ft of basalt.

Expesa/Guapex drilled the Ines G1 and G2 shallow tests in 1994 at locations chosen by Texaco. Texaco relinquished its interest in the block. All three wells were drilled off structure.

San Pedro Block

The Pecten/Occidental/ Trend group recorded 2,046 km of seismic data and drilled two wells. The Asuncion 1 in 1981 bottomed in the Caacupe Group at 10,575 ft. It was abandoned but had oil and gas shows ranging from trace to fair in the Lima and Santa Elena formations at 6,605-8,567 ft.

The best quality reservoir was in the Santa Elena at 7,724-8,384 ft at 16% porosity. Lima shales were cut at 7,478-7,728 ft, and Itacurubi shales were cut at 8,725-9,282 ft.

Asuncion 2 in 1982 bottomed in Mesozoic intrusives of the Caacupe Group at 9,600 ft. Continuous oil shows were recorded in the Lima formation at 6,658-7,400 ft. The best reservoir was in the Lima formation at 6,898-7,970 ft. Itacurubi shales were encountered at 8,922-9,315 ft.

Despite weaknesses, interpretation of a two-way time map on the Lima formation presents a coherent picture of north to north-northeast trending features interrupted by east-northeast, west-southwest trending right lateral strike-slip faults, Ayme reported.

These faults, particularly the one north of the Asuncion 2 well, can be seen on the regional geologic map Wiens constructed in March 1995. Fourteen structures ranging in size from 2,300-12,100 acres have been mapped in the area. The dominant feature is a tri-lobate northeast trending high, Ayme wrote.

Asuncion 1 was drilled near the crest of the central of these features, but information not available when the map was constructed indicates that the feature is complexly faulted rather than a simple closure. Asuncion 2 was drilled off structure.

Terms, logistics

Paraguay's hydrocarbon law 779, dated Dec. 12, 1995, offers a 20 year exploration period that may be extended 10 years.

It provides for royalties of 10-14% on oil and 11% on gas, a 30% income tax, a 15% depletion allowance, and an import duty exemption for materials used in the exploration, exploitation, transportation, and marketing of hydrocarbons and hydrocarbon products. Ayme described these terms as among the world's most favorable.

Paraguay has a 7,500 b/d refinery at Villa Elisa.