Firm to explore carbonate reefs in Palau

Palau Pacific Exploration, Brisbane, seeks to drill a 5,000-ft exploration well in 130 ft of water off northern Palau in the southwestern Pacific.

May 19, 2009

2 min read

By OGJ editors
HOUSTON, May 19 -- Palau Pacific Exploration, Brisbane, seeks to drill a 5,000-ft exploration well in 130 ft of water off northern Palau in the southwestern Pacific.

The company secured an option on a farmout covering a 1 million acre concession on the North Block in Kayangel state and sought investors to participate in a €30 million private placement to fund part of the drilling program.

By drilling the well, the company would earn a 75% working interest and a 66% net revenue interest in the block.

Palau Pacific defined the prospect by reprocessing in late 2007 about 140 miles of high-resolution seismic shot in 1997. Reprocessing with cutting edge frequency dependent processing resulted in the identification of multiple reefs and overlapping anomalies for drilling, the company said.

"Potential reservoirs, determined from seismic sequence stratigraphy, are thick Miocene age carbonate reef systems. Geochemical analysis confirms the presence of thermogenic hydrocarbons. Amplitude versus offset gradient analysis indicates shallow gas," the company said.

Consulting engineers suggest the existence of shallow Pliocene gas as a bailout option should oil not be found, and they estimated production lives of more than 20 years for Miocene oil and Pliocene gas if discovered. A power generation market exists for gas that would back out imported diesel.

Palau is formulating a hydrocarbon law and planning an exploration license round (OGJ Online, May 7, 2009).