Newfoundland's Port-au-Port area due new oil production attempt

By OGJ editors
HOUSTON, Aug. 23 -- Companies will try again to establish sustained production in the Garden Hill area onshore western Newfoundland.

The Hunt Oil Co. and PanCanadian Petroleum Corp. Port-au-Port-1 discovery well produced 51° gravity oil at the rate of several thousand barrels per day from the Middle Ordovician at 3,450 m in 1995.

Two sidetracks have been drilled since then, and more than 22,000 bbl of oil has been produced on sporadic tests. Reservoir problems, delays, and lack of revenue drove successor operator Canadian Imperial Venture Corp., St. John's, Newf., into bankruptcy, from which it emerged last week.

Alliance Energy Corp., private Houston independent, has begun planning $20 million (Canadian) of work in western Newfoundland under a farmout from Canadian Imperial.

The work program includes a $5 million 3D seismic survey, on which design has begun, and two wells at a cost of $7.5 million/well, said Steven M. Millan, Canadian Imperial chairman and chief executive officer.

The 3D data are to be acquired in the first half of 2005. Alliance will also review and evaluate existing wells at Garden Hill.

The survey will employ Alliance's experience and proprietary technology that has been successfully applied elsewhere in rocks of similar age and lithology, said geophysicist Dick Boyce, Dallas.

The project is a seismic imaging challenge, Boyce said. The main goal is to enable the discovery to be placed on production. He said the seismic survey may need to incorporate elements of onshore and offshore acquisition.

Canadian Imperial is gaining access to the original digital seismic field data in order to test some high-end seismic processing technologies on the data before finalizing the design parameters of the new 3D survey. The subsurface geometry in this area is complex with the reservoir section found in a subthrust footwall block that is overlain by basement rocks, Boyce said.

Meanwhile, Canadian Imperial is seeking low-risk exploration and development assets in western Canada and Trinidad and Tobago.

Complex geology
Garden Hill, at the western edge of the Port-au-Port peninsula, is on a 33,000-acre production lease, the first such lease awarded onshore by the government of Newfoundland and Labrador.

The lease includes the entire onshore portion of the structural inversion fairway that defines the play. The fairway is bounded to the east by the Round Head thrust fault, which Millan believes was an important conduit for both the reservoir-forming hydrothermal fluids and the hydrocarbons believed to have been derived from a "kitchen" under Port-au-Port Bay to the northeast.

The Round Head thrust is oriented NNE to SSW. Two structural culminations lie along the thrust. One is Garden Hill South, on which the Hunt Port-au-Port-1 discovery well was drilled. The other is the much larger Garden Hill North structure, which is untested. Both structures are adajacent to and east of the thrust.

Port-au- Port-1 and ST-2 are suspended oil and gas wells. ST-1 is plugged and abandoned.

Two main issues hampered production at Garden Hill South, Millan said.

The first was mechanical problems centered around water production, a poor cement job, and plugging by introduced lost circulation problems;

The second was rapid flowing pressure dropoffs due to the presence of minor faulting in close proximity to the well bore (as proven in ST-2).

On shut in, the reservoir pressure in Port-Au-Port-1 always returned to near initial value. Because of this, consultants concluded that the reservoir is not small since there was no permanent drawdown; rather, they found, the pathway to the well bore is impeded.

"Since there was no inflection on the pressure vs. production curve, no reserves can be assigned at this stage based on material balance considerations. We do know, however, that the formation is capable of producing at rates in the range of 2,000 to 3,000 b/d because this is what was produced at Port-a-Port-1 on test, Millan said.

"The trick will be to tap into the reservoir where it is less affected by minor cross-faulting."