Ivanhoe sees higher Sichuan gas potential

Evaluation of logs from an exploratory well on the 659,840-acre Zitong block in China’s Sichuan basin indicates a larger volume of potential gas in place than previously reported, said Ivanhoe Energy Inc., Calgary.

Nov 2nd, 2010

By OGJ editors
HOUSTON, Nov. 2
-- Evaluation of logs from an exploratory well on the 659,840-acre Zitong block in China’s Sichuan basin indicates a larger volume of potential gas in place than previously reported, said Ivanhoe Energy Inc., Calgary.

Analysis of open-hole logs of the Xu5 and Xu4 formations in the Zitong-1 well led the company to boost its estimate of gas potential on the 70 sq km Guan structure to 0.8 to 1 tcf from the previous 0.3-0.6 tcf. The company refers to the volumes as “gas potential” because the term gas in place is not used in Canadian securities reporting.

Ivanhoe’s Sunwing Energy Ltd. subsidiary initially considered Xu5 and Xu4, encountered at 3,500-3,800 m, as secondary targets to the deeper Xu2 formation. Sunwing has cased the two zones and resumed drilling towards Xu2 at 4,150 m. Horizontal drilling options will be determined after Sunwing has tested the vertical wellbore.

Log analysis indicates that Xu5 and Xu4 likely share the same pressure regime, with a total sand-shale sequence of 357 m at 3,445-3,802 m. Within this sequence, up to 58 m of primary sand package is identified in four sand packages between 3,841 m and 3,564 m in the lower Xu5 formation with porosity ranging up to 13%, and 22 m of secondary reservoir sand in three sand packages between 3,592 m and 3,801 m in the Xu4 formation with porosity up to 8.5%.

Log data indicate that gas shows were present throughout the Xu5 and Xu4 formations. Gas also was observed in the mud at surface while drilling through the formations, and high pressures were encountered while drilling the formations.

Guan is the largest known structure on the block.

Meanwhile, the Yixin-2 well on the block has reached 3,700 m and recorded increased mud gas levels as drilling progressed into and through the top of the Xu4 formation. The well is expected to reach total depth of 3,950 m within a week.

Yixin-2 well is a twin of Yixin-1, drilled by Sunwing in 2007, and generated unverified gas flows before being shut-in due to surface equipment complications.

Sinopec and PetroChina have made gas discoveries from the Xu2, Xu4, and Permian formations in blocks adjacent to the Zitong block.

Sunwing operates Zitong with 90% contractor interest in a petroleum contract with PetroChina Co. Ltd. Mitsubishi Gas Chemical Co. of Japan holds 10%.

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