Oil, gas shows off Greenland encourage Cairn

Cairn Energy PLC expressed encouragement at the results of early drilling off western Greenland as it suspended operations for the season as it had agreed with Greenland authorities.

Oct 26th, 2010

By OGJ editors
HOUSTON, Oct. 26
-- Cairn Energy PLC expressed encouragement at the results of early drilling off western Greenland as it suspended operations for the season as it had agreed with Greenland authorities.

The company released the Stena Forth and Stena Don rigs and suspended the Alpha-1S1 exploration well for possible reentry to sidetrack or deepen it later. It plugged and abandoned the T8-1 and T4-1 exploration wells.

Alpha-1S1 encountered oil shows in the volcanic section. Drilling ceased on Sept. 30 when the well was still in volcanics, and the prognosed Mesozoic section had not been reached.

T4-1, which targeted a Tertiary objective at a different stratigraphic level than T8-1, failed to encounter any significant hydrocarbons and found only thin reservoir sands, although geochemical analyses continue on selective samples.

T8-1 well, which encountered gas in thin sands, was plugged and abandoned.

Since T8-1 and T4-1 were not commercial, the well costs, including all associated demobilization and other costs, of $185 million are forecast to be written off in accordance with Cairn’s accounting policies. The primary objectives of the Alpha prospect were not reached, the well has been suspended, and any future re-entry work depends on the results of further evaluation, the company said.

A 2,500 km 2D seismic survey is under way on the Eqqua Block, and some 215 km of surveying will take place on the Sigguk block for well-tie purposes. A 7,400 km 2D survey was completed during the summer across the offshore south Greenland blocks (see map, OGJ, Aug. 24, 2009, p. 38).

Cairn has drilled one third of all exploration wells ever drilled off Greenland and the first wells in the Greenland Arctic for almost 35 years. The campaign demonstrated to the Greenland government and the industry that drilling operations can be successfully and safely carried out in this area.

Mike Watts, deputy chief executive, Cairn Energy, said, “Exploration in Greenland is at a very early stage and consequently to have encountered both gas and oil in two of the first frontier exploration wells in the previously undrilled Baffin Bay geological basin is extremely encouraging.”

The company is evaluating the data and plans to reveal its forward exploration program in the first quarter of 2011.

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