If you look at any of GGX's technical stuff re Cebu you will see that Nuevo Malolos intersected what appears to be a thick clean sand which essentially went untested (they tested the section right at the top of the sand which from the logs looks pretty ratty). The resistivity log suggest that it contains gas.
Quite a few wells were drilled in the '60s on Cebu some of which had high in initial rates of gas or oil flow but rapidly declined.
This suggests production occurred from unconsolidated sands which rapidly sanded up due to a lack of sand control..
This is a common problem (it occurs to some degree in most sandstone reservoirs) and there are a range of sophisticated techniques for resolving it.
If you go to http://www.bakerhughesdirect.com and select Baker Oil Tools from the pulldown top right you will find information on the various techniques that are used.
It is my understanding that GGX believes they can resolve these problems.
This from the GGX website:
Nuevo Malolos-1 was drilled in late 2006 - early 2007 to a total depth of 1,945 metres and it was designed to test for commercial gas and oil in the Malolos anticline, being sited about 15 metres west and twinning Malolos-1. The new well aimed to test and produce from the gas sandstones encountered in Malolos-1 at 2,500-3,000 feet (762-914m) and 3,300-3,500 feet (1,006-1,067m). A shallow gas sandstone was tested by DST-6 in Malolos-1 and flowed at estimated rates of up to 5 million cubic feet/day. Nuevo Malolos-1 was not designed to appraise the deeper (approximately 2,300m) gas sandstone tested by DST-8 in Malolos-1 at 6,050-6,150 feet (1,844-1,875m) nor the oil bearing sandstones of the Malubog Formation which on drillstem tests recovered clean, waxy oil of approximately 39o API.
The Nuevo Malolos-1 well is interpreted to contain net sandstone reservoirs that aggregate over 200m measured thickness (beds are dipping at 60o) and these sandstones are also interpreted to contain oil and gas with excellent mud log shows. The sandstones possess both high porosity and high permeability and they should be capable of flowing oil and gas at commercial rates - supported by core analysis and by referencing the core to the electric logs. Well flow test results indicate that the formation is either damaged or tight and it is believed that the reason the sandstones will not flow at commercial rates is due to near well bore damage caused by the drilling process (mainly the drilling mud type).
It may be possible to overcome the near well bore damage and test the well at commercial flow rates of oil and/or gas. There are numerous ways of remediating these damaged reservoirs and these include a small fracture stimulation ("frac"), acid application, nitrogen clean-up and drilling new formation with non-invasive drilling fluids/gas. A workover program is being devised for hopeful implementation in the first half of 2009 . Delays may be encountered in sourcing contractors to complete the program and works may be limited by funding. Similar remediation programs have previously been implemented on similar reservoir types elsewhere in South-East Asia.
The same interpretation of formation damage is made of the Malolos-1 well. It was encouraging to find that the 7 inch casing in the 1960 vintage Malolos-1 well still had integrity. This means that Malolos-1 is also available for formation remediation and production in the event that Nuevo Malolos-1 work over operations is successful.
GGX Price at posting:
5.7¢ Sentiment: None Disclosure: Held
(20min delay)
