Flour Bluff Gas Project, South Texas
(20 to 24.17% Interest)

The Flour Bluff Gas Project involved the redevelopment of three semi depleted gas fields on the outskirts of Corpus Christi on the South Texas Gulf coast. Existing gas production infrastructure is extensive and allows for immediate gas sales after wells have been drilled and or re-completed. The fields have produced 1.3 tcf of gas with 64 mmbo over a 65 year period with production coming from 40 separate reservoirs at shallow to moderate depths (above 2,400 metres). These shallow-moderate depth reservoirs are now largely depleted, but significant potential reserves, up to 210 billion cubic feet of gas gross equivalent (“bcfge”) were prognosed to be reservoired within the under developed deeper section between 2,750 to 3,600 metres depth.  

         

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Phase 1 of the development completed in mid March quarter 2006 consisted of a three well exploration program, BG Webb #1 in the West Flour Bluff Field and D-10 and D-24 in the East Flour Bluff Field with some well workovers.  These wells were principally designed to test the prospectivity of the deep Frio K sands, to prove up the remaining potential within the drainage areas of the wells of the Frio J and upper K sands and confirm the upper Miocene sands in the field were depleted.  This program showed remaining field potential was limited to the Frio J and upper K sands and a new reserve position was independently determined by consultants Ryder Scott. The reserve review had a significant increase in the Proved (1P) category with this component as a percentage of 3P reserves (Proved, Possible and Probable) increasing to 54% versus 38% from the prior review in October 2004.

 

                  

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Phase 2 of the development program will involve drilling up to 8 new wells targeting 40.9 bcfe of 3P recoverable reserves in the Frio J and K sands in both the East and West Flour Bluff Gas Fields.  The initial well planned in Phase 2 is the FB #1 well in the West Flour Bluff Gas Field. FB #1 is updip of the Petty #2 well, which was a good producer that has produced nearly 2.6 bcfe from the J17 sand and still has about 1.2 bcfe in the remaining J sands. Some 6.73 bcfe reserves is predicted in the K15, J33 and J17 sand of FB #1 by the most current Ryder Scott report.  However, the joint venture has opted to defer FB#1 and instead complete a major 3D seismic program over the West Flour Bluff Field and merge this with 3D over the East Flour Bluff Field.  This will allow a better understanding of structure and its effect on reservoir development and field "sweet spots".  The operator has demonstrated a possible outcome from the results of a recent successful 3D survey over the Corpus Christi Bay Field, offshore and to the north of West Flour Bluff.  This field is a good analogue where drilling post 3D has delivered both increased production and reserves. The Joint Venture is currently undertaking a program of well workovers to increase the production and profitability of the fields.