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MGM rates Mackenzie find ‘significant’
Gary Park For Petroleum News
MGM Energy has indications of a “significant discovery” from the first production test at its Ellice J-27 gas discovery in the Mackenzie Delta, said company President Henry Sykes.
“This discovery is only the most recent example of the resource potential of Canada’s North,” he said Feb. 9.
As the only active driller in the Canadian Arctic this winter, MGM has managed to lift its own hopes and those of others by posting its second Mackenzie Delta find in six wells over the past three winters.
The J-27 well perforated the Aklak formation from 6,452 feet to 6,471 feet, with a total net pay of almost 100 feet and an average porosity of 22 percent.
The zone flowed at rates up to 38.2 million cubic feet per day through chokes up to 1.5 inches at rates the company said were restricted by the test equipment.
MGM had earlier said it expected the testing would be sufficient to gain regulatory approval for a Significant Discovery License to encompass all prospective reservoirs. The SDL designation grants indefinite tenure based on evidence of sufficient hydrocarbon accumulations for sustained commercial production.
A second zone in the Taglu formation is scheduled for completion later in February.
In addition to the two zones to be tested, there are two additional gas-bearing zones in the well, but they will not be tested this winter, MGM said.
Estimate in March Once testing of the second zone is complete, MGM said it expects to provide an estimate of the discovery’s resource size by the end of March.
Since entering a farm-in agreement with Chevron Canada-BP Canada Energy in fall 2006, MGM has completed six of its committed 11 wells, plus C$50 million on seismic data.
Of the first five wells, four were dry and one, Langley E-07, was a discovery, testing at 13 million cubic feet per day through a 2-inch choke.
They earned MGM a 32 percent interest in the farm-in lands plus any discoveries from the drilling program and have made it operator of the joint venture.
However, it does not qualify for any interest in three existing discoveries by Chevron and BP.
If the company completes another five wells during this winter and next it can earn an additional 3 percent interest in the lands and any discoveries for each additional well it drills, plus a 50 percent interest in the three existing discoveries.
MGM has also signed a capacity request agreement to deliver 200 million cubic feet per day to the pipeline gathering system of the Mackenzie Gas Project and an option to acquire an ownership stake in the gathering pipelines.
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