Providing coverage of Alaska and northern Canada's oil and gas industry
April 2008

Vol. 13, No. 15 Week of April 13, 2008

MGM posts Mackenzie success

Gary Park

For Petroleum News

It took five attempts over the past two winters, but MGM Energy has notched a success from its Canadian Arctic drilling program, reporting a natural gas discovery in the Mackenzie Delta.

The Calgary-based junior said April 7 that the Langley E-07 well tested at restricted flow rates of 13 million cubic feet per day on a 2-inch choke.

MGM said the primary target consists of about 25 feet of net pay with 28 percent porosity in the middle Taglu formation.

Located on exploration license 394, the well was designed to test multiple stacked zones to a depth of 4,600 feet.

Well logging and testing information will have to be evaluated before the company can estimate the size of the discovery.

However, the production tests give MGM confidence that it can obtain a significant discovery license from the federal government, effectively granting it indefinite tenure of the leases based on evidence of a sufficient accumulation of hydrocarbons to support sustained production.

MGM expects more drilling

Pleased with the discovery, MGM President Henry Sykes said the Langley E-07 well “should result in future drilling programs in this area.”

It is about 10 miles southeast of the Chevron Canada-BP Canada Energy Langley K-30 well discovered in 2002 and tested at 18 million cubic feet per day.

MGM said it believes the new find could be developed as a satellite of the existing Langley field, improving the economics of development.

It should also bolster MGM’s estimated net contingent gas resources of 300 billion cubic feet on the Delta, which enabled it to sign a capacity request agreement last year for 200 million cubic feet per day of space on the planned Mackenzie Gathering System which would feed into the Mackenzie Valley mainline, if the project goes ahead.

Langley E-07 completed MGM’s commitment to drill a minimum five test wells under its farm-in pact with Chevron-BP covering four exploration licenses and concessions.

Seismic also completed

As well, it has concluded two seismic programs on the Delta and one in the Central Mackenzie Valley of the Northwest Territories.

The company said it will move equipment off the drilling and seismic locations before spring melt closes ice roads.

The discovery well, part of MGM’s drilling and seismic program expected to cost C$60 million in the 2007-08 winter, came after four wells — Aput C-43 and Atik P-19 in the past winter and Kumak I-25 and Unipkat M-45 in 2006-07 — failed to yield commercial quantities of hydrocarbons.

In a thin year of drilling in the Canadian North, a Husky Energy-led partnership reported two dry holes on Exploration License 423 — the Keele River L-52 well and the Dahadinni B-20 well, which was drilled to a depth of 8,000 feet.

However, the two wells fulfilled a work commitment on the license, extending the term for a second period of four years.

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