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Calima re-examines data points to optimise Canadian gas play

Calima Energy is looking to optimise its future production gas flows by examining a swag of old data points from previous drill core and pressure gauges that have been sitting down-hole at its Canadian Montney gas play for 18 months. The company is looking to get a handle on how much condensate it might be able to produce along with the gas in order to enhance the economics of its wells.

Calima is currently sitting on 60,000 acres of drilling rights in British Columbia in western Canada. The company’s land holdings cover an area in the northern portion of the revered Montney hydrocarbon basin that is prospective for gas but also has light oil, or “condensate” present that can drastically turbo-charge the economics of the project.

The ground position lies around 630km northwest of Edmonton and shares the Montney field with a who’s who of the oil and gas industry in Canada, including Conoco Phillips, Canadian Natural Resources and Tourmaline Oil Corp.

The Montney Formation has a development history dating back to the 1950s but has come under increased scrutiny in recent years as oil and gas suppliers in the United States have shuttered their wells due to low oil prices, constraining the North American supply of hydrocarbons into the domestic and industrial markets.

Calima says the vast basin hosting the Montney Formation boasts more than four times the gas resources of Western Australia’s famed North West Shelf, making it one of North America’s most sought-after hydrocarbon destinations.

Calima has hinted that a number of third parties are likely to be running their rulers over the company’s land holdings following a flurry of merger and acquisition activity across the basin in recent months driven by declines in oil production, a rising gas price and the development of the LNG Canada facility at Kitimat, north of Vancouver. An example of this activity includes Conoco Phillips, whose recent acquisition of Kelt Exploration’s undeveloped, 140,000 acre holding in the Montney for a cool C$550 million got market wags talking. This transaction provides Calima with a strong catalyst to continue adding value to its own strategic position.

Calima’s recent work has focussed on two areas aimed at the optimisation of the field.

Firstly, it has been analysing a 230-metre string of drill core from the Calima 1 well and it has now retrieved the downhole pressure gauges from the Calima 2 and 3 wells, that have been in place since the winter of 2019. The gauges are expected to assist Calima to enhance its future production profiling.

Calima has recently passed the downhole pressure gauges to its reservoir engineers, McDaniel’s ,who will use the plethora of data the gauges contain to assist in the optimisation of the production profiles and estimations of recoveries from the Upper and Middle units of the Montney. The data will also be used to establish the over-pressure boundaries of the Montney Formation in the region for future development work – build-up reports are expected mid-September 2020.

The downhole gauge recovery and Canadian Discovery core analysis will provide valuable data to determine long-term reservoir performance. We look forward to providing updates as we progress through the key stages of the operation.

The company has also engaged sedimentological experts, Canadian Discovery, to complete a detailed analysis of its Montney drill cores. Canadian Discovery has more than 30 years’ experience in Western Canadian Sedimentary Basin geological studies and is the preferred consultant for work in the Montney. The consulting group has played a key role in more than 20 separate studies across the basin and according to Calima, it has an exceptional level of expertise in hydrocarbon development across the Montney field.

The company’s Calima 1 drill core has been returned to the lab in Calgary for analysis by Canadian Discovery. The 230 metres of core from the well is rare in that it covers around 90 per cent of the entire Montney sequence, including the lower units of the Formation, delivering the group a unique insight into the make-up and potential of the stratigraphy.

First-pass analysis of the drill core in 2019 determined that the sedimentary package on Calima’s ground showed significantly elevated oil saturation levels in both the Upper and Middle Montney horizons, with wireline logs confirming that the Calima 1 well demonstrated exceptional reservoir values in comparison to adjacent wells. These observations played a critical role in reservoir analysis and reserve reporting by McDaniel’s that confirmed the ‘liquids-rich’ nature of the Montney on Calima’s ground holdings.

Canadian Discovery’s study for Calima will collate the company’s extensive data set for the project and incorporate it into the known stratigraphic, hydrodynamic, geothermic framework for the basin to provide a snapshot of the liquids production potential of Calima’s Montney acreage. The Canadian Discovery study will ensure the potential value of the ground position is factored into future development models.

Calima continues to add value to its coveted holdings in the Montney and with the ongoing optimisation of its well data and detailed analysis of the project’s drill core, the company can look forward to an interesting few months ahead as it completes its study across the project just as the majors start producing their cheque books to snap up neighbouring ground.

Is your ASX listed company doing something interesting? Contact: matt.birney@wanews.com.au

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