Stage 2 – Explore & Appraise Additional Play Types
The Stage 2 exploration and appraisal drilling program will evaluate the potential of the liquids rich gas fairways in both the Kyalla and Velkerri shales to determine the most commercially prospective play to be targeted during Stage 3.
For details of Stage 2 please refer to the updates outlined below.
Stage 3 – Work Program Overview
Stage 3 objective is to achieve commercial production flow rates.
Drilling operations include the drilling and hydraulic fracture stimulation of two horizontal wells targeting one of more of the three plays:
- Velkerri B shale gas play
- Kyalla shale and hybrid liquids rich gas plays
- Velkerri shale liquids rich gas play
9 October 2019 – Spudding of the Kyalla 117 N2-1 Appraisal Well
On 9 October 2019, Falcon announced the spudding of the Kyalla 117 N2-1 appraisal well in the Beetaloo Sub-Basin.
- Kyalla 117 N2-1 is the first well in the Stage 2 drilling programme to target the Kyalla shale liquids rich gas play.
- Located within Exploration Permit 117 approx. 32 kilometres north of the Beetaloo W-1 well.
20 November 2019 Drilling data from Kyalla 117 N2-1 Vertical Well Very Encouraging
On 20 November 2019 Falcon announced that drilling of the vertical section of the Kyalla 117 N2-1 appraisal well in the Beetaloo Sub-Basin, Australia had been completed to a vertical total depth of 1,895 metres.
Preliminary drilling data from the vertical section of the Kyalla 117 N2-1 appraisal well confirmed:
- The continuation of the regionally pervasive Kyalla Fm between the Beetaloo W-1 and Amungee NW-1H wells.
- Elevated gas show with relatively high C3, C4 and C5 components were observed across the carbonaceous shales.
Other work carried out as part of this drilling operation included:
- 45 metres of conventional coring was acquired in each of the Upper and Lower Kyalla reservoir sections.
- Sidewall cores and extensive wireline logging have been acquired.
10 December 2019 – Kyalla 117 N2-1 – Horizonal Drilling Commenced, Evaluation of Vertical Well Advances
On 10 December 2019 Falcon announced that drilling of the horizontal section of the Kyalla 117 N2-1H appraisal well in the Beetaloo Sub-Basin, Australia had commenced, along with the advancement of the vertical well evaluation.
13 January 2020 – Kyalla 117 N2-1H Horizontal Well Operational Update
The vertical section of the Kyalla 117 well was successfully and safely completed in late November 2019. Drilling of the horizontal production hole section with a target length of 1,000 to 2,000 metres, commenced in early December.
However, after reaching a horizontal length of 700 metres, operational challenges were experienced in maintaining adequate clean hole conditions and stability over portions of the horizontal production hole section appropriate to complete operations.
The initial horizontal production hole section will now be plugged in line with regulatory requirements. This will then be followed by sidetracking and drilling a new horizontal production hole section.
Plugging back and drilling a new horizontal section from an existing vertical well is not uncommon in an exploration drilling program such as this.
With the drilling rig and equipment on-site and in position, drilling operations will recommence on the new horizontal well section within the next month.
Fracture stimulation activity will only occur after the successful completion of drilling and the integrity of the well is tested and verified.
Results obtained from operations to date in the target shale formation demonstrate good reservoir continuity, conductive natural fractures, and continuous gas shows. The JV remains positive about the potential of the Lower Kyalla Formation, resulting in the decision to continue with drilling operations.
30 January 2020 – Kyalla 117 N2-1H ST2 Horizontal Well Operational Update
On 30 January 2020 Falcon announced the commencement of the sidetrack to drill the new horizontal production hole section of the Kyalla 117 N2-1H ST2.
20 February 2020 – Successful Drilling of Kyalla 117 N2-1H ST2 Horizontal Well
On 20 February 2020 Falcon announced that drilling operations, including casing and cementing, on the Kyalla 117 N2-1H ST2 well had been successfully completed.
The well was drilled to a total measured depth of 3,809 metres, including a 1,579 metre lateral section (from 90 degrees) in the Lower Kyalla Formation. Preparatory work, including the drilling of water impact monitoring bores – a new requirement of the Code of Practice for onshore petroleum activities in the NT – will commence in the coming month ahead of the next stage of operations.
26 March 2020 – Kyalla 117 N2-1H Horizontal Well Operational Update
On 26 March 2020 Falcon provided the following operational update in light of COVID-19.
Given the unprecedented circumstances brought about by COVID-19, the JV made changes to its operations to protect the health and well-being of Origin Energy Limited employees, contractors and communities across the Northern Territory. Adhering to the latest guidelines and advice from the Northern Territory and Federal Government on health and safety and social distancing are of the utmost importance to the JV and all present on site observed health authority requirements.
Following the implementation of the necessary control procedures, the JV elected to temporarily pause activities at the Kyalla 117 site, reducing those on site to essential personnel only, whilst ensuring the required regulatory and environmental management conditions to monitor and maintain the site can be met. The JV planned to resume activities in the latter half of 2020 and during this interim period the JV will use Northern Territory based employees and contractors to undertake civil and other works in preparation for the resumption of activities.
The JV remains committed to the Beetaloo project which, if successful, has the potential to deliver long-term economic and social benefits for the Northern Territory, Australia and is encouraged by the positive results to date. However, the circumstances presented by COVID-19 led the JV to conclude that the focus in 2020 must be to protect the people and communities of the Northern Territory.
7 April 2020 – Beetaloo Farm-out
On 7 April 2020 Falcon announced that its c. 98% subsidiary, Falcon Oil & Gas Australia Limited (“Falcon Australia”), had executed an agreement which includes a restated Farm-Out Agreement and Joint Operating Agreement (collectively “the Agreements”) with Origin to farm down 7.5% of Falcon Australia’s 30% participating interest (“PI”) in the Exploration Permits in the Beetaloo Sub-basin. Full details are outlined above.
21 September 2020 – Beetaloo Operational Update
On 21 September 2020 Falcon noted that operations had recommenced at Kyalla 117 N2-1H ST2 with the fracture stimulation of the well.
02 October 2020 – Beetaloo Technical Update
On 02 October 2020 Falcon provided a technical update on the Beetaloo project regarding the hydraulic stimulation of the horizontal Kyalla 117 N2-1H ST2 well.
Highlights of the preliminary results from the Kyalla 117 well:
- Completion of 11 hydraulic stimulation stages along the 1,579-metre horizontal section in the Lower Kyalla Formation
- Stimulation treatments were successfully executed
- Activities have commenced in preparation for the flowback and extended production test
- Early stage gas flow rates are expected in the coming weeks
04 November 2020 – Operational Update
On 4 November 2020 Falcon noted that operations continued following the hydraulic stimulation at Kyalla 117 N2-1H ST2 well. Following a short initial flow back of hydraulic fracture stimulation fluid to surface the well was subsequently shut in and production tubing was successfully installed and tested. Flow back operations recommenced in late October, with the well flowing back fracture fluid at a rate of approximately 500 bbl/d with minor gas breakthroughs observed.
25 November 2020 – Operational Update
As announced on 4 November 2020, flowback operations of the fracture stimulation fluid commenced in early October before Kyalla 117 was shut in and production tubing was successfully installed, with flowback operations recommencing in late October.
Kyalla 117 continued to flow back fracture stimulation fluid, with some gas shows; however, a measurable gas breakthrough that would allow the commencement of extended production testing to assess the extent of the resource that may be present had yet to occur.
Data collected and analysed to guide ongoing operations showed greater pressures in the horizontal section of Kyalla 117 than in the surrounding reservoir, due to the saline content and density of the flowback fluid and the hydrostatic column weight of this fluid in the vertical section. This pressure difference can prevent the flow of gas from the reservoir into the fractures and then to surface and it is not unusual in shale plays to observe the salinity and density of the flowback fluid to increase as salt easily migrates from the formation.
Operations were planned to re-enter Kyalla 117 with coiled tubing and apply nitrogen lift techniques to lower pressures in the Well and assist with achieving and sustaining gas breakthrough that, if successful, will allow extended production testing to commence. This technique is not uncommon and was applied to the successful Amungee NW1-1H well in 2016.
The timing of coiled tubing activities and the nitrogen lift were considered as the wet season approached, with health, safety, environment and cost considerations in mind.
As is the nature of exploration and appraisal, Falcon and Origin, continually responded to the data gathered through operations to inform ongoing activities.
Other data collected to date remains positive. In particular, core analysis indicates mature hydrocarbons and good permeability (natural pathways for gas to flow) and mud logs indicate liquids rich gas. The fracture stimulation of the well was successful and the integrity of the well remains.
10 December 2020 – Operational Update
The JV decided to execute operations without delay with all of the necessary equipment and consumables for the nitrogen lift being prepared to mobilise to the well site.
24 December 2020 – Operational Update
The coiled tubing unit and all necessary consumables have arrived at the wellsite and the rigging up of the equipment were in progress.
19 January 2021 – Notification of Discovery – Kyalla 117 N2-1H ST2
19 January 2021 Falcon announced that Origin had submitted a notification of discovery and an initial report on discovery (“Notification of Discovery”) to the Department of Industry, Tourism and Trade of the Northern Territory (“DITT”) on the Kyalla 117. The Notification of Discovery is a requirement under s64(1) of the Petroleum Act 1984 (Northern Territory) and the NT Guidelines for reporting a petroleum discovery.
Details of the Notification of Discovery from Origin to the DITT are as follows:
- The Notification of Discovery is supported by preliminary production test data and petrophysical modelling.
- This follows the introduction of nitrogen to lift the fluids in Kyalla 117, which has enabled Kyalla 117 to flow unassisted for a period of seventeen hours.
- Unassisted gas flow rates ranging between 0.4-0.6 MMscf/d over seventeen hours were recorded.
- Flow back of hydraulic fracture stimulation water to surface over the same period, averaged between 400-600 bbl/d.
- Initial analysis suggests a liquid-rich gas composition with less than 1% CO2.
- Condensate shows were also observed.
- These early-stage flow rates are preliminary indications of well performance, and an extended production test (“EPT”) will be required to determine the long-term performance of Kyalla 117.
- Longer-term measures will be put in place to flow back sufficient hydraulic fracture stimulation water to allow Kyalla 117 to flow continually without assistance and enable an EPT to continue in the coming months during the dry season.
22 January 2021 – Gas Composition Data Confirm Kyalla Liquids Rich Gas Play
On 22 January 2021 Falcon announced details on the first gas composition data obtained during the 17-hour unassisted flow period of Kyalla 117.
The initial analysis of natural gas by gas chromatography confirms a liquids-rich gas stream low in CO2 as follows:
- C1 = 65.03 mol%
- C2 = 18.72 mol%
- C3 = 8.37 mol%
- iC4 = 1.29 mol%
- nC4 = 2.03 mol%
- C5+ = 2.73 mol%
- CO2 = 0.91 mol%
- N2 = 0.92 mol%
The elevated C3+ gas component of 14.42 mol%, meets pre-drill expectations, confirms the Lower Kyalla Shale as a liquids-rich gas play. Gas composition data also support the view that the Kyalla gas stream will have elevated LPG and condensate yields.
As announced on 19 January 2021, longer term measures will need to be put in place to flow back sufficient hydraulic fracture stimulation water to allow the Kyalla 117 to flow continually without assistance. This work is expected to commence at the start of the dry season in Q2 2021 and if successful would allow an extended production test (“EPT”) to commence.
19 March 2021 – Planned 2021 Work Programme – Beetaloo Sub-Basin
On 19 March 2021 Falcon provided details of the 2021 work programme.
The 2021 work programme is expected to include the following:
- Resume clean-up operations of Kyalla 117 and commence an EPT
- Drill Velkerri 76 S2-1 vertical well (“Velkerri 76”)
- Perform a production test at Amungee NW 1H
2021 Work Programme Detail
- Resumption of reservoir clean-up operations using an artificial lift technique.
- If the Kyalla 117 clean-up is successful, progress to an EPT.
- Drill a vertical pilot well to acquire core and log and run diagnostic fracture injection test data across the Velkerri.
Amungee NW 1H
- A production test to be carried out to determine if all frack stages contributed to the initial EPT conducted in 2016.
22 June 2021 – Commencement of the 2021 Work Programme – Beetaloo Sub-Basin
On 22 June 2021 Falcon announced the commencement of the 2021 work programme, starting with operations at Kyalla 117.
On-site operations at Kyalla 117 begun, with rigging up complete, and clean-up operations resumed. These operations, if successful, will result in an EPT being carried out to determine the expected longer-term performance of the well.
20 July 2021 – 2021 Work Programme Update– Beetaloo Sub-Basin
As noted on 22 June, operations recommenced at Kyalla 117.
Activity has focused on the continued clean-up of Kyalla 117 in preparation for extended production testing, using nitrogen to support operations.
This has allowed the Kyalla 117 well to begin flowing again without assistance for intermittent periods, however, production has not been sustained and there is evidence of a potential downhole flow restriction.
Operations will now be temporarily paused while the cause of the restriction is investigated, the results of which will inform the development of a new go-forward plan for Kyalla 117.
In the meantime, the JV’s focus will continue on other elements of the work programme. The JV remains on track to drill the Velkerri 76 well and commence a further extended production test at Amungee NW 1H in the coming weeks.