Block Energy working on 25-fold production increase at Norio

Georgia-focussed exploration and production company Block Energy updated the market on its initial work programme on Wednesday, with the focus on achieving a 25-fold increase in production at its Norio oil field to 250 barrels of oil per day (bopd) by the first half of 2019.

The AIM-traded firm holds a 100% working interest in Norio, which has gross oil reserves of 1.631 million barrels.

It said it was currently preparing four of eight wells for the application of a specialist micro-drilling perforation tool which, after being shipped from North America, had landed in Georgia and was due to arrive onsite shortly.

The board said the work involved levelling and preparing the ground at the well sites for rig-up and access.

It explained that the programme would enable all four wells to be ready for the perforating system by the end of the year.

With the exception of the sidetrack, the Norio workover programme was being carried out using an A50 workover rig.

As all of the wells to be worked over had previously produced oil, Block said it was necessary to clean and bleed off each of them to allow a scraper tool to be run down to total depth, ensuring a clear pathway for the wireline, caliper and pulsed neutron-neutron (PNN) logs.

The process had been carried out on three wells and was now underway on the fourth.

Thus far, the caliper logs had confirmed suitable casing dimensions for the micro-drilling system, and the PNN logs indicated “encouraging” perforation intervals, the board said.

The perforation tool had been selected to bypass suspected damage caused by historic heavy mud drilling.

It replaced conventional-shaped charge perforation, Block Energy explained, with a micro drilling technique able to cut horizontal drain holes at multiple levels.

Following the application of the system, new or refurbished pumps would be installed to bring the wells to production.

The current workover programme aimed to rapidly scale-up production at Norio, then sidetrack one of the field's wells with the aim of bringing total net production at the field to 250 bopd by the first half of 2019 - approximately three times the break-even production rate.

Crude oil from Norio currently sold at Brent minus $10 per barrel.

Block said Norio's existing facilities were also being upgraded to industry standards to accommodate a “significant increase” in production.

Two of the four tanks had so far been painted, and firefighting and other safety systems were being installed.

Work on the current phase of the upgrade was on track to be completed by the end of the year.

In addition to the Norio programme, the company said it was preparing to drill horizontal sidetracks and test a legacy gas discovery in the Lower Eocene at the West Rustavi field, where it held a 25% participating interest as part of an agreed earn-in to 75%.

The discovery, which lay on the same play being targeted by Schlumberger in neighbouring fields, had estimated gross 2C contingent resources of 608 billion cubic feet of natural gas.

Block said the field also held 37.9 million barrels of 2C gross oil resources.

“After months of planning and preparation we are glad to report that we have undertaken the successful re-entry of three wells at Norio, are rigging up at a fourth, and have compiled encouraging PNN logs,” said Block Energy chief executive officer Paul Haywood.

“In addition, the specialist perforation tool has arrived in Georgia and will soon be onsite.

“Shareholders can expect significant newsflow in the coming weeks and months as we pursue our objective of increasing our production rate at Norio from 10 bopd to 250 bopd and commence work at West Rustavi where we plan on drilling two sidetracks.”

Haywood said the board also looked forward to working over two of West Rustavi's other wells to test the extent of the field's gas discovery.

“With ExxonMobil recently entering the country and ongoing operations across Schlumberger's 100%-owned position next to our own licences, Georgia's potential as a hydrocarbon region is being recognised by the industry.

“We are taking advantage of our first mover advantage to play our part in realising this potential, and in the process generating significant value for our shareholders.”