Initial Tulainyo-2 Results Are Encouraging
Summary Key Points
Initial results from Tulainyo-2 show that there is potentially up to 56m of net gas pay in the target sandstones with good porosity: The JV has completed some initial testing on the well, and the results indicate there are multiple potential gas pay zones in the Tulainyo-2 well. This positive result, therefore, meets the expectations of the JV as well as being consistent with the results of the Tulainyo-1 well which was drilled in 2017 and confirmed the presence of gas saturated sands in the Tulainyo structure.
The successful drilling and completion of the Tulainyo-2 well is an achievement in itself: The successful drilling and completion of the Tulainyo-2 well to planned terminal depth is an important achievement. Reviewing the well reports from the Tulainyo-1 drilling program reveals the challenges of drilling a successful well into the Tulainyo structure. The subsurface conditions are challenging from both a geo-mechanical and geology perspective.
The Next Steps: The next step in the program is the flow testing of the well to determine if gas can be recovered to surface in a consistent flow. The flow rate that is achieved in the testing will indicate the potential commerciality of the play. The JV is in the process of planning this portion of the evaluation program, and it is expected that it will commence with the test in the next several weeks. The test will provide critical data points that can be used to develop the next steps and ultimately determine the path towards a commercial development.
The Porosity is good but what about permeability?
The fact that the sands are gas saturated and display a reasonable level of porosity is in our opinion an outstanding result. While the well shows encouraging levels of porosity, the level of permeability is uncertain because the JV did not recover drill core from the well for laboratory testing. In the absence of drill core, the result from the flow testing program will give a good indication of the permeability of the sandstone in the reservoir.
The project has access to markets
Considering the results that have been achieved to this point and if the flow testing is successful, there is a strong possibility that Tulainyo could result in commercial development. There is a market for the gas as California imports a large amount of its domestic gas needs and the project is situated in an infrastructure-rich area. The demand for gas and the access to markets will help the JV move onto the development stage if the play is deemed to be commercial.
Could there be more gas in the structure lower down?
The original Tulainyo well was meant to intersect areas of interest down to 11,000 ft. Due to the technical difficulties encountered in the drilling of the well, the well TD at 5,700 ft. Tulainyo-2 was successfully drilled to 5,700 feet, and therefore, a large portion of the structure remains untested. Thanks to the confirmation of gas in the upper part of the structure it is more than likely additional gas will be present in the lower part of the structure. If so, this could be a very large accumulation indeed.
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