By Doug Hadfield
In Mississippi, just a few kilometres from the town of Natchez, KFG Resources (TSX.V: KFG) is about to try something that CEO Bob Kadane believes will create significant value for his company’s shareholders.
Buried beneath the Fayette field is the Fayette salt dome – the last hydrocarbon-bearing salt dome of its kind in the region that has not been redeveloped. In February 2008, KFG will carry out the first 3D seismic imaging survey on the Fayette salt dome in which it holds a 100% working interest. The data from the seismic survey will be analysed with existing data from more than 100 well logs to determine the best fifteen or more targets for a drill program to be started this summer. The goal will be to drill through multiple oil and gas formations in the shallow Wilcox Formation (from 3,500 to 3,900) and the Lower Tuscaloosa (9,600 feet).
Salt domes like the Fayette were deposited millions of years ago when the shores of the Gulf of Mexico were located far inland from their current position. As waters evaporated, they left thick pockets of salt in layers. Over the millennia, these were buried by sand, soil and sediment. Over time, the thick layers of salt bowed in the centre and penetrated upward through the existing strata of rock – hence the “dome” shape of the structures. The salt is hard and impenetrable; the upward bending of the salt formed traps or pockets where oil and gas collected, often in large quantities.
There are numerous salt features located in the area surrounding Natchez. While most have been thoroughly explored and exploited from the 1930s until the present, the Fayette Salt Dome has seen only limited exploration.
Of the 4,000 acres that comprise the Fayette field and salt dome, only a fraction has been explored. Historically, exploration companies have drilled 29 deep holes on the east side of the dome. The west side, however, has only seen eight deep drill holes – which makes the west side a priority target.
The problem with mapping on the west side of the dome, Kadane says, “has been that the drill holes are too far apart to make any logical conclusions from the surface mapping (well logs). Some of them had small quantities of oil and gas production, so they could be the edge of a larger untapped reservoir. These old wells are 1,000 to 2,000 feet apart and you could have a reservoir easily run right between them and not even know it. And that’s what the seismic will tell us.”
3-D seismic surveys, or "seismics" as they are commonly called, use sound waves to locate rock formations in the earth that are associated with oil and gas. Acoustic vibrations are created either by a controlled explosion, or more often, by use of a vibration truck, which thumps the ground creating waves that radiate into the earth. The sound waves are reflected off subterranean rock, sediment, salt and other layers. The length of time required for the waves to travel through layers of varying densities is used to create a profile of the structure. With the use of computers, 3-D seismics Fhave becomes incredibly detailed and complex. Billions of data points are compiled to create a three dimensional image of the underground structures thus dramatically reducing the element of chance in drilling wells.
Then there are the well logs from more than fifty previously drilled wells in the Fayette field. These well logs are like electric cardiogram images depicting a foot by foot image of the types of hydrocarbons present down a well hole. With the log data, the presence of hydrocarbons is measured up and down the drill hole and outward about 20 feet in all directions.
In addition, Kadane says, 3D seismic survey signatures will show areas of undepleted shallow gas as well as the undepleted oil reserves. In all, this adds up to a potentially huge amount of hydrocarbons.
Although KFG’s earlier plans to recomplete its existing three Lower Tuscaloosa gas condensate wells were successful, they represented only the initial phase of hydrocarbon recovery from the Fayette field. With those online, the Fayette Field is presently producing 20 barrels of oil and 250 MCF of gas per day. Kadane says these were just a fraction of what could be underground here.
“If I walk away from this with just five successful wells, I’m going to be disappointed, Kadane says.”
Full Article: http://www.resourcexinvestor.com/news.php?id=4272
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