Operations - Uganda
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The Albert Basin in Uganda is considered to be the most exciting new oil and gas play in Sub-Saharan Africa in the past decade, with multi-million barrel reserve potential and is one of the key focus areas for Heritage. The gross acreage position covers in excess of 12,000 square kilometres, roughly equivalent to fifty five North Sea blocks
Heritage is the operator and holds 50% interests in two licences in the Albert Basin of the Western Rift Valley of Uganda - known as Block 1 and Block 3A. These Blocks are adjacent to the border with the Democratic Republic of Congo. As at January 2009 18 exploration and appraisal wells have been successfully drilled in the basin since 2006. All of the wells have encountered oil bearing reservoirs and the two wells drilled in Block 3A have production tested at over 13,000 bopd.
Since the beginning of 2006, there have been 27 wells drilled in the Albert Basin, with 26 of these wells encountering hydrocarbons. Heritage has drilled six wells with a 100% success rate in our operated Blocks 1 and 3A. In excess of 700 million barrels of gross resources have so far been proved up and there remain many prospects yet to be drilled in this prolific basin. The commercial threshold for development of this basin has been comfortably exceeded and we are in discussions with the government of Uganda for an early phased development for the commercialisation of this basin.
Block 3A
Heritage's Kingfisher-1 well in Block 3A was drilled in 2006/2007 to a total depth of 3,195 metres after sidetracking twice for geological reasons. Hydrocarbons were encountered in Tertiary-age reservoir sandstones and four intervals were tested, resulting in an overall cumulative maximum flow rate of 13,893 bopd through a one inch choke over a total net productive thickness of 54 metres.
The Kingfisher-2 appraisal well commenced drilling on 26 April 2008. This drilled to a total depth of 3,906 metres (3,197 true vertical depth). Three zones were tested and resulted in a cumulative flow rate of 14,364 bopd, almost 50% greater than the equivalent zones which were tested in Kingfisher-1.
The Kingfisher-3 well commenced drilling at the end of September 2008 and on the 11 December 2008 it was announced that the Kingfisher-3 well had encountered oil in all three reservoir intervals with a gross hydrocarbon bearing interval of 110 metres and net oil pay of up to 40 metres. It was found that the south-west part of the field is structurally higher than anticipated, thereby extending the field boundaries which will result in an upgrade to the Kingfisher field reserves.
The Kingfisher-3A well was completed in February 2009. The well intersected all three Kingfisher Upper Miocene reservoir intervals present in the Kingfisher-1A and 2 wells. An extensive coring programme was undertaken from the three reservoir intervals and initial analysis confirms high permeabilities of up to 3,000 milliDarcies. Pressure data and fluid samples confirm the three reservoir intervals to be in communication with the three intervals production tested in the Kingfisher-1A and Kingfisher-2 wells at 9,773 bopd and 14,364 bopd respectively. This demonstrates the lateral continuity of the reservoir intervals and also provides strong evidence to support previous determinations of the level of the oil water contacts within the reservoirs. The well results confirm the Company's resource estimates for the field, while further analysis of the core data could provide an upgrade.
The Kingfisher-3A well has been suspended as a production well, in addition to the previously drilled and suspended Kingfisher-1A and Kingfisher-2 wells. The tested oil in Block 3A has been good quality, of light to medium gravity and sweet, with a low gas-oil ratio and some associated wax.
During 2007/08 Heritage acquired two seismic surveys in Block 3A; an approximately 325 square kilometres 3D programme over the Kingfisher and Pelican structures and an approximately 530 kilometres 2D infill survey on Lake Albert. These have helped to identify a number of prospects in the lake, including the large Crane prospect. Plans are progressing for a Lake Albert drilling programme which is expected to commence in 2010.
Block 1
On 13 January 2009, Heritage announced the successful Giraffe-1 exploration well which has unlocked the multi-billion barrel potential of Block 1.
A seismic survey comprising approximately 670 kilometres of 2D data was completed in Block 1 in February 2008. This has helped to work up further prospects in the Block that were not initially included in the assessment by RPS Energy. A three well exploration programme in Block 1 commenced in September 2008 with the Warthog-1 prospect.
On 21 October 2008 Heritage announced the successful Warthog-1 discovery which had a gross hydrocarbon-bearing interval of approximately 150 metres with 46 metres of net hydrocarbon pay. Wireline logging and formation pressure measurements indicate 31 metres of net oil pay in the principal oil-bearing reservoir section, overlain by 15 metres of additional net hydrocarbon pay comprising, most probably, volatile oil, condensate and wet gas. The well was drilled to a total depth of 911 metres.
On 16 December 2008 Heritage announced the successful Buffalo-1 discovery which had a gross hydrocarbon-bearing interval of approximately 123 metres, with approximately 43 metres of net hydrocarbon pay. Wireline logging and formation pressure measurements indicate 28 metres of net oil pay in the principal oil-bearing reservoir section, overlain by 15 metres of additional net hydrocarbon pay containing gas.
The Giraffe-1 exploration well encountered a gross oil-bearing interval of approximately 89 metres with net oil pay of approximately 38 metres. Downhole pressure testing and sampling have confirmed the presence of moveable oil that was recovered to surface and log interpretation indicates excellent reservoir quality with porosities of up to 30%.
Pressure and seismic data indicate that the Giraffe discovery is structurally connected to the Buffalo discovery creating a combined Buffalo-Giraffe complex covering approximately 48 square kilometres with an oil column of approximately 140 metres. Based on current mapping the Company's initial estimate of reserves for the Buffalo-Giraffe complex is over 400 million barrels. The Buffalo-Giraffe complex may extend into the Buffalo East prospect creating one very large structure of up to 90 square kilometres
The Warthog-1, Buffalo-1 and Giraffe-1 wells have all been suspended as potential future production wells.
There are many other prospects and leads mapped within Block 1 from over 600 kilometres of seismic data acquired in the licence during the past 18 months. The data give the potential to find additional substantial quantities of oil. All these prospects and leads are characterised by similarly encouraging seismic amplitude anomalies as those seen over the successful Warthog, Buffalo and Giraffe discoveries, and represent further additional multiple drilling targets within the block.
Heritage plans to undertake a six well exploration and appraisal programme in Q4 2009.
Commercial Development
Heritage is discussing potential options with the government of Uganda for fast-track development and commencement of early production. Options include the possibility of utilising the existing railway network in East Africa for a phased development with the potential for first production in 2011. An export pipeline to the coast is also being considered as well as a scheme to service local markets. A number of parties have approached Heritage with a view to financing large scale infrastructure programmes in Uganda and these discussions are ongoing.