Kea Petroleum (LON:KEA) has found gas at the Beluga-1 well in New Zealand's Taranaki Basin. Kea said the well, in exploration permit PEP51155, has reached a total depth of 4,100 metres and was now being prepared for wireline logging. This is expected to begin later this week. Kea said the well has intersected a number of sands with indications of hydrocarbon presence, including a zone which encountered higher pressure. Gas was detected on the surface and waxy condensate coated the upper parts of the drill pipe. The wireline logs will enable Kea and its partner Methanex New Zealand to evaluate the significance of these shows and to make a decision whether to case the well in preparation for flow testing.
Dave Bennett, Kea’s chief executive, said: “We are pleased that drilling has been successfully completed and we now have encouraging indications in the well - not unlike those encountered in nearby producer wells. At this stage it is not yet possible to draw firm conclusions as to the quality of what we have uncovered but we will work on evaluating this well and a further announcement will be made upon completion of the electric logging in a few days time.”
Work on Beluga-1 began on May 9 with the well being drilled from a site west of the Waitara River near the township of Tarata. In January 2010 Kea entered into a funding and participation agreement and a separate gas off-take agreement with Methanex New Zealand, a subsidiary of methanol supply giant Methanex Corporation. Under these agreements Methanex agreed to contribute up to US$10m to drill and complete the Beluga-1 well, in Kea's permit PEP 51155. In the event of a commercial gas discovery, Methanex has agreed to purchase and Kea has agreed to sell the gas under a 15-year gas off-take agreement.
Traditionally, gas discoveries in New Zealand’s Taranaki basin have been rich in condensates. At current prices a successful condensate rich gas discovery at Beluga could generate higher revenues from condensate sales than from gas sales. If that turns out to be the case, Methanex will receive a royalty on sales. Beluga's best estimate prospective resources as estimated by independent assessors from MBA Petroleum Consultants are 446 bcf with condensate yield of about 27 million barrels.
Progress at Beluga-1 follows news at the end of April that Kea had discovered oil in…
