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Oil price

Oil has fallen again today, partly whilst the EU struggle to agree on sanctions against Russia and partly as their oil continues to get through. The authoritive PVM reported that yesterday India lifted 3m barrels of Russian crude yesterday, the second such lifting this month.

As already reported Russia have been offering to sell oil and product in roubles, yesterday they announced that they would take Bitcoin in return for shipments, that’s all the digital currency needs, an association with dictators and spivs….

In today’s discussions the US are proposing to up their game in natural gas and are offering a deal with Europe on LNG exports, this comes from Sleepy Joe of the ‘I will end fossil fuel’ fame.

Empyrean Energy- Game on…

Empyrean has provided the following update on preparations to drill the Jade prospect at its 100% owned Block 29/11 permit, offshore China:

HIGHLIGHTS

• The China Oilfield Services Limited owned NH9 drill rig for drilling of the Jade well is being handed over to Empyrean within the next few days for safety checks
• Mobilisation of the NH9 rig to the Jade well drilling location expected to be on or around 27 March
• The Jade well is currently anticipated to spud on or around 2 April

Empyrean is the operator of Block 29/11 in China and has 100% working interest during the exploration phase. In the event of a commercial discovery, its partner, China National Offshore Oil Company, may assume a 51% participating interest in the development and production phase.

Following discussions with COSL and CNOOC to establish rig availability, the recent completion of the well site survey and receipt of all required permits, following the final well site survey report, Empyrean advises that the mobilisation of the NH9 rig to the Jade well location is expected to occur on or around 27 March. NH9 had been used to drill a well for  CNOOC immediately preceding mobilisation to Jade.

COSL now estimate that the spud date for the Jade well will be on or around 2 April 2022, depending on prevailing weather conditions to ensure the safe anchorage of the NH9 rig at the Jade location.

As previously advised, CNOOC EnerTech Drilling and Production Co are providing  comprehensive pre-drilling, drilling and testing services to Empyrean for the Jade well. CNOOC EnerTech has a wealth of global experience, but more importantly has vast local hands-on experience managing the drilling of wells within the Pearl River Mouth Basin where the Block 29/11 permit sits. The Empyrean/ CNOOC EnerTech team will be present both onshore, and offshore on the rig, during the drilling of Jade. Offshore, the team will consist of a hand picked drilling supervisor, well site geologist, mud logger and an electric logging expert. Gaz Bisht, Empyrean’s technical director who has a successful track record of hydrocarbon discoveries within offshore China, has already made his way to China and is supervising the operations as part of the onshore team.

Empyrean and the CNOOC EnerTech team have taken every precaution to plan for a safe drilling campaign at Jade. The COSL owned NH9 rig and its drilling team are ‘drill fit’ and the NH9 rig will be mobilised straight to the Jade well location from its current position without the need to go back to port.

From the spud date, the Jade well is anticipated to take approximately 26 days to drill to Total Depth on a trouble free basis. There are no overly challenging drilling zones anticipated with the Jade well design and program. If the Jade well intercepts a hydrocarbon zone, as anticipated, then testing is planned to take approximately a further 2 weeks.

The Jade Prospect

The 2021 drilling campaign is targeting a world class conventional oil target in the Jade Prospect, to which Gaffney Cline & Associates assigned a Geological Chance of Success of 32%. Subsequent to this independent assessment, the Company completed a gas cloud study and post stack seismic inversion study that it believes further mitigates risk and increases the GCoS to 41%.

The Jade Prospect has a GCA audited mean in place potential of 225 MMbbl and a P10 in place upside of 395 MMbbl. Four recent nearby discoveries by CNOOC immediately to the West of the Jade Prospect are filled to their P10 potential or better. All four CNOOC discoveries have gas clouds showing in the overburden on seismic.

Empyrean’s excellent quality 3D seismic indicates that there is a classic “fill to spill” geological setup in the basin, and a robust regional seal, that provides the Jade and Topaz Prospects with a very real possibility of being filled in a similar fashion to nearby discoveries. The Jade and Topaz prospects both have gas clouds, similar to nearby discoveries, in the overburden on 3D seismic. Dry wells nearby do not have gas clouds. The Jade Prospect is the first of the three identified prospects within Block 29/11, which also contains the Topaz and Pearl prospects. The combined audited mean in place potential of all three prospects is 884 MMbbl and a P10 in place upside of 1,588 MMbbl. The post stack seismic inversion study showed Jade and Topaz both have the potential for excellent carbonate build-up reservoir quality with excellent porosity and permeability. Any oil discovered is expected to be light oil in the 38-41 API range, similar to nearby discoveries. These attributes combined with the potential for exceptional natural reservoir drive supports the potential for excellent recovery rates.

The information contained in this announcement has been reviewed by Empyrean’s Executive Technical director, Gaz Bisht, who has over 31 years’ experience as a hydrocarbon geologist and geoscientist.

Empyrean CEO, Tom Kelly, stated:
“We are delighted that we are now days away from being ready to spud one of the highest impact and exciting wells of 2022. Things are getting very real for our team and we look forward to providing shareholders and investors with further updates.”

And so, after six years in the preparation and countless ups and downs on the path to this moment, the drilling of Jade is now imminent. I wrote last week that I had a long chat with Tom Kelly and I’m sure that by now he is as excited as a kid before Christmas. 

I have followed Empyrean all of the way, I remember Gaz Bisht and Tom rolling back the Jade, Topaz and Pearl maps on the desk and the rocks looked as good then as they do now before putting the drill bit into the ground. Gaffney Cline gave them a 32% geological CoS and with a bit of (internal) tweaking managed to mitigate the GCoS to nearer 41% for this well. 

However we do not have to look back far to see exploration wells with a much higher CoS proving to be dusters so I just hope that for all those shareholders who have waited all this time that they might make some proper moulah out of this well. The market has started to move up and the warrant holders have started to convert which most importantly will save the company money in the event of a farm-out thus enabling the company to keep a larger share.

Spud date is circa. 2nd April and the well should take around 26 days to get to TD any testing would obviously be two weeks after that. Easter weekend is going to be as never before this year. 

KeyFacts Energy Industry Directory: Malcy's Blog