Oilex announces major upgrade to gas reserves in Cambay field

The company operates the Cambay Field production sharing contract on behalf of its partner Gujarat State Petroleum Corporation (GSPC), which owns 55 per cent of the equity in the joint venture.

The company said in a statement on its website that the reserves in the low permeability reservoirs attributable to its 45 per cent net working interest in the field totaled 248 billion cubic feet (bcf) of natural gas and 11 million barrels (mmbbls) of condensate.

It said these reserves were in the P90 category - the highest classification under Australia's oil reporting code.

The company said P90 contingent resources, also attributable to its 45 per cent net working interest in the field, amounted to 186 bcf of natural gas and eight mmbbls of condensate.

The statement said the upgrade followed a nine-month programme of extensive technical studies on the field using proprietary low permeability reservoir technologies derived from similar "tight/shale gas" projects in North America.

Oilex said that it was advised by two North American companies - NuTech Energy Alliance and Morning Star in reserve certification of the "tight" reservoir projects.

The company said it expected to submit data in October this year for independent reserves certification.

"Oilex will, subject to joint venture and Indian Government approval, further evaluate the 'tight' reservoir potential with drilling and production testing using modern, multi-stage fracture stimulation technology. These operations are expected to continue through the first half of 2011 as equipment and materials become available, it said.

"The Company has renewed its focus on India and has made significant progress in unlocking the potential of the Cambay 'tight' Eocene reservoirs that extend over the 40,000 acre contract area. Key to this success has been applying leading-edge North American tight/shale gas industry expertise and proven technology to the extensive database on the Cambay Eocene reservoirs which includes: modern 3D seismic, wire line logs from 36 wells, drilling data, production and well test data and cores, Dr Bruce McCarthy, Oilex's Managing Director, said.

"Two years ago Oilex conducted well tests on the Eocene section that flowed hydrocarbons to surface from conventional vertical wells, a very encouraging result for 'tight' reservoirs. Oilex now intends to apply horizontal drilling and multi-stage fracture stimulation technology to improve on the flow rates and confirm commerciality of the Eocene tight reservoirs," he added.

The company made it clear that the estimates had not been endorsed by the Government of India or the Directorate General of Hydrocarbons, India.

Oilex is an AIM and ASX-listed company based in Perth, Australia. Its main area of focus is India where it operates three onshore production sharing contracts on behalf of joint ventures with GSPC.

The Cambay Field contract area comprises 161 sq km onshore Gujarat and contains thick, overpressured low permeability reservoirs in the Eocene section. The top of the Eocene is at a depth of 1,400 metres to 1,700 metres below the surface.

NNN