As first well hits net oil-bearing pay off Brazil, second one gets the go-ahead

Australia’s oil and gas company Karoon Energy has made a decision to drill the second well within an existing oil discovery offshore Brazil to assess the commerciality of a potential Neon field development, following the confirmation of net oil-bearing pay at the first well in this drilling campaign.

Back in April 2021, Karoon hired a rig to perform well intervention on four wells on the Baúna field. After the Maersk Developer rig, now called Noble Developer, was done with the campaign, it was expected to drill two development wells on the Patola field and one or potentially two control wells at the Neon oil discovery.

The Australian player put the Patola work to the rig’s backlog in June 2021 and the Neon option was added in May 2022. Following the Patola completion activities, the Noble Developer rig was expected to move to the Neon field to drill the first of potentially two Neon control wells, subject to the receipt of regulatory approvals.

In an update last week, Karoon reported that the Neon-1 or 9-NEO-1-SPS control well, spudded on 23 January 2023, reached a total depth of 2,382 metres measured depth (MD) on 10 February 2023. The firm pointed out that the wireline logging of the target sections was underway at the time.

Furthermore, the Neon-1 well was drilled into the down-dip southern flank of the Neon discovery to better constrain lithologies and reservoir quality, and reduce the range of uncertainty on the oil-water contact. The overall objective was to better understand the range of potentially recoverable volumes in Neon to assist in delineating pathways of potential future production wells.

While evaluation is ongoing, preliminary analysis of the logging-while-drilling (LWD) and wireline log data available to date, including preliminary inspection of whole core samples, confirms that the Palaeocene sandstone primary target zones are present and oil-bearing at this location.

Moreover, the Palaeocene intervals, representing an extension of reservoirs tested at Echidna-1, were found to be present over a gross 113-metre MD interval. Karoon says that a probable oil-water contact has been identified, which is within the range of pre-drill expectations and closely aligned with predictions based on seismic analyses.

According to the company, the net pay thickness above the identified oil-water contact at this down-dip location is estimated at 25 metres MD. The deeper secondary target Maastrichtian sandstone section was confirmed to be water-bearing, consistent with pre-drill expectations.

The Australian player highlights that analysis of pressure tests through the Palaeocene section indicates that the oil in this section lies on the same pressure gradient as the oil at Echidna-1, suggesting that the two wells are likely in communication.

The firm further elaborates that all reservoir quality estimates, including a preliminary analysis of net pay and the oil-water contact depth, will be subject to further studies and calibration from laboratory analyses of physical samples, including the 57 metres of core acquired from the well.

Meanwhile, Karoon has decided to proceed with the drilling of the Neon-2 or 9-NEO-2D-SPS well, based on the preliminary results from Neon-1. Therefore, the firm plans to plug and abandon Neon-1 and mobilise the Noble Developer rig to the Neon-2 location. This well will be drilled directionally to intersect a crestal location in the north of the Neon field.

Karoon’s objectives regarding Neon-2 are to determine the quality and continuity of the Palaeocene units and to determine Palaeocene pressure connectivity with the two wells drilled to date. In addition, it is planned that Neon-2 will test a deeper zone below the existing Palaeocene discovery.

While the resource estimates for the Neon field – May 2018 – are 1C, 2C and 3C contingent resources of 30 MMbbl, 55 MMbbl and 92 MMbbl1, Karoon says that a revised resource assessment will take place once the results from both Neon control wells are known and, together with development engineering studies, will contribute to an updated integrated asset evaluation, which could potentially enable a decision to enter a Neon concept select phase.

Dr Julian Fowles, Chief Executive Officer and Managing Director, remarked: “All the main objectives of the Neon-1 control well have been achieved. The preliminary results from the well, which confirm the presence of 25 metres of net oil-bearing pay at this down-dip, flank location, are encouraging and satisfy our minimum criteria to proceed with drilling Neon-2.

“The full logging suite currently being acquired will provide us with the data required to fully assess reservoir quality at this location. Once logging is complete, the rig will be mobilised to the Neon-2 well site, with the well expected to commence drilling before the end of February.”

Located within Karoon’s 100 per cent owned S-M-1037 license, approximately 210 kilometres offshore Brazil in the southern Santos basin, Neon-1 lies at 343 metres of water depth and is 2.1 kilometres south of the Echidna-1 discovery well, while Neon-2 is planned to be located 1.3 kilometres NNE of Echidna-1, in 305 metres water depth.