Elixir Energy Ltd (ASX:EXR, OTC:ELXPF) is encouraged by the successful stimulation and clean-up of the Lorelle Sandstone after drilling the Daydream-2 Well at its 100%-owned Grandis project adjacent to the Wallumbilla gas hub in Queensland.
Computer models based on the data acquired during testing indicate that the Lorelle Sandstone alone could produce a commercial flow rate.
Data acquired during the Lorelle Sandstone flow periods has been used to predict the initial gas flow rate and ultimate recovery for each well from this lowermost zone.
Gas flows to surface
Following the recent successful free-flowing test on the Lorelle Sandstone, Elixir advises that this key formation has now been successfully stimulated.
The zone was flowed back overnight to clean out the stage and again flowed gas to surface with slugs of proppant debris and stimulation fluid as expected.
Stimulation equipment on location at Daydream-2.
Elixir’s technical and economic modelling indicates the Lorelle Sandstone alone could produce a commercial flow rate of gas, with the breakeven commercial initial flow rate being estimated at 2.5 million cubic feet per day.
Prime location
This commerciality threshold is underpinned by the location of the Grandis Project only a few tens of kilometres from gas pipeline infrastructure connecting to domestic and international gas markets; existing and proposed local gas-fired power stations; a commercial gas hub into which spot sales can be made at high gas prices; etc.
Accordingly, plans for a staged development are underway, including engaging with gas offtakers with interests in the region.
Operational delays
Since the stimulation and flow-back of the Lorelle Sandstone, Elixir has sustained a number of logistical and other operational delays.
After successfully isolating the Lorelle Sandstone with a bridge plug to proceed with the next stimulation stage, the setting mechanism became lodged in the hole requiring remedial activity.
This delay has resulted in the full stimulation program not being able to be completed before the hard deadline for certain equipment to leave the site to meet commitments with another operator.
Elixir’s managing director Neil Young said: “Whilst the logistics and scheduling issues are frustrating, we are extremely encouraged by the results of the first stimulation stage.
“Can deliver commercial flows”
"Given factors such as the highly favourable gas market location, our analysis indicates that this well can deliver commercial flows from the Lorelle Sandstone alone, with additional flows from the upper levels just adding to the economic returns.
"Albeit slightly delayed, the program is otherwise completely on track and we look forward to matching this early success with the additional five stages to be completed as soon as logistically possible.”
Elixir has demobilised at Daydream-2 and will re-commence the stimulation program in a month or so. This will ensure that the program can be executed as planned and there are no negatives for the ultimate program except for this time delay.
Negotiations with the relevant subcontractors are in hand and a more precise timetable is expected to be finalised shortly.