Sugarloaf Gas and Condensate Project >> General Geological Information
Recent information derived from the Sugarloaf AMI and public reports from nearby acreage continues to support the geological model of the Sugarkane Gas and Condensate field. The field consists of a localised pool of over-pressured Austin Chalk directly above a regionally extensive over pressured Eagle Ford organic shale with a well established common pressure gradient of 0.8 psi/ft. This can be compared to a ‘normal’ pressure gradient of 0.45 psi/ft, meaning that the reservoir pressure is almost double a ‘normal’ gradient.
Gross reservoir thickness across the Sugarkane field is between 180 – 250 ft, which is controlled by at least 8 fully logged historical wells (plus a large number of wells with less than full log suites available), over 25 wells drilled in the last 4 years, 2D seismic and partial coverage by a 3D seismic survey. Whilst a distinction has previously been made between the two horizons, they act as a single reservoir and have many similarities including lithology with calcareous (Chalk) interbedding being evident down through the Eagle Ford reservoir, hence the earlier designation of a ‘New Chalk’. Production from the Sugarkane Field has been fairly consistent across all of the recently producing wells. Gas being produced is very rich with 1250 British Thermal Units per cubic feet of gas (“BTU/scf”) and a significant condensate ratio of 150 – 300 barrels per million cubic feet of gas (“bbls/mmscf”).
These factors are important as they distinguish Sugarloaf production from elsewhere within the trend (there is both dry gas and oil dominated areas within the Eagle Ford Shale trend) and from other ‘dry’ gas shales in the USA with ~1000 BTU/scf gas being produced only.
The condensate ratio, the higher BTU’s, and pressure regime within the Sugarloaf AMI has a substantial positive impact on the commerciality of Eureka’s interest in the AMI. The higher BTU gas is priced higher than low BTU gas and liquids being considerably more valuable than gas.
Using current hydrocarbon prices and the condensate to gas ratios observed to date, liquids should account for over 80% of the value of the produced hydrocarbons from the Sugarloaf AMI.
It is key to note that in a commodity price environment of depressed gas prices, the Eagle Ford Shale is one of the few areas where activity is being ramped up rather than reduced due to economics with recent reports indicating nearly 50 drilling rigs now active across the trend. This commercial distinction is even greater for Sugarloaf where the high condensate to gas ratio significantly adds value to the field.