Senegal appraisal looks to de-risk 2014 discovery success

Published on 19-05-2015 11:33:5019 May 2015

Cairn’s Capital Markets Day this month focused on Senegal, providing some insight into its 2014 back to back independent discovery wells, FAN-1 and SNE-1. Here we look at the shelf edge discovery SNE-1 and point to the key uncertainties the company will need to address when it returns to drilling in the region at the end of 2015.

Exhibit 1: Senegal location map

Source: Cairn Energy

Exhibit 2: Senegal basin cross-section

Source: Cairn Energy

Cairn was very enthusiastic about its SNE-1 discovery when it reported initial results back in November 2014, so it is no surprise that it is focusing on appraising here now. The discovery well was drilled on the shelf edge in 1,100m of water and encountered 32° API oil in 30m of net oil bearing reservoir in a gross reservoir interval of around 100m in the target Albian sandstone. Data recovered from the well is very positive. Reservoir quality was described as excellent at the time of discovery and we now know that the average hydrocarbon saturation is over 70% and average porosity is 24%. while pressure measurements and fluid samples collected as part of the logging programme show good mobility from all the reservoir intervals.

To follow up on these promising results, Cairn will return in Q4 2015 with a firm three well campaign consisting of two SEN appraisal wells and and exploration well on a shelf edge prospect.

Cairn estimates unrisked 2C resources of 330mmbbls with a 1C to 3C range of 150 – 670mmbbls. A key risk on volumetrics is commonly driven by uncertainty in OWC. Pressure data from the well has however provided a textbook pressure profile with clearly defined Gas Oil Contact (GOC) and Oil Water Contact (OWC) so that volumetric uncertainty comes from elsewhere in this case. The answer lies in the complex geology that overlies the 60 -100km2 field and complicates the seismic time to depth conversion, giving varied results. Getting to grips with this will be key, so drilling the two appraisal wells planned for SNE should allow de-risking by providing extra data points for seismic calibration.

In addition to reducing the resource uncertainty range, the appraisal programme will focus on establishing the reservoir continuity and connectivity. Nothing from the seismic suggests this will be an issue, but understanding this will be crucial to determining field commerciality. In SNE the plan is to assess this through interference testing sometime in 2016. Requiring a minimum of two wells, this involves monitoring a pressure response in one well to a transient change in another.

Finally, the sand distribution in the reservoir will be something to pay attention to in the appraisal wells. Within the 30m of net pay found in SNE-1, we know that this is not one thick sand, but made up of a number of sands of varying thicknesses, from the order of tens of metres down to less than a metre. Thinner sands could prove more challenging to produce and effectively drain, so the prevalence of these will likely impact recovery from the reservoir.

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