BPZ Energy, an independent oil and gas exploration and production company, provided an operations update regarding the 2014 exploration campaign at onshore Block XXIII.
Onshore Block XXIII (100% BPZ; 200,000 acres)
Three onshore shallow exploration wells, ranging in depth from 3,500 to 3,800 feet, have been drilled at Block XXIII during 2014. These wells targeted the Caracol, El Cardo, and Piedra Candela prospects, which are on a six-mile trend. All three wells tested dry gas from the Mancora formation. The Caracol 1X well also recovered some light oil from the Heath formation and also tested dry gas from the Zorritos formation.
The Piedra Candela 3X exploratory well reached a total depth of 3,515 feet. The well is located at the northeastern tip of Block XXIII near Block XIX (100% BPZ; 500,000 acres), and tested a combined 4.1 million cubic feet per day (mmscfpd) from two zones that were stimulated. Internal volumetric estimates for the Piedra Candela discovery are up to 39 billion cubic feet (Bcf) of gas, assuming the prospect is full to the spill point. The Caracol 1X and El Cardo 2X wells tested 1.5 and 0.3 mmscfpd, respectively. Internal volumetric estimates for the Caracol and El Cardo discoveries are up to 34.9 Bcf and up to 10.1 Bcf of gas, respectively, assuming the prospects are full to the spill point.
The Company will pursue a long term testing program in these Block XXIII prospects, starting with Piedra Candela, and potentially sell the tested gas under a pilot program to the local communities. The Company is in preliminary discussions with a local compressed natural gas (CNG) distributor to establish terms of the transaction, including sales volumes and pricing. Additional appraisal wells could be included in the long term testing program. The Company has already received the long term gas testing permit.
This is the first time that the Mancora formation has tested gas onshore. Offshore, the Mancora formation tested gas from the C-18X well drilled by a previous operator in the Piedra Redonda field at Block Z-1. This well is approximately 26 miles from the Piedra Candela 3X well. In addition, between the Piedra Candela and Piedra Redonda discovery gas wells, logs from several onshore exploration wells drilled by prior operators in Block XXIII had strong evidence of gas pay in the same Mancora formation, which could potentially define a regional Mancora gas play. A 2010 report prepared by Netherland, and Sewell & Associates, Inc. provided an assessment based on SPE guidelines, that prospective gas resources could exceed 5 trillion cubic feet (TCF) in the Mancora gas play.
While the Company continues to explore and appraise the Mancora gas play which will require additional wells and studies, the Company is also reviewing other avenues for larger scale commerciality from development of current and future onshore gas discoveries. This could include revenue and cash flow from broader CNG sales, micro or mini LNG projects, the Company's previously announced gas to power project, a future Peruvian northern gas pipeline project being promoted by the Government, and gas exports to Ecuador.
Furthermore, the Company continues to work on the environmental permits to also be able to drill the Eocene oil prospects mapped in the southern section of Block XXIII, which is also found below the Mancora formation in Piedra Redonda.
Manolo Zuniga, President and CEO commented, "We are excited about the progress being made with our onshore exploration program at Block XXIII, including our potential future first gas sales, which could provide economic benefit while we continue testing these discoveries. Block XXIII results are also encouraging with respect to what we may find at our bordering Block XIX, where we plan on acquiring additional 3D seismic, as well as Piedra Redonda, which has already tested gas and could also contain oil below.
This activity onshore further defines our regional gas strategy, potentially anchored by the Block Z-1 Corvina gas to power project. Development of these gas projects will provide the needed local and export markets for our prospective gas potential, while helping meet the energy needs of the local communities in the region. Commercialization of the gas onshore and offshore would also provide us the ability to book gas reserves and obtain additional cash flow."