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I have been involved with bringing rigs into Australia from the US and it always takes around 100 days. I guess time will tell which of us is correct but I would bet on Bellevue not spudding this year.
The method of picking the location for the Westwood well may not have been scientific but at least OEH managed to find the money and drill a well which is more than Empire has done.
IMO Empire will have a lot of problems finding a rig in Australia that is avaliable and can drill to the required depth.
In my experiance it takes a minimum of 100 days to move a rig into Australia from the US. The rig that the PR claims they have bought was not built for Australia and once it arrives will probably take another 2 - 3 months get compliance with Australian standards. As I have said before IMO it will be at least 6 months from when they start shipping the rig to spudding the first well.
It is you who are wrong Howard, oil analysis is done in specialised labs using mass spectrometers and other specialised equipment and is not done onsite. There is no tool that you can lower down the hole that will tell you the size of the field and how much oil will be produced, an Extended Production Test (EPT) is required for this. There are wireline logging tools (for example Schlumberger’s Modular Dynamic Tester (MDT) that can give you an idea of permeability and porosity which will aid in planning the EPT.
IMO oil will not be produced on a regular basis for at least two years after the well has been drilled. There is a process that has to be gone through before oil can be produced this involves:
1) Completing the well. This involves perforating the well, running packers and running tubing.
2)Extended production test (EPT). This is done to help determine the flow characteristics of the well to determine what type of permanent facility is required. This will generally take at least 6 months to organise as some sort of temporary surface facility is required to handle any fluids produced and obtaining regulatory approval, particularly at Bellevue will take at least this long. The EPT will normally last for around 6 months. Some oil may be produced and sold during this period.
3) Production facility. After the EPT is finished the permanent facility has to be designed, approved and put in place. This will normally take at least a year.
It is probable that getting regulatory approval for a permanent facility could take significantly longer than a year as this would be the first time this would be done in Tasmania.
Extended production test (EPT). This is done to help determine the flow characteristics of the well to determine what type of permanent facility is required. This will generally take at least 6 months to organise as some sort of temporary surface facility is required to handle any fluids produced and obtaining regulatory approval, particularly at Bellevue will take at least this long. The EPT will normally last for around 6 months. Some oil may be produced and sold during this period.
After the EPT is finished the permanent facility has to be designed, approved and put in place. This will normally take at least a year.
It is probable that getting regulatory approval for a permanent facility could take significantly longer than a year as this would be the first time this would be done in Tasmania.
It is you who are incorrect, the Hunt rig was fully rigged up and was ready to spud. It was only the financial problems that prevented the well from being drilled. IMO The rig was moved to Tasmania with much fanfare to try to boost the share price and attract investors this failed. Also IMO The rig was moved to Bellevue, again with much fanfare, to boost the share price and attract investors and again this did not happen
Hi Earnest, I agree with wshaw14, what you should have said is that financial deals involving Empire always take longer than expected and then often fall appart.
Why would the share price jump 1000% just because Empire have some money. Remember that Empire had Hunt rig 3 rigged up over the well ready to drill and what was the share price then???
The money from the RO will only be enough to drill one well (if that). By the time all the debts are paid off there is not going to be much left over!
Could it be that rather than MM manipulating the share price, (which seems unlikely as the MM's would only gain a few hundred dollars)the share market just does not think the shares are worth 4c? Or could it be that there is some bad news coming?
The vast majority of "Costal Bitumens" are in fact waste oil from ships. Analysis of this oil (for example the samples from Brunie Island)gennerally shows it to be refined.
Actually Hunt was just moved to location, rigged up and waited. Hunt then did not get paid so they moved the rig off the mountain. At no time did Hunt do ANY drilling for GSLM. Spauldings drilled the surface hole.
Howard nowhere is it stated that there is ANY oil at all in any of the so called structures. All that has been stated is that if the structures exist as defined by Empire and if oil is present and if it has be sealed then there could be this amount of oil in the structure
You neglected to mention that there is an extremely low chance of ANY of these structures having ANY oil at all. A lot of these so called structures are only seen on one line of seismic and a lot more work would be required to determine if they are real or not
I guess we will have to wait until Oct to find out. I still believe based on my experience, that drilling will not start this year.
The real questions regarding SmartWin are:
1) Why did SmartWin stop making payments to Empire? They would not have done so without very good reason.
2) If Empire have such a strong case why didn't they take legal action against SmartWin while the rig was at Bellevue. It was at the Bellevue site for over 6 months
IMO there is absolutly NO WAY Empire can start drilling in Oct 2010. It will take longer than that just to get the money (if they get it at all) and it will then take a minimum of 3 months to get the rig moved to Tasmania, rigged up and ready drill. In my experiance this is more likly to take 4-6 months. It is highly unlikley that drilling will start this year.
You are correct, the Hunt Rig was removed from the Bellevue site, at Hunts own cost, because, despite many promises of money, they were not paid. The idea of Winterising the rig was just another misleading statement by Empire to try to mask the fact they had no money to drill. Empire have owed Hunt over $1.5 mil for nearly two years now, and there are other companies they owe money to as well.
So are you saying a divining rod is no good but a vision from God is a sound basis for drilling?
If the surrounding areas are so valauble how come no-one, not even MR, has applied for them?
There has never been ANY oil produced from ANY well in Tasmania
And another thing Seismic mapping does not show the presence of Oil all it does is indicate the depth to various lithological reflectors. Interpretation of this information MAY indicate the presence of structures that MAY contain hydrocarbons
And one final point MR has at least drilled an oil exploration well which is more than Empire have done and IMO are ever likely to do.
Howard,
Ensign Rig 16 and Weatherford rigs 828 and 826 are all capable of drilling to these depths. The reason that there are not a lot of big rigs in Australia is that the vast majority of wells drilled onshore are less than 10,000' so there is little need for these big rigs.
As I have said before IMO the Gefco rig will require significant and time consuming modifications before it will be able to drill in Australia. I think that even if Gefco were paid in full today it is very unlikely that this rig would be ready to drill this year.
Howard, this indpendent report was based on information provided by GSLM and only claimed that, based on the information provided and if the structures were as big as the seismic indicated then they have the potential to contain this amount. Until wells are drilled and the structures confirmed there is no value and no resource.
And if you dont find oil the shares are worth nothing! Even the RPS report only rates it a 2% chance of finding oil.
As I have stated several times in the past it will take at least three months to start drilling one the money is raised and this is assuming Empire can get a rig from the mainland, if they try to buy their own rig and bring it into the country then it will be at least 6 months. IMO it is unlikely that Empire will do any drilling this year.
I am not trying to influence the outcome of the project, all I am trying to do is bring some reality to some of the wildly optimistic and unrealistic claims made by some posters. When I see something posted that I know to be inaccurate or unrealistic I feel I should say something. Contrary to what you may think I would love to see Empire be successful I just don't like to see people mislead.
The license is not an approval to drill as drilling is a regulated activity and each well will have to be approved by MRT. Before approval is given they will have to show that they have the technical abality to drill the well and the financial resources to pay for it.
You are quite right until Empire get some money the whole argument is academic. I guess at the moment there is not much more to talk about.
The 2 main issues with electrical compliance are
1) The US uses 110 volts and Australia uses 240 volts.
2) Different colour coding is used for the wireing. This usually means that all the wireing has to be replaced.
GSLM spent a lot of time and money getting the origional Gefco rig to comply with Australian Standards before it was relised that this rig was not sutable for the wells they wanted to drill and it was sold. The new Gefco rig will not meet with Australian Standards, particularly electrical standards, without similear time consuming and expensive modifications. The origional Gefco rig has drilled some mineral wells which have different standards but has not drilled any deep oil exploration wells.
By the way the person in charge of a drilling operation is called a drilling superintendent or drilling engineer not drilling master.
The Hunt rig was moved of the mountain because they were not paid and and the idea of "Winterising" the rig was IMO just a face saving device by Empire. Nothing was ever done to the rig.
I have never claimed that there were not other rigs out there that would do the job, just that the Gefco rig as specified still needs a lot of equipment. Most of these rigs you found would be a bit on the small size to drill Bellveue and Thunderbolt. The problem with all these rigs are that they are in North America and not built to Australian Standards. Considerable time and money would be required getting them up to comply with Australian Standards (particularly the electrical standard) The one thing that NONE of these rig with is crew and this could be a big issue. Buying a rig and bringing it into Australia and getting it to comply with Australian Standards will take IMO at least 6 months from when the money is paid. Given that the RO does not close now until the end of July and assume all the paperwork can be completed by the middle of August this would mean that it would be at least mid Feb 2011 before drilling could start.
When buying a rig all you get is the basic rig with none of the equipment required to actually drill a well and the rig would cost nearly as much to equip as it would to but. The type of equipment I am refering to is things like:
BOP's
Mud pumps
Mud Pits
Drill pipe
Drill collars
Accumulator unit
Drilling line
Tongs
Handling tools (slips, elevators etc)
Forklift
Etc etc
All this equipment comes as part of the package when you hire a rig like the Hunt Rig. The other thing you don't get when you buy a rig is the systems and procedures required to operate and maintain it, I am refering to things like
Safety Managment Systems
Standard Operating Procedures
Planned Maintainance Systems
Preventative Maintainance Systems
These all take considrable time to develope and put in place. If you hire a rig all that is needed is a simple Bridging Document. The other consideration about buying a rig is where are you going to get the people required to operate and manage it? IMO Empire do not have the resources or ability to manage this type of operation. Another thing to consider is that if it was so easy to buy and manage your own rig why do none of the other operators, including companies like SANTOS, Wodside, BP etc) own their own rigs. If Empire buy a rig in my estimation it would take an absolute minimum of 6 months from when the deal was signed until spudding the first well and more likly it would take a year.
IMO it will be an absolute minimum of three months before drilling can start drilling and that is assuming they get money today and use an existing operational oil drilling rig. If Empire try to buy their own rig and set it up IMO it will take at least 6 months and probably longer to get ready to start drilling
All that Empire has accomplished in the past is to spend $50 mil and deliver a few km of seismic.
The requirments for a Petroleum Industry Standard rif is one that is built, maintained and operated in a "Fit for Purpose" condition. This would preclude a rig that was built in the US to American Standards, designed mainly for mineral drilling and operated by a company with no oil field experiance. In order to meet minimum requirements to drill the Bellvue well the Gefco rig would require:
13 5/8" 5,000 psi Rated Blow Out Preventors (BOP's)
Mud pits capable of mixing and storing 500 bbls of drilling fluid
Shale shakers
Accumulator unit to operate BOP's if power fails
Drill pipe and drill collars
Sub-base to sit rig on so BOP's can fit underneath
Re-wire the rig to Australian Standards as I very much doubt this rig was manufactured to these standards
Etc, etc etc
The advantage of contracting a drilling contractor like Hunt is that they supply the rig, associated equipment and all the personnel required to run the rig.
Tasmania is considered by most people to be a very high risk area in terms of finding hydrocarbons and very few people want to drill there. This is part of the reason that Empire can't get money, the area is seen by most as very unprospective with little chance of any return on investment. If the Tasmania was anything like as good a prospect as Empire claim there would have been many applications for a license, not just in the area Empire now have but for the rest of Tasmania a well.
It is intresting to note that they require the wells to be drilled with a Petroleum Industry standard drilling rig. Neither of the two Gefco rigs would meet this requirement without extensive (and expensive) modifications.
Empire was unable to get funding with a rig rigged up over the well ready to spud so I would think it is going to be far harder to get funding now. Remember they only got a part of the area they applied for. With regards to drilling, if they can find a rig that will drill Bellevue then drilling could start about 3 monthes after the money is raised. If they insist in buying a rig then IMO it will take at least 6 months to be ready to drill.
I understyood the conditions of the license to be that one well had to be drilled by the end of the first year and two wells by the end of the second year.
Howard,
Rather than blame market managers IMO it is far more likley that investors did not like what was in the PR (no commitment from managment to fully subscribe)and decided to pull out now.
No, this is a common device used extensivley in the oil industry for burning off oil
I was under the impression that Empire had to drill one well by the end of the first year, in which case there is now less than a year to got the money, get a rig and drill a well. Given Empire past record I would not bet on this happening. If as seems likly the RO fails then getting other funding could be very difficult. If existing shareholders don't support the company why would anyone else?