This Solimar update was just posted on their website.
Solimar receives government permit for steam enhanced production
testing at Kreyenhagen
Solimar Energy limited (ASX:SGY, TSXV:SXS) (“Solimar” or the “Company”) is pleased to
announce that it has received formal approval from the California regulatory authorities to conduct
steam enhanced oil production testing of its 100% owned Kreyenhagen oil field project. This
project contains a number of existing oil and gas discoveries that Solimar is in the process of
appraising and redeveloping.
The Cyclic Steam Project Permit was attained within seven months of application after review by
all applicable government departments lead by the California Division of Oil, Gas and Geothermal
Resources (DOGGR) and following a period allowing for public comment.
Solimar will soon be commencing a two phase production testing program at Kreyenhagen where
there is independently assessed, unrisked oil in place of up to 79 MMBBLS* net to the
Company’s working interest. The 13 to 18 degrees API gravity oil is contained in a shallow
sandstone oil reservoir (the Temblor Sandstone) which has produced at unstimulated initial
production rates of 1-21 BOPD in numerous vintage wells.
As announced on April 20, 2012 Solimar’s testing program will utilise up to 4 suspended wells
previously drilled in 2007. The first phase or “Cold Flow” testing program will involve zonal
production testing using modern completion equipment and methods. A work over rig is currently
being contracted for this phase of work. The second phase, for which the Permit to Steam is
required, will involve alternating periods when steam is injected into the oil reservoir and allowed
to “soak” followed by oil production periods. This cyclic steam or “Huff and Puff” test program will
be initiated in late 2012 once the Company’s 20MMBTU portable steam generation unit (for which
construction has already been contracted) has been delivered and installed.
In addition to the Permit to Steam, the Company is also progressing the permitting of multiple,
new well sites located to better define the extent of the existing oil discoveries and to provide
detailed reservoir information for the three main oil productive horizons in the project area. These
being the Temblor Sandstone which contains the heavy oil, the Avenal Sandstone within which
light oil and gas has been discovered and the Kreyenhagen Shale. Potentially large volumes of in
place light oil are present in the Kreyenhagen Shale within the Company’s extensive acreage
holdings. The Kreyenhagen Shale regional oil play is attracting increasing major company interest
in the area and will be the subject of a future dedicated evaluation program by Solimar.
Commenting on the issue of the Permit to Steam, Solimar CEO John Begg said:
“Securing this important milestone permit in such a timely manner testifies to the effectiveness of
the Solimar operating team in California. It represents a further step in the appraisal and the
anticipated redevelopment and commercial production of oil from the Kreyenhagen field”.
