In the case of MJ02, the initial evidence for a discovery was submitted in late Nov of 2021 in order to obtain an extension of the exploration license; at that point in time to only way to get a license extension was with a discovery as all other extensions had already been granted. Due to the short time from reaching TD and the extension grant, I suspect a simple flow test was successfully performed where the mud weight on the formation was lightened and the hydrocarbons flowed. This was enough evidence to obtain the extension, but not enough to obtain a Production Lease. In order to obtain the production lease, all the data in the previous post must be collected and the application linked to above submitted.
The application has 4 parts 1. Background/intro 2. Data on the formation (from the tests specified in the previous post + 3D) 3. Field conceptual development plan 4. Financial analysis
So, Zion has a ton of work to do in order to complete this application even after the testing is complete. I suspect that Zion had an outline of the development plan and financial analysis before the final test data was complete. Therefore, the application was/is awaiting fine tuning with the last details so that it could be done relatively quickly (but still its a lot of detail to bring together).
I wont go into the development plan nor financial analysis here, but reading the Appendix in the linked document will provide the details if you are interested.
Beyond the application for discovery, Zion also has a ton of work to do figuring out how to deliver the hydrocarbons to market. In the case of oil, a trucking intermediate plan followed by a pipeline plan to deliver to a refinery (which one, and is the oil type compatible?). In the case of gas, a pipeline plan to the point of sale. Also need to figure out how to dispose of produced water. And there are separation (gas-oil-water), storage requirements, etc to deal with (i.e. infrastructure).
Djbradles has advocated for an investor presentation from Zion. I would think that all the information needed for that presentation would derive out of the Discovery Application plus the market delivery work. Not all of the info submitted the Energy Ministry should be made public. But 75% of the summary data could be made public and if rolled into a polished presentation could have a big impact on investor interest going forward.
As always, perform DD and own your investment decision to buy/hold/sell. I am long and accumulating.
Just thought it was a time of refreshing your post regarding, Israel Well Testing Requirements. TY
Israel Well Testing Requirements
Since we are testing MJ02 I thought it would be a good to have an overview of the testing requirements. I first posted the chart below when MJ01 was being tested in Aug of 2018. Lets hope it turns out differently with MJ02. I don't think MJ01 got past the wire line tests and initial attempt to get oil to flow; it did not make it to DST. I might be wrong as they did provide fluid properties from several zones that might have been from a DST instead of a simple circulation test with the rig. In any event, we are on new ground with MJ02 after almost 4 years as I'm sure MJ02 is in DST or equivalent based on Zion updates.
Each required data is labeled "RT" in the table for Required Test. I think it would be more accurate to say "Required Data" as there are several variations to all the tests that could provide the desired data. In that regard, I'm sure the MJ02 approved test plan varies slightly from this table but provides the desired data and conclusions.
There are two steps to the test:
#1 Wire line logs, which Israel calls "Initial Pressure Test". Dunn listed the logs being ran by name and stated they were complete in an update. These logs are ran "open hole" before casing covers the zone of interest (the casing down the the zone of interest is in place). The purpose of these tests are to determine the permeability and flow characteristics of the formation. Also, a fluid sample should be collected at this step, or later during the Production Flow Test. Most of the time it is desired to get the sample earlier instead of later, so if the well will flow, then its allowed to flow. So, I'm guessing Zion already allowed the well to flow and has an oil sample.
#2 Drill Stem Test (DST), which Israel breaks down into two categories of "Pressure Transient Test" and "Production Flow Test". The Transient test is interested in permeability again, but it is measured now by actual fluid flowing. Going beyond permeability, the Transient test also finds the well drainage area (which tells how far apart the wells should be spaced) and somewhat the reservoir boundaries. Boundaries are hard to detect unless they are close to the well. If not close, then another (appraisal) well is needed. The 3D seismic is the main tool for determining the boundaries at this point. In any event, a P50 number should be calculated. The Production Flow category has the test most interesting to guys who like to run wide open: the AOF or Absolute Open Flow test! A well might run at X bopd wide open, but it may be in the long term interest of the field to run at less than X. The PI test shows flow vs surface pressure and the IPR test the flow vs formation pressure. The tests in this category usually allow flow, then shut-in to measure the pressure change. The time for both the flow and shut-in can be hours or days. Typically, the DST is performed prior to stimulation, and again after stimulation. In the last update Dunn said they are preparing for the last run down hole, so I'm guessing the prior DST and stimulation is done and the final DST will be done soon.
This video illustrates a DST, but they refer to packers and in MJ02 Zion choose to use liners with built in isolation mechanics due to the high down hole temperatures to avoid reliability issues with the packers. So, the liners enabled testing and also will stay down hole for production.
Here is the chart. You can run searches on any term of interest to learn more. Please do your DD and take ownership in your decision to buy/hold/sell.
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