Empyrean, an oil and gas firm preparing to drill its 'world-class' Jade prospect offshore China, has executed the final integrated drilling contract with the Chinese offshore drilling company COSL.
The parties had previously agreed on technical, commercial, and contractual terms and COSL confirmed rig availability for the Jade Prospect.
Empyrean said Thursday that with the final drilling contract signed, the drilling start is expected in late December 2021. Empyrean will pay the 10% deposit ($US1.23m) under the terms of the contract. It did not say which drilling rig would be used for the project.
Empyrean is the operator of Block 29/11 in China, where the Jade prospect is located, and has 100% working interest during the exploration phase. In the event of a commercial discovery, its partner, China National Offshore Oil Company ("CNOOC"), may assume a 51% participating interest in the development and production phase.
Also, Empyrean said that the signed drilling contract confirms the substantially reduced turnkey quote for the drilling of the Jade Prospect of US$12.3 million on a dry hole basis, an approximate 34% saving on the initial quote. On a success basis, testing of any oil column has been quoted at US$7.4 million, the company said.
Further, Empyrean is gearing up for a well site survey which is expected to start as soon as there is a good weather window with low enough swell to safely and effectively complete the survey, as recent sea conditions at the well site have been poor.
Also, Empyrean said that the drilling of the Jade Prospect remains subject to further funding being secured by the company.
"The Company is currently in negotiations with potential counterparties and is aiming to finalise the necessary arrangements in the coming weeks. Further updates in this regard and in relation to the Jade well drilling preparation and permitting activities will be made in due course," Empyrean said.
World-class prospect
Empyrean has said that the Jade was a world-class conventional oil target, to which Gaffney Cline & Associates ("GCA") assigned a Geological Chance of Success ("GCoS") of 32%. Subsequent to this independent assessment, the Company completed a gas cloud study and post-stack seismic inversion study that it believes further mitigates risk and increases the GCoS to 41%.
The Jade prospect has a GCA audited mean in place potential of 225 MMbbl and a P10 in place upside of 395 MMbbl. Four recent nearby discoveries by CNOOC immediately to the West of the Jade Prospect are filled to their P10 potential or better. All four CNOOC discoveries have gas clouds showing in the overburden on seismic, Empyrean said.
"Empyrean's excellent quality 3D seismic indicates that there is a classic "fill to spill" geological setup in the basin, and a robust regional seal, that provides the Jade and Topaz Prospects with a very real possibility of being filled in a similar fashion to nearby discoveries. The Jade and Topaz prospects have gas clouds, similar to nearby discoveries, in the overburden on 3D seismic.
"Dry wells nearby do not have gas clouds. The Jade Prospect is the first of the three identified prospects within Block 29/11, which also contains the Topaz and Pearl prospects. The combined audited mean in place potential of all three prospects is 884 MMbbl and a P10 in place upside of 1,588 MMbbl," Empyrean said.
"The post stack seismic inversion study showed Jade and Topaz both have the potential for excellent carbonate buildup reservoir quality with excellent porosity and permeability. Any oil discovered is expected to be light oil in the 38-41 API range, similar to nearby discoveries. These attributes combined with the potential for exceptional natural reservoir drive support the potential for excellent recovery rates," the company added.
Empyrean CEO, Tom Kelly, stated: "The signing of the integrated drilling contract with COSL, marks another important milestone for Empyrean as we gather momentum on the downhill run to drilling the Jade prospect next month. We thank COSL for their diligent and collaborative approach to date. We have already locked in the drill rig and awarded the well site survey and are making very good progress with other drilling preparation activities, acquiring long-lead items and securing the necessary drill permits. As announced last week we have engaged CNOOC EnerTech to manage a number of these critical workstreams. Finally, we would like to again thank CNOOC for their continued support and cooperation throughout this process."