East Play Prospect Assessment
In Q3 and Q4 2019, intensive interpretation work was carried out by a Railroad Valley Analogue Project team comprised of geologists with in-depth experience of the adjacent producing field and focusing on East and West Plays in Hot Creek Valley. Assessment is now complete for the Tertiary East Play, a likely analogue of Railroad Valley’s producing Trap Spring field.
Promising drilling targets have been identified by analysis and interpretation of well data from Eblana-1 and Eblana-3, four reprocessed 2-D seismic lines, gravity, magnetic and geochemical data, as well as VSP data from Eblana-1 along with energy absorption analysis. The Company is preparing applications for permits to drill three wells, Eblana-8, Eblana-9 and Eblana-10. Eblana-9 will be the first well drilled. If commercial, the other wells will follow.
The interpreted reservoir lies in a porous zone of the Tertiary Volcanics, most likely in weathered tuffs (ignimbrites) and/or fractured vesicular basalt. This zone features a structural trap identified on seismic and well log data and appears to be locally closed by down-to-the east faults, separating the zone into three compartments. Seismic data supports the presence of an intact seal over the porous zones, with the top of each compartment sealed by non-porous volcanic flows.
At least three separate porous layers are visible on seismic in each of the compartments, with the shallowest of these being at 4,300 ft below ground surface and the deepest at 5,500 ft. Gross thickness of the porous layers is 300 to 450 ft. Based on the well log response of these layers in the Eblana-1 well, porosity is estimated at between 12% and 18%. Energy absorption analysis suggests hydrocarbons could be present in the porous units. Large seismic amplitude anomalies (bright spots) have been interpreted as directly indicating the presence of hydrocarbons, although other factors can also account for these effects. The planned Eblana-9 target horizon is approximately 1500 ft to 1900 ft above the same horizon present in the Eblana-1 well.
Due to limited seismic coverage, the full lateral extent of the reservoir is uncertain, but at a conservative estimate of 300 ft the surface area is 560 acres. Resources targeted in the well are provisionally estimated at 38-56 million bbls oil, assuming a 15% porosity and an oil-to-water ratio of 15:85.
West Play Prospect Assessment
Subject to funding and regulatory permissions, the Company expects to drill a further well or wells to the west of its acreage, where the current basin model indicates a structural analogue of Railroad Valley’s Grant Canyon field. Grant Canyon historically included the most productive onshore well in the USA, flowing at over 4,000 bopd. In this area, the Paleozoic strata rise to relatively shallow depths, currently estimated to be 3,500 ft. or less, potentially allowing the development of low-cost wells. Intensive data analysis and modelling efforts are ongoing, and planned data collection includes seismic surveys to confirm structural aspects of identified leads.
The Eblana-1 well
The Eblana-1 exploration well, drilled in 2013 by U.S. Oil’s wholly owned subsidiary Major Oil International LLC, identified nine large potential oil reservoir intervals and associated high fracture zones before reaching its target depth of 8,550 feet. Testing confirmed two producer zones, approximately 150 feet cumulative net pay, and identified light, sweet oil of 33 and 28.5 API. Oil produced had a high water cut and did not flow at commercial rates. The discovery was confirmed by an independent Competent Person’s Report prepared by Forrest Garb & Associates.
VSP and structural modelling
From the beginning of its exploration programme in Hot Creek Valley, US Oil recognised both the potential for major discoveries and the special difficulties associated with Nevada geology. Complex faulted structures, complex lithology, unusual fluid relations, unconventional reservoir rocks and difficult downhole conditions make for a challenging operational area. The Company’s approach to these challenges has been systematically to reduce exploration risk by carrying out multiple surveys and applying advanced technologies.
In 2016, the Company contracted Halliburton to carry out a Vertical Seismic Profile (VSP) survey based on US Oil’s Eblana-1 discovery well, and Baker Hughes Inc. (BHI) to carry out structural modelling based on all the available data including VSP.
Halliburton Vertical Seismic Profiling (VSP) – data collection
In June 2016, Halliburton conducted a zero-offset VSP (ZVSP), two walk-away (WAW) VSPs, one offset VSP and two mini-WAW VSP surveys for 8000ft in each direction from the Eblana #1 well. The VSP acquisition survey was run using a 30-level Geochain™ tool string. For depth correlation, a gamma-ray wireline tool was attached to the tool array to check the geophone depth locations and allow for corrections.
Baker Hughes structural modelling
The following datasets were analysed and integrated:
Short angle data (integrated with AVO)
AVO and anisotropy results
BHI identified four possible hydrocarbon-bearing upside Tertiary structures and stratigraphic traps, all of which are potential targets. Two correspond with zones from which Eblana-1 flowed oil in 2013. The Tertiary structures correspond to a faulted anticline, and/or stratigraphic traps, that deepens toward the W-SW and grows in the E-S direction. In addition, BHI identified two possible hydrocarbon-bearing upside deep Palaeozoic structures: a faulted anticline in the Centre-East of the Block that apparently constitutes the upside structure that surrounds the Eblana-1 well and a second anticline structure in the East that has a clear structural closure. AVO analysis was uninformative due to geologic complexity.
Analysis of the VSP data revealed that the Palaeozoic stratum in the area of Eblana-1 lies at significantly shallower depth immediately to the west.
The Eblana-3 well spudded at 13:30 PST on April 17th 2018 and drilled vertically to a depth of 8,200ft. The well was updip of the Company’s discovery well Eblana-1, and on the same structure. Wire-line and mud log results were highly encouraging, identifying multiple potential hydrocarbon zones in the Tertiary. Oil of API 34.5 flowed to the surface.
During completion operations, perforations targeting potential producer zones with good permeability and porosity appeared to suffer from blockage by volcanic ash and tuff. Attempts to clear the perforations by pumping and establish consistent flows of oil with low water cut were unsuccessful. A plan was developed to flow other, low permeability zones by fracking.
Between September 2018 and March 2019, the Company developed a detailed fracking plan for Eblana-3 and carried out water quality and other studies as part of the permit application process. The Nevada Division of Minerals duly awarded the permit on April 26 2019. However, significant developments in the Company’s understanding of the oil system in Hot Creek Valley, driven by additional data collection and intensive modelling activity, led the Company to decide not to proceed with fracking Eblana-3, in favour of drilling a further well or wells.