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| OPERATIONS REVIEW |
HUASNA VALLEY MANKINS RANCH PROJECT
CALIFORNIA, UNITED STATES
Excelaron LLC has made a Permit Application pursuant to which and an Enviromental Impact Report (EIR) has been commissioned by the County of San Luis Obispo relating to the right to explore, test, and produce oil on approximately 260 acres on the western edge of the Huasna Valley which is an existing oilfield designated by the California Department of Oil, Gas and Geothermal Resources (DOGGR). See Figure 1 for the general location of the project. The project site is located in the foothills on the western edge of the valley. Excelaron LLC has leased approximately 1200 additional adjoining acres.
The primary purpose of this project is to quantify the existing reserves. However, to assure that the (EIR) addresses the impacts of the entire project, the project description covers the full field development.
There are a series of potential steps being planned including:
Exploration and testing which includes the drilling of up to four oil wells, one produced water disposal well, and the installation and operation of test equipment. This would also oncl;ude improvements to the existing access roads and three pads. The drilling of four wells is expected to take two months to complete and well testing would last about six months.
Production phase with the establishment of up to four production wells, one produced water disposal well, and constructing related permanent oil, gas and produced water recovery and production facilities on site which would be designed to handle the full development.
Future field development which would involve the full development of the oil resources from the Huasna Oil Field, and could involve the drilling of an additional eight production wells. |
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Background
The Huasna Valley has been the site of oil exploration activities dating back to the late 1800’s. As oil exploration moved beyond the newly discovered Santa Maria Valley field, small crews hand drilled wildcat wells throughout the valley. The location of these wildcat wells was dependent upon an interpretation of the surrounding topography and surface geology.
Most explorers were searching for shallow, free-flowing oil that could be easily recovered without the use of enhanced recovery methods (EORM).
Over the course of the twentieth century, the Huasna Valley experienced oil exploration activities in the 1930’s, 50’s, 60’s, 70’s, and 80’s. The exploration took place in the eastern and western hills bordering the Huasna Valley. Figure 2 shows the location of previous wells that have been drilled in the vicinity of Huasna Valley. The location of these wells was based upon information in the California Department of Oil, Gas and Geothermal Resources (“DOGGR”) database. The figure shows that at least seven (7) wells have previously been drilled in the area of the project site.
The project site is located on private property. Excelaron has obtained an exclusive access easement over the Mankins Ranch that starts at Huasna Townsite Road and ends at the project site. A second access easement has been obtained across the Porter Ranch that would allow the majority of the project related traffic to access the valley via Hwy 166, Alamo Creek Road to Huasna Townsite Road. Figure 2-1 shows the access roads for the site. |
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Potential Reservoirs
The primary objective of the project would be investigation of the upper and lower geologic members of the Monterey Formation, which is a known source of heavy 8-12° crude. This project has been designed to test the Monterey Formation for its commercial production capabilities. The top of the Monterey formation is at a depth of approximately 500 feet below ground surface (bgs).
Combined, the upper and lower Monterey Formation may have up to 2,500 vertical feet of fractured shale that contains commercially viable oil. This means that the Monterey formation could range from a depth of 500 feet to 3,500 feet bgs.
A secondary objective of the project would be investigation of the Vaqueros Formation. California Division of Oil Gas and Geothermal Resources (DOGGR) records indicate some light oil was found at 4,500 feet bgs in a previous well test at the site. The Vaqueros sands may have up to 150 feet of depth that contains commercially viable oil.
Potential Oil and Gas Production
Although wells have been drilled in the past on this site, very little is known about the true potential for recovering economically viable quantities of oil. Over the past ten years the technology for logging and evaluating reservoir potential has changed substantially. Sophisticated computer models are now available that allow one to better understand and develop potential oil reservoirs.
Enhanced Oil Recovery Methods (EORM)
As the oil in the Monterey formation is expected to be heavy crude, enhanced oil recovery methods would be required. Hot water flooding would be utilized to increase the production of crude oil from the wells drilled into the Monterey formation. Hot water flood requires heated water, to approximately 150° F, to be reinjected down the wells. The efficiency and effectiveness of a hot water flood in the Huasna Oil Field is unknown at this time.
The heat from the hot water flood can have an effective radius up to 150 feet from the well bore. It is estimated that using a hot water flood as an EORM is effective up to a depth of approximately 2,000 feet, due to heat loss. Any oil deposits existing beyond the depth of 2,000 feet would need to be produced with primary recovery methods. |
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| EP 435 Carnarvon Basin Western Australia - 17% Equity Interest |
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| We are awaiting the drilling of the Bee-Eater well on the adjacent permit and following this well the participants will consider whether to drill a well on the structure which may extend into EP 435. |
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| PEL 182 Cooper Basin South Australia - 5% Equity Interest |
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We retain in addition to our 5% interest in the permit, a 12.5% interest in the Emily 1 exclusion area adjacent to the Emily 1 well which was completed as a production well.
Victoria Petroleum NL has acquired the Audax Energy interest in the permit and has been appointed operator.
Negotiations are taking place for the sale of our interest but no agreement has been reached. |
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| Timor Oil Limited - 50% Equity Interest |
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A joint study, evaluation and application agreement has been finalized with a potential joint venture party to carry out an initial work program incorporating gravity and magnetic studies and a technical review of certain onshore areas in East Timor which Timor Oil Limited previously had leased prior to 1976.
There is currently no legislation in place in respect of the onshore oil exploration or production in East Timor so it is not possible to predict if or when any negotiation can take place with the government of Timor Leste for a contract. |
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