Tsimiroro PSC

The Tsimiroro Block 3104 covers approximately 6,670km2 and contains the 1,600km2 Tsimiroro heavy oil field as well as significant deeper exploration potential. According to Netherland, Sewell and Associates, the best estimate contingent original oil in place for the Tsimiroro field is approximately 1.7 billion barrels, with further significant prospective oil in place in adjacent untested fault blocks.

The oil is heavy (14° API gravity), with a high viscosity in the shallow sandstone reservoir, and so cold production is not commercially viable. In order to flow, the oil’s viscosity has to be reduced and, as with many fields worldwide including Canada, California, Venezuela and Indonesia, thermal stimulation is used by introducing heat via steam into the formation.

In 2008 MOIL performed a Cyclic Steam Stimulation (“CSS”) pilot. This demonstrated that the oil and formation rock reacted positively to steam, leading to MOIL engineering and constructing a Steam Flood Pilot (“SFP”) project.  The SFP began operating in April 2013.  This project was designed to further evaluate the potential production rates and recovery factors that could be achieved through thermal stimulation, either by CSS and Steam Flood and, in the future potentially Steam Assisted Gravity Drainage (“SAGD”).

Based on positive results from the SFP, MOIL declared commerciality of the Tsimiroro project under the terms of the PSC, in May 2014.  Then, in accordance with the timescales set out in the PSC, MOIL submitted a comprehensive Development Plan for the Block 3104 in October 2014, and on 15th April2015 was awarded a 25 year development license for the Block. The development license also permits additional extensions to allow a potential license term of up to 50 years provided production remains commercial.

The SFP continues to operate and all SFP wells on Block 3104 are operational, all steam generation equipment is available and the facilities are capable of providing sales specification Tsimiroro crude and blended Heavy Fuel Oil (“HFO”) to the domestic Madagascar market.

The Steam Flood Pilot (“SFP”) is designed in nine “inverse five spot” patterns where each of the nine steam injector wells is surrounded by four producer wells, giving sixteen production wells in total. The steam creates a blanket of heat over the entire reservoir, and oil with its reduced viscosity, migrates towards the producing wells which continuously pump to encourage drawdown. Steam flooding is often used as secondary recovery mechanism but at Tsimiroro it will be a primary recovery mechanism.

The first phase of the SFP is to utilise CSS on all the wells to create voidage around the wellbore, as well as provide data as to the reaction of the reservoir to steam. On 8 April 2013 steam injection operations were commenced on six of the injection wells. During this process, steam is injected into both the injection wells and the production wells for a number of days, followed by a short “soak” period to allow heat to be transferred to the oil in place and then all of the wells put on production – the “Huff and Puff” cycle. When the production rate declines, the CSS process is repeated. Once voidage has been created, particularly in the injection wells, the reservoir will allow continuous steam injection to be initiated more effectively.

Throughout the operation of the SFP, information such as temperatures, pressures, steam injection and oil production rates including temperatures at specially drilled observation wells, allow the management team to model actual and projected performance of the field.

Information collated form the SFP allowed MOIL to declare commerciality of the Tsimiroro project under the terms of the PSC, in May 2014.  Then, in accordance with the timescales set out in the PSC, MOIL submitted a comprehensive Development Plan for the Block 3104 in October 2014, and on 15th April2015 was awarded a 25 year development license for the Block.

Now that a development license has been awarded for Block 3104, MOIL can now commence the roll out of its Development Plan.  This will include the phased development of the heavy oil Tsimiroro Field as well as appraisal of the deeper potential in the southern part of the block.

Phase 1 of the heavy oil development will first fully develop the geological compartment containing the existing SFP area. It is planned that long-lead orders will be placed for drilling under Phase 1 of the TDP and SFP facilities upgrade equipment/materials for the planned work programme to commence in late 2015.  An additional geological compartment will be developed with up to 800 wells planned to allow sales volumes to reach 10,000 barrels of oil per day.

MOIL will also undergo extensive appraisal activities of structures to be found in the southern area within the Block 3104 license boundary (Tsimiroro Deep and Deep South) through seismic acquisition and, depending on prospectivity, with drilling on the deeper horizon potential.   These structures have the potential to yield light oil  and gas from deeper horizons as indicated by well results from exploration drilling in Block 3104 and Block 3107 to the immediate south.

The current Development Plan is based on a Best Estimate Contingent Resource of around 1.8bn barrels in the Main Field Ambolando reservoir.  It is planned to further improve this geological model in 2015 using the results of a 30 well Development Evaluation Programme (“DEP”) work.  This work consists of 30 new fully cored and logged “DEW” wells, a recently completed ground magnetometer survey for reservoir scale igneous dyke imaging, field geological surveying and improved fluvial sand-body modelling techniques.

The first of the 30 DEW was drilled and cored successfully in February using the MOSA owned drilling rig. This will be followed up with a continuous drilling programme commencing in 2Q15 to provide updated information on the thermally effective oil-in-place available from the Amboloando reservoir and from the underlying Isalo-1 horizon.

Construction of the SFP facility was completed in early spring 2013, leading to the first continuous generation and injection of steam on 8th April 2013. The SFP has operated continuously since then. Initially, CSS was implemented on six wells and then rolled out across the pilot area. A small number of wells suffered from casing damage and became inoperable but a SFP pattern re-alignment well-work programme, completed in August 2014 returned all inoperable wells to working condition and reverted to the original nine pattern steam-flood. Eight injection wells are now placed on continuous injection as the SFP moves into the Steam-flooding phase.

As at 28 February 2015, cumulative oil production had reached 173,351 barrels from a cumulative steam injection of 910,017 BWE giving a cumulative Steam Oil Ratio of 5.2.  90,780 barrels of crude oil available for sales were accumulated in the storage tanks at the SFP as at the same date.

By mid-April 2015 there were over 100,000 barrels of crude oil in storage.

Average 2014 oil production was 317 barrels of oil per day (“BOPD”), equating to average oil rates of 20 BOPD from the 16 SFP production wells. Average steam injection for the SFP in 2014 was 1,582 barrels of water equivalent per day.

MOSA is working jointly with state utilities supplier, Jirama, to plan a test of Tsimiroro crude as a HFO feedstock into the Antananarivo, Mandroseza power station.  This test is planned to follow the refurbishment of the Mandroseza power generation equipment.  A truck load of Tsimiroro crude is also planned to be sent to two separate domestic Madagascar industrial end-users, also for testing purposes. It is hoped that continuous sales contracts will follow successful outcomes of all of these tests.

Swiss Energy Partners