Gaffney Cline endorses Mercator block in Gujarat

Vol 15, PW 24 (14 Jun 12) Exploration & Production

Watch out for BSE-listed E&P minnow Mercator and you might be onto a good thing.

This month UK-based Gaffney Cline & Associates (GCA) submitted an encouraging reserves report on 132-sq km onland Gujarat NELP-VII block CB-ONN-2005/9, operated by Mercator with a 100% stake. GCA took a conservative look at three of five prospects: in a ‘high case’ scenario it put recoverable reserves at 25m barrels of oil but in a ‘mid case’ scenario it estimated them lower at between 11m and 12m barrels.

“GCA’s figures are based on a proposal to drill three vertical wells,” we hear, “one at each prospect.” Mumbai-based service contractor Oilmax, which manages the block on Mercator’s behalf, had earlier prepared internal reserves estimates but sought confirmation from GCA.

Dissatisfied Mercator however has asked the DGH for data on seismic lines and some wells outside the block as it feels the true reserves figures are higher, since the block lies in an oil producing area. “The (hydrocarbon) ‘kitchen’ lies to the west,” we are told.

“Hydrocarbons migrate east through the block to the (HOEC-operated) Palej field and (ONGC-operated) Matar field.” More ‘stratigraphic traps’ at CB-ONN-2005/9 are believed to hold most reserves.

Mercator has budgeted $30m on exploration and $100m on ‘high’ case development and expects environment ministry clearance this month (June) for a six-well drilling programme. Plans are afoot to hire a 1500-hp rig to begin drilling this December or January 2013.

Each well will be drilled to a depth of around 3000 metres, targeting the Palaeocene, Late Cretaceous, Oligocene, Cambay shale and other sediments. First oil is expected from January 2014 at this ‘S’ type Cambay Basin block where Mercator is in the four-year exploration Phase-I.