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Block Energy Plc: update on workover operations in Georgia

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Oilfield Technology,

Block Energy Plc, the exploration and production company focused on the Republic of Georgia, is pleased to provide an update on its initial work programme focused on achieving a 25-fold increase in production at its Norio oil field to 250 bpd by H1 2019. Block holds a 100% working interest in Norio, which has gross oil reserves of 1.631 million bbls completed by Gustavson Associates, 1 January 2018).

The Company is currently preparing four of eight wells for the application of a specialist micro drilling perforation tool which, after being shipped from North America, has landed in Georgia and is due to arrive onsite shortly. The work involves levelling and preparing the ground at the well sites for rig up and access. The programme will enable all four wells are ready for the perforating system by the end of the year.

With the exception of the sidetrack, the Norio workover programme is being carried out using an A50 workover rig. As all of the wells to be worked over have previously produced oil, it is necessary to clean and bleed off each of them to allow a scraper tool to be run down to total depth, ensuring a clear pathway for the wireline, caliper and Pulsed Neutron-Neutron (PNN) logs. The process has been carried out on three wells and is underway on the fourth. So far, the caliper logs have confirmed suitable casing dimensions for the micro drilling system, and the PNN logs indicate encouraging perforation intervals.

The perforation tool has been selected to bypass suspected damage caused by historic heavy mud drilling. It replaces conventional shaped charge perforation with a micro drilling technique able to cut horizontal drain holes at multiple levels. Following the application of the system, new or refurbished pumps will be installed to bring the wells to production.

The current workover programme aims to rapidly scale up production at Norio then sidetrack one of the field's wells with the aim of bringing total net production at Norio to 250 bopd by H1 2019, approximately three times break-even production rate. Crude oil from Norio currently sells at Brent minus US$10/bbl.

Norio’s existing facilities are being upgraded to industry standards to accommodate a significant increase in production. Two of the four tanks have so far been painted, and firefighting and other safety systems are being installed. Work on the current phase of the upgrade is on track to be completed by the end of the year.

In addition to the Norio programme the Company is preparing to drill horizontal sidetracks and test a legacy gas discovery in the Lower Eocene at the West Rustavi field, where Block holds a 25% participating interest as part of an agreed earn-in to 75%. The discovery, which lies on the same play being targeted by Schlumberger in neighbouring fields, has estimated gross 2C contingent resources of 608 billion ft3 of natural gas. The field also holds 37.9 million bbls of 2C gross oil resources (Source: CPR).

Block Energy Chief Executive Officer Paul Haywood said: “After months of planning and preparation we are glad to report that we have undertaken the successful re-entry of three wells at Norio, are rigging up at a fourth, and have compiled encouraging PNN logs. In addition, the specialist perforation tool has arrived in Georgia and will soon be onsite. Shareholders can expect significant newsflow in the coming weeks and months as we pursue our objective of increasing our production rate at Norio from 10 bpd to 250 bpd and commence work at West Rustavi where we plan on drilling two sidetracks. We also look forward to working over two of West Rustavi’s other wells to test the extent of the field’s gas discovery.”

“With ExxonMobil recently entering the country and ongoing operations across Schlumberger’s 100% owned position next to our own licences, Georgia’s potential as a hydrocarbon region is being recognised by the industry. We are taking advantage of our first mover advantage to play our part in realising this potential, and in the process generating significant value for our shareholders.”

Roger McMechan, Technical Director, has reviewed the reserve, resource and production information contained in this announcement. Mr McMechan is a BSc, Engineering from the University of Waterloo, Canada and is a Professional Engineer registered in Alberta.

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