88 Energy provides operational update on Project Icewine

The Joint Venture having assessed the current rate of fluid recovery and, despite several encouraging trends, made the decision to shut-in for the Winter period due to logistical reasons associated with ongoing testing in Arctic conditions. The main issue is that of freezing of the borehole fluid, predominantly fresh water from the frac, over the ~1300 ft permafrost zone due to the low rates of fluid flow observed towards the end of the current test phase. Additionally, winterised equipment deemed suitable for executing efficient artificial lift of the frac fluid is currently unavailable. The forward plan is to optimise and re-initiate the flow testing, utilising artificial lift, in April/May 2018 when weather conditions are more favourable.

Regarding the encouraging trends observed, a summary is included below:

• Decrease in C1 (most recent average <91% vs 93% previously) and increase in C2+ components as a percentage of the gas flow, potentially trending towards the interpreted phase of hydrocarbon in the reservoir.

• Increase in the gas/water ratio such that as the water flow rate has decreased over time, the gas rate has remained relatively constant. It is still interpreted that additional fluid is required to be lifted off the formation before effective connectivity to the reservoir can be achieved with representative flowback.

The Icewine#2 well is located on the North Slope of Alaska (ADL 392301). 88 Energy Ltd (via its wholly owned subsidiary, Accumulate Energy Alaska, Inc) has a 77.55% working interest in the well. The well was stimulated in two stages over a gross 128 foot vertical interval in the HRZ shale formation, from 10 957 - 11 085 ft TVD, using a slickwater treatment comprising 27 837 bbls of fluid and 1 034 838 lbs of proppant.

The well was initially flowed back on a 6/64 in. choke and was reduced to a 4/64 in. choke after 26 hours to maintain pressure. Approximately 370 barrels of frac fluid had been recovered as at 1730 on 3 September (AK time) at an average rate of 100 barrels per day. The choke was subsequently stepped up to 8/64 in. at 1800 10 September (AK time) as the overall declining pressure gradient versus time improved, indicating potential pressure support. The choke was gradually increased to 10/64 and then 12/64 in order to lower the bottom hole pressure significantly below the reservoir pressure to increase the draw down on the formation. Consequently, the well head pressure fell below that required to support flow through the separator (~35 psi) and the well stopped flowing naturally on 18th September 1630 (AK time), as expected, and was shut in. To date, the cumulative amount of stimulation fluid produced from both testing periods is 5533 bbls, 19.9% of fluids injected. Since the shut-in, significant pressure build up has already occurred, with current wellhead pressure over 739 psi. This is consistent with the interpreted overpressure of the HRZ and is an encouraging sign.

A total of 16.57 million ft³ of gas was measured as production since the 9th September, with an average flow rate of 1.79 million ft³ per day. Results to date are consistent with several other early stage unconventional plays that have subsequently been proven successful; however, it is too early to tell the significance of these results for the HRZ play. As previously advised, the Joint Venture is of the view that greater than 30% of the frac fluid needs to lifted from the formation before gaining connectivity with the reservoir and achieving representative flowback.

Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/21092017/88-energy-provides-operational-update-on-project-icewine/