RE: Nothing to see here20 May 2025 20:11
If investors recall the key reason Megrez 1 was conceived, was its potential to provide a lower cost route to production development cash flow self sufficiency, for Ahpun West and Kodiak, through the productive capacity of its high flow reservoirs. While the secondary was to find more high value oil to add to the 1.6 billion barrels already in stock, and tertiary to provide a productive use of time gained in the lull as the IER for Ahpun had pushed development further out.
Initial drill results were very promising, but flow testing has reduced that optimism, with the current analysis showing oil wet reservoir. With the latest RNS including new data on the sidewall cores, that initial optimism was well justified. Showing a calculated range 53% to 58% oil saturation in the reservoir pore space is an excellent outcome, which is compared to the at surface saturation of 46% to 48%, showing a clear drop, which means oil flow.
Bear in mind when determining net pay (productive reservoir) cut offs are applied, in the case of oil saturation the conservative cut off is at 30%, some companies have used a more promotional 20%
In any case staying at 30%, it means its normally a duster below 30%, Megrez TS1 and L P C had 53% to 58%, so more than half the pore space is filled with oil.
Had it been water wet at those saturations, oil flows would have been substantial, making it fair to say it was the right decision to test. Moving along PANR have in light of the oil wet probability, decided to skip the next 3 zones and test the shallowest zone Sag 3. Sag 3 has the highest porosity and permeability, giving it the best chance of producing flowing oil
This decision will reduce costs, while giving the best case result, PANR will know the range of Megrez 1s 7 reservoirs
IMO Megrez has failed its prime test, to be the cheapest path to production, but still remains in tact as a potential productive oil source. Its an engineering problem, proving its potential now, would be much more expensive now that it will be later, for example when cheap produced water disposal/ reinjection will be onsite, rather than the expensive cartage and disposal option currently used. Still all to play for, but off the critical priority list
Considering the latest from Governor Dunleavy on the Gas pipeline FID being planned for before Xmas 2025, this a major acceleration and PANR will now be under pressure to provide additional proof of gas deliverability before FID. PANR's low CO2 gas at $1/mmbtu is the make or break of Phase 1, in which a pipeline is built to supply Alaskan domestic needs, as the Cook inlet supply falls away
The gas pipeline accelerated timescale, is another external change that PANR must adapt to, so shifting full attention and resource into Dubhe makes sense as that is again the lowest cost pathway to development funding. Parking Ahpun East soon saves resources, so they can be applied to the new number one priority, whilst still leaving a productive revisit on t
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