CERP.L Regulatory News (CERP)

12 Jun 2008 07:00

FOR IMMEDIATE RELEASE 12 June 2008

LENI GAS & OIL PLC

("Leni Gas & Oil" or the "Company")

Water Injection Pilot commences at Ayoluengo Oil Field

Further to the announcements made by Leni Gas and Oil plc on 22 April 2008, in relation to the production enhancement programme on the Ayoluengo oilfield in northern Spain, the Company announces that the planned water injection pilot programme commenced on 10 June 2008. This pilot represents the first phase of the programme by the Company to re-energise the field and substantially increase production of the incremental recoverable volumes, forecast at P50 4mmbo. 

The details of the water injection pilot programme and its commencement follows:

The purpose of this pilot is to assess the potential benefit for a full field water injection programme. Previous water injection trials were initiated by Repsol during their operatorship of the field in 1990s. Despite a successful trial, and a positive recommendation from Repsol technical staff, a full water injection programme was never performed.

It is common for water injection programmes to yield one extra barrel of oil production for every 1.5 to 2 barrels of water injected in the targeted reservoir area. Normally the incremental production benefit is seen 2 - 6 months after commencement of the injection, depending on reservoir connectivity and location of the producing wells with respect to the injection location.

Currently all produced water from the Ayoluengo field is re-injected into well Ayo-23. The aim of the pilot is to increase and extend water injection by producing fresh water from a shallow aquifer, and injecting into two additional wells, Ayo-33 and Ayo-13, up to 1200 barrels of water per day (bwpd) into all wells continuously.

In order to quantitatively assess the benefit from the pilot water flood, it is essential that the wells are monitored for any changes to their current performance. Increases in rates or fluid levels from the existing production wells will be positive effects indicating success. 

Ayo-33 was identified as the first well to commence injection. As the well had been shut-in, it was necessary to drill out a cement plug at 1153m and clean out the well to the terminal depth of 1263m for maximising water injection through the well perforations located at 1212-1263m. All facilities for the water injection pilot are already in place and all associated injection activities shall be executed by the existing field staff. 

On 10 June 2008, water injection commenced at Ayo-33 well at a rate of 876 bwpd, and will be increased to 1200bwpd during the next week. This rate will be maintained continuously in order to maintain formation integrity and to maximise incremental production. Subsequently to Ayo-33 reaching the maximum injection rate, Ayo-13 will be prepared for water injection.

At conclusion of the water injection pilot initiation activities in June, it is planned to commence the second production pilot programme in July to stimulate and re-perforate individual wells to increase production rates, and thus the overall productivity of the zones identified for enhanced recovery. Similar to the extension of the water injection pilot to the full field, at conclusion of the perforation pilot, a wider programme will be scoped to improve well productivity over the whole field.

David Lenigas, Executive Chairman, commented:

"Commencement of the water injection pilot programme is a significant milestone to enhancing production from the Ayoluengo oilfield towards our target of 1000bopd. Re-energising the oil field is the primary means to substantially increase the recovery factor by 10% and exploit the identified incremental reserves in the field. 

The high injection rates experienced in the first day of the pilot provide confidence of the high potential of the reservoir to support sustained water injection, and we are looking forward over coming months to observing the production improvement in the field.

This water injection pilot programme, together with the well stimulation and re-perforation pilot programme in July, will allow us to better understand the reservoir production performance of the field and therefore scope the planned full field production enhancement programme by the end of 2008 to exploit the targeted recoverable reserves."

The technical information contained in this announcement has been reviewed and approved by Fraser S Pritchard, Consultant to Leni Gas & Oil plc (member of the SPE) who has 20 years relevant experience in the oil industry.

For further information, please contact:

Leni Gas & Oil PLC

David Lenigas, Executive Chairman

Tel +44 (0) 20 7016 5100

Beaumont Cornish Limited

Roland Cornish

Rosalind Hill Abrahams

Tel +44 (0) 20 7628 3396

Pelham PR

Charles Vivian

Tel + 44 (0)20 7743 667

Evgeniy Chuikov

Tel +44 (0)20 3008 5506