Blast Energy Services Jets Horizontally in the Austin Chalk

Blast Energy Services Jets Horizontally in the Austin Chalk

Blast Energy Services Inc. announced that its lateral jetting rig successfully completed several separate horizontal penetrations in a well operated by Reliance Oil and Gas, in the Austin Chalk play outside of Luling, Texas. At a depth of approximately 2,500 feet and using a 15% acid-based solution, the rig drilled multiple horizontal laterals into the target zones up to ninety feet in length.

“We drilled at a deeper depth and achieved almost double the lateral length in multiple zones compared to the wells tested outside of Abilene last fall. This success represents an important step toward the full commercialization of our horizontal completion technology,” said John O’Keefe, President and CEO of Blast.

The laterals were cut at a rate of approximately 1.5 feet per minute using water, acid and certain other fluids under a pressure of approximately 3,000 psi. Additionally, the laterals were jetted at three separate depths within two targeted producing sand sections. Oil was visible in the retention pits containing the circulated fluids and the well experienced a few kicks from gas pressure after the laterals were drilled. Lateral jetting on a second Austin Chalk well for Reliance is expected to commence later this week.

This first well in the Austin Chalk achieved a total of eleven laterals in the upper, middle and lower zones. The lateral extent was deliberately constrained by a 90 foot flexible hose, which was employed to avoid certain additional Texas permitting requirements when drilling horizontally longer than 100 feet. The acid solution will remain in the lateral formations for several weeks before well fracturing operations commence. Following the frac job, Reliance will open the wells up for production and capture their initial production flow rates. Blast management believes its lateral jetting service will provide dramatically higher initial flow rates than conventional well completions in the area.

If the results of the two test wells in the Austin Chalk achieve expected flow rates, Reliance has already received funding for a new seven-well project and will receive funding for the drilling of an additional 18 wells in the area under the planned Austin Chalk drilling program.

Under the terms of the Blast revenue sharing agreement, Reliance will operate the lateral jetting rig at no cost to Blast and will share 50% of the revenues generated from such rig. The rig has been contracted at a gross rate of $40,000 per well in the Austin Chalk program. In addition to validating the application of this technology specifically in the formations of the Austin Chalk, the success of this technology will allow Blast to begin actively marketing its lateral jetting service to other operators in the area for the Chalk and other horizons.

During October 2008, Blast completed two separate 50 feet laterals in two gas wells near Abilene, Texas and was able to increase gas flow five-fold and twelve-fold respectively. Meanwhile, Blast has already begun the capture of additional drilling opportunities, including the execution of a recent Master Service Agreement with Resource Energy Technologies in Kentucky where the lateral drilling process may allow producers to significantly increase their production flow rates of natural gas from limestone formations similar to the Austin Chalk.

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