Successful Oil Field Startup With Target of 1,000 Barrels of Oil per Dayadmin
Lexaria Corp. announce that Belmont Lake oil field in Mississippi is expected to be back into production next week. For the first time our wells will be producing with the aid of artificial lift (pumping).
We now have our first good early indications of the potential for this oil field. It is the Company’s goal that the Belmont Lake oil field ultimately produce from existing and potential future wells at least 1,000 barrels of oil per day. Our operator has received approval from the Mississippi State Oil Board to develop the Belmont Lake oil field on an as-needed basis, which should assist us to optimize production and ultimate field recovery.
Work completed recently includes rebuilding of access roads and drill pads and workovers of the two existing wells at Belmont Lake. This included assessments of the wells; removal of the paraffin blockages; treatment of the oil field with chemicals designed to reduce future paraffin buildup; and installation of down-hole pumps driven by natural gas pressure that do not require electricity or mechanical power at the well locations.
The PP F-12 well originally went into production on October 2, 2007. It produced intermittently until Feb 14, 2008, when a down-hole screen was blocked by paraffin buildup. During that time it produced roughly 10,000 barrels of oil and production was limited both by paraffin buildup and by lack of artificial lift. We were not able to perform the simple procedures to deal with paraffin buildup at the time, due to the flooding of the Mississippi River which had prevented surface access. As a result, production was interrupted from Feb 14.
Stepout well PP F-12-3 is also expected back into production next week, with pump. This well produced intermittently from Nov 11, 2007 until May 25, 2008. During that time the well produced roughly 11,000 barrels of oil with no pump. It also suffered from paraffin buildup which had limited production rates. Lexaria expects the production rates of both of these Belmont Lake wells to stabilize in the weeks to come.
During 2008 and 2009 Lexaria expects to complete development of the Belmont Lake oil field with between 3-12 additional wells. Each new successful well that is drilled will be immediately commissioned with pumps and the necessary chemical treatment to help ensure maximized stable production. The Company expects to be able to drill all or most of these wells from its existing cash flow.
With the successful installation of down-hole injection lines and the non-mechanical pumps, we believe we have removed to the fullest extent possible, the probability of extended future production shut-downs due to paraffin build up or lack of access to the wellhead due to difficult surface conditions.
Subject to acceptable weather conditions, Lexaria expects to conduct similar workover operations on the PP F-52 well, located some 9 miles north of Belmont Lake oil field. Although the PP F-52 well was completed as a gas discovery, it also began producing oil from Oct 23, 2007, until Feb 15, 2008 during which time it produced approximately 5,500 barrels. Although the production rate from the PP F-52 well is expected to be lower than from the Belmont Lake oil field wells, the Company believes it to be significant because it demonstrates our success in finding repeat occurrences of oil production within our exploration areas in Southern Mississippi.
Lexaria is attempting to discover as-yet unidentified oil fields in the region that may have characteristics similar to our Belmont Lake discovery, and believes that pursuing this strategy could produce significant shareholder value.
There was no known damage to any of Lexaria’s wells or production facility from the recent Hurricane Gustav. Typical damage in the area consisted of fallen trees. The latest reports on Hurricane Ike project it to not come closer than 200-300 miles of our Belmont Lake oil field.
Lexaria currently has a 30% working interest in the Belmont Lake oil field and in the PP F-52 well mentioned above, as well as additional producing gas wells. Lexaria also holds a 50% working interest in future exploration wells to be drilled on lands surrounding Belmont Lake in all directions.
Lexaria Corp. is an oil & gas company active primarily in Mississippi, where it holds between 30% and 50% gross interests in various gas and oil projects. Lexaria routinely evaluates additional oil & gas projects and corporate opportunities.