Oil developer Indago Energy (ASX: INK) has expanded its operational acreage by 1,539 acres over a portion of Asphalt Ridge in the Uinta Basin in Utah, as part of what Indago chairman Stephen Mitchell calls the company’s “upstream strategy” to identify and acquire interests in several upstream oil projects across Utah and Kentucky in the US.
The expansion supplements the 1,920 acres Indago acquired in May this year and takes the total amount of acreage the company has acquired up to 3,459 acres including the so-called “Section 22 (T4S R20E)” portion, where six wells have been drilled by previous operators.
More specifically, at a prospect called Asphalt Ridge, Indago is targeting oil sands in the upper cretaceous rimrock sandstone which is considered to be one of several well-documented oil sands in Utah.
According to the Utah Geological Survey, Asphalt Ridge contains oil sands with over 1 billion barrels of measured oil in place over an area covering approximately 10,500 acres.
Indago says it has observed that several operators have mined asphalt from the shallow Mesaverde Group to the east, southeast and northeast of its leased acreage with some asphalt mining having occurred within Sections 23 & 24 of Indago’s newly-acquired acreage directly adjacent to Section 22.
The oiler says that information procured from previous operators has demonstrated an oil-saturated reservoir approximately 90-175’ (27-53 metres) thick at a depth range down to around 914 metres.
In terms of early signs, Indago has been able to acquire initial estimates and “reservoir properties” relating to various operational caveats within its acquired acreage, including porosity, permeability, oil saturation and oil gravity.
Based on results from 330 core samples published by the Utah Geological Survey and obtained from six test wells drilled in the sections that Indago just acquired, the target zone has reported reservoir properties including an average porosity of 30.3%, average permeability of 524 “millidarcies”, oil saturation of 65.6% and an oil gravity of 10-140 API.
The Utah Geological Survey also published results indicating that the average oil grade in Indago’s sections range from 171-178 thousand barrels/acre ft. Spurred on by reasonably positive historical estimates, Indago says it intends to conduct volumetric analysis and to verify its published information via an independent resource assessor.
One of the near-time milestones is for Indago to submit all its finding, including historical results and well logs, as soon as possible.
Indago says it wants to make quick progress by testing samples from Rimrock Sandstone to confirm key reservoir parameters including oil saturation. Results will also be used to assist in the design of a larger appraisal programme aimed at determining the continuity, thickness and amount of oil saturation of the Rimrock Sandstone across its leased acreage.
An important component of the programme will be to demonstrate whether “multi-flow technology” can be used to extract oil economically via mining techniques and enable the crude to be lifted to surface with conventional oilfield equipment.
As part of a market statement, Indago revealed that its contracted leases have a primary term of 10 years, at an annual cost of US$10 per acre per year. At Indago’s current acreage total of 3,459 acres, the company’s total exposure on annual basis equates to around US$34,590 (A$47,000) per year with Indago describing its acquisition costs as being “immaterial”.
According to Indago chairman Stephen Mitchell, “Indago’s new leases now complete our land acquisition at Asphalt Ridge so our efforts will now turn to the appraisal of the acreage and to test the applicability of our technology to this very large oil accumulation.”
“Our entry into Utah, like our recent acquisition of a heavy oil project in Kentucky, is part of our upstream strategy to identify and acquire interests in several upstream oil projects where its unique technology for reducing viscosity can be applied in order to develop its own reserves and cash flow,” said Mr Mitchell.