Omega has eye on gas prize at Canyon with acceleration of hydraulic stimulation plans

With drilling all sewn up, Omega Oil & Gas has accelerated plans to execute a fracture stimulation program over its Canyon wells in Queensland’s Surat Basin.

The Canyon-1 and 2 wells are confirmed hydrocarbon discoveries with preliminary petrophysical analysis and cuttings proving that both gas and liquids are present in the primary target Kianga Formation and in the secondary target, upper Back Creek Group.

And rather encouragingly for Omega Oil & Gas (ASX:OMA), there’s plenty of gas pay present in the two wells with petrophysical analysis using cutoffs of 4% porosity and 70% water saturation returning 68.6m of net sand and 16.5m of net sand in the Kianga and Tinowon formations respectively in Canyon-1 while Canyon-2 returned 86.1m and 22.1m of net sand.

Overpressure was also observed in both Canyon-1 and 2 in both the Kianga Formation and upper Back Creek Group – a key element in a successful basin-centred gas system.

Meanwhile, cuttings from Canyon-2 also showed oil fluorescence between 3510 and 3530m, which are similar to those seen in Canyon-1, while the geochemical analysis suggests that there is a particularly high liquid hydrocarbon content in the well.

This lends support to the company’s belief that there are liquid hydrocarbons such as liquefied petroleum gases and condensates dissolved in the gas in ATP2037 and 2038, which can in turn deliver an extra revenue stream that isn’t dependent on pipeline infrastructure.

“Drilling two discovery wells that confirmed gas and liquids was a huge achievement and exceeded our expectations,” managing director Lauren Bennett said.

“The good porosity numbers, over pressure and fluorescence in the cuttings have us very excited about the potential future commercial success of this gas discovery.”

Omega’s rapid progress on the Canyon wells is timely following the Queensland Government’s announcement of a $21m Frontier Gas Exploration grants program earlier this week.

The new initiative, which recognises the role of gas in firming renewable energy generation in the state, is aimed at driving exploration for new gas reserves.

Given that this is exactly what the company is looking for, it won’t be much of a stretch to believe that it could benefit from the grants offered under this program.

Fast tracking hydraulic stimulation plans

Bennett added that the positive data received and interpreted to date have led the company to expedite the frac program in order to unlock the potential of the Canyon wells as quickly as possible.

“We are continuing to analyse the data to plan and carry out a fracture stimulation in the near-term.

Fracture or hydraulic stimulation is essential for getting tight sandstone plays – such as the basin centred gas resource identified in the two Canyon wells – to flow gas at commercial rates.

This article was developed in collaboration with Omega Oil & Gas Limited, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.