Omega’s confirmation of liquids-rich gas is a plus for Permian Deep Gas economics

Omega has proven without a doubt that liquids-rich gas is present within the Kianga Formation and Back Creek Group intersected by its Canyon-2 well in Queensland’s Bowen Basin.

Laboratory analysis of mud gas samples taken from the two formations confirmed that zones of high gas saturation are present.

Additionally, LPG gasses and condensate are also present and appear to increase in concentration with depth in the Kianga gas column.

While the results are certainly another tick in favour of drilling having intersected the targeted Permian Deep Gas play, Omega Oil & Gas (ASX:OMA) is keeping its cards close to its chest, noting that they will have to be verified by post-frac testing of the well to determine the nature and concentrations of the various hydrocarbon components.

Adding further interest, significant gas peaks had required the rig to progressively increase mud weight well above normal hydrostatic levels.

This demonstration of overpressure, which was previously shown at Cabawin 1 to the east and at Tasmania 1, is an important drive mechanism for tight gas plays as it indicates the potential to deliver commercial flow rates.

“The gas analyses and wireline logs continue to add to our knowledge of the system and deepen our understanding of the play,” managing director Lauren Bennett said.

“The liquids-rich gas is likely to be positive for the economics of any potential future Canyon development, as revenue may be derived from sale of gas (mainly methane), and of natural gas liquids (NGL) and condensate/light oil.”

Coming plans

Given the presence of large gas columns, liquids-rich compositional data and significant reservoir overpressure, the company has engaged specialist engineers and petrophysicists to analyse all of the data acquired on Canyon-2 and the Canyon-1 well that is currently being drilled.

Omega will combine this analysis with the large data sets that QGC acquired at the offset wells.

These specialists will also design the upcoming hydraulic stimulation testing, which are essential for getting tight sandstone plays such as the basin centred gas resource identified in Canyon-2 to flow at commercial rates.

This article was developed in collaboration with Omega Oil & Gas, 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.