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A Russian winter road, neighbouring the West Medvezhye licence area.
The West Medvezhye oil, gas and gas condensate licence near Nadym in Western Siberia, lies in the Yamal Peninsula. This area is one of the most prolific gas regions in the world where over 70 Tcf of gas has been produced. In 2004, the Company acquired a 74.8% interest in Russian company ZAO SeverGas-Invest (SGI), which holds the licence for the West Medvezhye field and in 2005 Victoria acquired the remaining 25.2% bringing its total shareholding to 100%.
West Med lies near to the super-giant Medvezhye field and is located about 120km from Urengoy, the second largest gas and condensate field in the world. The Medvezhye field has been in production since 1972. In 2006, independent reserve auditors DeGolyer and MacNaughton provided best estimates for the total prospective recoverable resource volumes for the 1,224 square kilometre licence of 1.1 billion barrels of oil equivalent.
In 2011, Mineral prepared structure maps and seismic attributes anomaly maps for all the prospective formations in the West Med block. These were integrated with the Company's passive seismic, gas tomography and geochemical studies to define/rank leads and prospects and to further assess the 103 discovery.
In September 2011, Mineral has concluded West Med prospective resources are now in excess of 1.4 billion boe including increased oil prospectivity of approximately 670 million barrels of oil in the Lower Cretaceous Neocomian-Achimov and Jurassic formations.
Well 103 was drilled to a total depth of around 3,900 metres intersecting two hydrocarbon-bearing intervals in the Jurassic (J2) and Bazhenov at depths of between 3,718 and 3,741 metres.
Following extensive testing during 2007, a discovery was approved by the Russian Ministry of Natural Resources and C1 + C2 proven reserves of 14.4 mmboe were calculated for the Well 103 location during 2008. The current reserves and resources estimate for the licence area are as follows:
|C1 + C2 Reserves||14.4||Based on Russian Classifications|
|C3 Resources||170||Based on Russian Classifications|
|Prospective Resources||1,416.6||Independently Assessed by DeGolyer and MacNaughton|
Following the 103 discovery, the company pursued a cost-effective work-programme over the past three years to appraise the 103 area and firm–up the leads and prospects mapped by DeGolyer and MacNaughton (D&M) based on conventional seismic. The programme included two passive seismic and two gas tomography (geochemical) surveys over the 103 discovery and the other leads and prospects respectively. More than 60 km of winter roads were constructed within the licence area to provide access for the survey equipment and personnel to the areas of interest.
VOG's technical team carried our preliminary integration of the new data with existing datasets including seismic and well data. The results confirmed hydrocarbon presence in the area of three seismically defined structures mapped by D&M.
The company has maintained relationships with Russian geosciences consulting institutes with established experience in the region including OGFC Siberian Scientific & Analytical Centre, "SibNats" and Mineral LLC, "Mineral" to discuss technical collaboration. In the first quarter of 2011, VOG commissioned a seismic reprocessing and geological modelling study with Mineral to re-interpret certain targeted areas taking into account the newly integrated survey information.
Mineral prepared structure maps and seismic attributes anomaly maps for all the prospective formations in the West Med block. These were integrated with the Company's passive seismic, gas tomography and geochemical studies to define/rank leads and prospects and to further assess the 103 discovery.
On the basis of their independent assessment received at the end of August 2011, Mineral concluded West Med prospective resources are now in excess of 1.4 billion boe including increased oil prospectivity of approximately 670 million barrels of oil in the Lower Cretaceous Neocomian-Achimov and Jurassic formations. These results exceed the previous estimate by D&M by more than 300 million boe.
Mineral are the leading consultants in Russia for this specialised geological work and have an excellent proven track record in Siberia where our West Med block is located. We believe that their updated assessment of over 1.4 billion boe is of major significance and demonstrates the very real potential of our West Med block.
Following these positive results, In January 2012, VOG contracted an experienced local company, LLC Nefteproject, based in Tyumen, to develop a project plan for an early production scheme for the West Med discovery area. This project was completed and the findings were reviewed and discussed in a workshop by VOG’s technical / commercial team at the contractor’s offices in Tyumen. The scheme was agreed by the Company in April 2012. This report for the development of an Early Production Scheme was approved by the Russian Ministry in August 2012.
Separately, in February 2012, the Company presented its drilling candidate locations for the next five well locations to the Russian Yamal district authorities in February 2012.
The drilling design contract for these planned wells was awarded to CJSC “TjumenNIPIneft” in March 2012. The wells will target the Jurassic discovery horizons successfully encountered by Well 103 and also new hydrocarbon potential horizons in the Achimov layers identified as part of the study carried out by Mineral. The scope of work includes detailed well design as well as studies of the terrain, soil mechanics, access and ecological issues.
The current estimate for completion of the drilling design project which includes public consultations and permitting consents is not estimated to be complete until October 2013. This will not give the Company sufficient time to mobilise drilling operations in the coming winter period. Therefore, the Company now anticipates postponing its two well drilling programme until the winter of 2014.