Sacgasco has established a robust portfolio of modest to large-scale natural gas prospects in the Sacramento Basin, located close to under-filled gas trunklines connecting US and Canada gas supplies to the Californian gas market.
Sacgasco’s key assets are the Dempsey and Alvares natural gas prospects, which have gross unrisked best estimate recoverable prospective resources of 1 Tcf and 2.4 Tcf respectively.
The Company’s development strategy in the Sacramento Basin represents an opportunity to increase near-term supply to a California gas market with a significant energy supply deficit. California’s gas demand is approximately 7 billion cubic feet per day, with local California gas production only contributing less than 10%.
The development strategy is based on acquisition of producing and idle wells (with future potential) and associated infrastructure as ‘facilitators’ for appraisal, exploration and production. Sacgasco can choose from a portfolio of “1 to 10 Bcf” prospects targeting historical producing reservoirs; and “100 Bcf to Multi-Bcf” prospects and overlooked discoveries in the proven Petroleum Systems in older reservoirs in the Sacgasco designated Tehama sub basin.
Dempsey Natural Gas Prospect – Appraisal / Exploration Stage (SGC 90% WI)
The Dempsey natural gas prospect is SGC’s flagship prospect and remains the focus of the Company’s near-term development plans. The Dempsey prospect has the potential for near-term natural gas production because it is located below existing SGC production facilities. Permitting activities are being finalised in preparation for commencement of drilling in mid 2017.
The Dempsey prospect has a Proposed Total Depth (‘PTD’) of 3,200 metres and is anticipated to take around 45 days to drill with drilling and completion costs estimated to be between US$3.0 and US$5.5 million.
The total (100%) unrisked recoverable prospective resource in multiple sandstone reservoirs on a best-estimate deterministic basis in the Dempsey prospect is over 1 Tcf (i.e over 167 million barrels of oil equivalent (boe) – using an industry standard energy based conversion factor of 6 mcf per boe).
The Dempsey-1 well will be located within a proven gas field area with existing infrastructure easily accessible. Should commercial quantities of gas be found, existing production facilities, which are connected to the interstate pipeline networks, would be used to sell the gas almost immediately.
Alvares Natural Gas Prospect – Appraisal Stage (SGC 75% WI)
The Alvares natural gas prospect is located close to large natural gas pipelines and is on trend 30 miles from the geologically similar multi-Tcf Tulainyo Project.
The Alvares prospect is based on the Alvares-1 gas discovery well drilled in 1982, which intersected a large column of high pressure gas shows in sandstones and conglomerates. The well flowed small quantities of gas to surface with gas quality similar to gas produced from the Northern Sacramento Basin. The Alvares project is estimated to have a total (100%) unrisked recoverable prospective resource on a best estimate deterministic basis of approximately 2.4 Tcf (400 million boe).