Nido set to abandon Tindalo well in Palawan

MANILA, Philippines - Australia-based Nido Petroleum Ltd. is set to plug production in its Tindalo well in northwest Palawan, a company report said.

In a disclosure to the Australian Stock Exchange, Nido said they have decided to abandon the production activities in the well due to the continued presence of water.

Nido said it would be “uneconomic” to continue with oil production from the Tindalo well and the abandonment program will be completed next month.

Nido operates Service Contract 54A which covers the Tindalo oil field. It has a 42.4 percent stake in the contract, which it operates with its joint venture partners Kairiki Energy Ltd (30.1 percent), TG World Energy Corp. (12.5 percent) and Trafigura Ventures III B.V. (15.1 percent).

“Increasing water-cuts and declining oil production rates during the period of the test indicates that continued production from Tindalo would be uneconomic and the decision has therefore been taken by the joint venture to abandon the well,” said Nido deputy managing director Joanne Williams. Water-cut is the ratio of water produced compared to the volume of total liquids produced.

 “Since the last operations update on Dec. 22, subsequent water analyses from Zones 1, 2 and 3 indicated that produced water was formation water,” Williams said.

Formation water is natural water that lies under the oil reservoir.

“The abandonment program will shortly be underway and will be completed in January 2011. Whilst abandonment activities on Tindalo are underway, Nido, along with its joint venture partners will decide whether to demobilize the production equipment and hardware from SC 54A, or to retain the equipment for further work within the permit,” the Nido official said.

Despite this untoward event, Nido said it is optimistic that it would be able to explore other wells adjacent to the Tindalo well.

Earlier, studies indicate that Yakal-1 has a potential of up to 10.7 million barrels with a 35 percent recovery factor.

In October 2008, Nido Petroleum discovered the Tindalo oil field and the joint venture decided to proceed with the well development in December 2009.

The Tindalo well initially produced a maximum flow of 16,000 to 18,000 barrels per day when it started production in July with the use of the submersible pump.

Oil production fell to 9,000 barrels per day due to the presence of water. Of the 9,000 barrels of fluid produced per day, 50 percent accounted for water while the remaining 50 percent is crude oil.

The Tindalo joint venture conducted “workover operations” and an acid soak test at Tindalo well to address the water problem but the presence of water remained almost the same.

It would be noted that the Tindalo oil field is estimated to contain between 1.5 million to 9.1 million barrels with a mid-case of approximately 5.1 million barrels of oil.

Earlier, Nido successfully offloaded and delivered to South Korea its first crude oil cargo from the Tindalo oil field to South Korea.

The sale of the first cargo will deliver over $14 million in gross revenue to the Tindalo joint venture.