Frontera Resources is a Texas-based, independent oil and gas company that was established in 1996. The aim of the company is to acquire leases and production assets in the emerging energy markets of Eastern Europe. Their focus is on proven hydrocarbon basins that have been overlooked, or underdeveloped, as a result of previous political uncertainty in the host country. Frontera's current focus is to exploit a 'Greater Black Sea initiative', with its core operations in the country of Georgia. Board members' experience includes working with major companies in the oil and gas industry such as Shell, ConocoPhillips and Baker Hughes.
To date, Frontera has focused its activities, almost exclusively, on the onshore Kura Basin situated between the Caspian Sea and the Black Sea, in the nations of Azerbaijan and Georgia. The company has invested over $70m in researching the geological play types involved in Block 12 in Georgia. This involved the processing and interpretation of new 2D and 3D seismic data, re-processing historic seismic and well log data, undertaking new and extensive geological field work, and carrying out new reservoir engineering studies in some of the existing fields on Block 12. As a result of the seismic and geological fieldwork undertaken, the company believes that there are two major geological plays within this large block, which could hold significant reserve potential. It is always good to see a company putting in the groundwork in preparation for drilling, as modern seismic is an effective way of lowering exploration risk. The aim of Frontera is the rapid development and commercialisation of any oil or gas find.
Georgia
The company holds a 100% working interest (wi) in Block 12; situated in eastern Georgia the license covers some 5,060 square kilometres of exploration rights. Before 2004, there were seven existing fields on the block, proving that an active hydrocarbon system was located in the area, and that the strata contained viable traps. As a result of the modern 2D and 3D seismic acquired by Frontera, there have been multiple exploration and developmental locations identified.
Taribani Field
Frontera's initial focus was the Taribani field development, where they hoped to bring on production by drilling horizontal development wells into the accumulation. The Taribani Field is a large, over-pressured oil field covering an area of approximately 80 square kilometers, with productive horizons situated in the Miocene and Pliocene age reservoirs. The reservoirs in this field are between 2,200 and 3,500m, so only moderate depth wells with reasonable drilling time and expense will be required. However, the horizontal production wells require high-tech equipment and skilled operators, which increases costs substantially when compared with vertical wells to this depth. The field has, to date, produced a total of approximately 550,000 barrels of oil from eight of the forty-one wells, all drilled in the Soviet era. The oil from the field is of good quality, with low impurities, and an API of 36 degrees, and will fetch a high market value. As all the wells drilled were clustered in the down-dip area of the field, the company believes that with the use of modern drilling and completion technology, there could still be significant oil reserves to be recovered.
In 2000, Frontera successfully drilled the Niko-1 well into the Taribani Field, which tested at a rate of 960bopd, but suffered technical failure due to sanding. The management suggested that poor cement integrity and a failed flow packer were responsible for the influx of sediment into the wellbore, and that this might be overcome with a new horizontal production well design. Twelve possible production horizons have been identified with a combined resource estimate of 118MMbbls. The use of horizontal drilling can expose a much greater reservoir surface to the wellbore. The field has vertical fractures that may block, flow, and penetrating these compartments horizontally would not only increase the possible oil bearing surface area exposed to the wellbore, but also the permeability and communication between the reservoir compartments. No oil water contact zone has been identified during the drilling of the Taribani Field, suggesting that the limits of the hydrocarbon accumulation zone is yet to be identified ? making reserves difficult to estimate. Frontera drilled/recompleted three wells in the Taribani field during 2005 and 2006. The Dino-2, No. 23 and Niko-1 wells confirmed the geology of the field, and provided large amounts of data regarding the nature of the reservoir, its suitability for fracturing and the type of completions to be used. The complex nature of the reservoir with its running sands mean that gravel pack completions are required in order to prevent the well from clogging up. Frontera is planning to drill up to 20 wells into this field over the next 36 months, and as many as 8 wells in 2008. Operations were to begin again on Dino-2 in August and on completion the rig will commence drilling operations on Taribani #45 well, followed by a third well, Taribani South-1, in October.
Basin Edge
Recently identified, these two large prospects lie along the northern edge of block 12. An independent resource estimate has suggested that these prospects could hold a combined volume of over one billion barrels of recoverable oil. Only the drill can prove exactly how much oil, if any, has been trapped, but there's certainly big potential by any standards. It has been estimated that targeted Cretaceous carbonate reservoirs in this area could have a vertical thickness of up to 2000m, and if they turn out to be 'oil bearing' this could lead to those impressive numbers suggested by the independent evaluation.
A well drilled in 2003, by CanArgo Energy, apparently encountered significant volumes of oil and gas, and their prospective target lay on trend with the Basin Edge play. In 2006, Frontera completed a 3D seismic acquisition over prospect C of the Basin Edge play. They revealed that the prospect was even bigger than first anticipated, and may contain over 500MMbbls of recoverable oil, if oil is present. Moreover, they obtained Amplitude Versus Offset (AVO) data over the target with positive results, indicating the possible presence of hydrocarbons in the target reservoir. AVO is not a guaranteed method of proving oil before drilling: it is a direct hydrocarbon indicator technology and the presence of hydrocarbons would be assumed by the change of amplitude as the sound waves passed through a gas filled reservoir unit. AVO can be very effective in certain circumstances and the additional expense is warranted to limit the exploration risk. Although AVO is an established technique, it can sometimes provide false positive results and cannot predict the commerciality of any hydrocarbons present. Site preparations have commenced and a road has been built to allow the drilling of the Lloyd-1 well. Spudding was expected to occur around the middle of August.
Mirzaani Field
This area contains a number of proven fields including the Mirzaani Field, the Patara Shiraki Field and the Nazerlebi Field. The producing reservoirs in these fields are situated at depths of between 900 metres and 1,300 metres. These shallower fields have historically produced approximately seven million barrels and are today producing at a nominal rate of approximately 100 bopd. The management believes that there is significant potential for hydrocarbons at depths similar to that of the Taribani Field; the further potential is still relatively shallow at approximately 1,800 metres to 2,500 metres. Frontera believes that finding oil at depth here would open up a whole new play for this area of the block, significantly increasing potential and prospectivity.
Conclusion
At present, Frontera's main asset is the Taribani oilfield development: with a possible 118MMbbls of oil in the known oil bearing horizons and as much as 36MMbbls of prospective reserves in the deeper horizons, it's clear why they are focusing on this asset. With up to 20 wells planned over the next 36 months, this will clearly be the centre of activity, and investors will be anxiously awaiting a result. And the positive AVO response on a prospect the size of Prospect C on the Basin Edge play may cause a few eyebrows to be raised later in the year.
This company is still perusing its first commercial field development, and if it is able to control the sanding in the Taribani field it will be well on its way to first production - but Basin Edge means this is no one-horse race.
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