Gulf Keystone Petroleum (LON:GKP) is nearly ready to start producing oil from the Shaikan-1 well, just over one year since it discovered oil in the Kurdistan region of northern Iraq.
The company is now commissioning its long term test facilities at the Shaikan oilfield.
“This marks the end of a seven month accelerated design and construction project,” Gulf Keystone chief operating officer John Gerstenlauer commented.
The facility has the capacity to handle 18,000 barrels of oil per day (bopd), and it will enable an 18-24 months production test from the Shaikan-1 discovery well.
Shaikan-1 discovered several oil reservoirs and the test will produce oil from the top Jurassic age section. Initial flow rates are low to allow facility commissioning and will be kept low, pending receipt of oil assay results which will assist in determining a domestic sales price and allow finalisation of the oil sales contracts.
The company said that its test operations are ‘well on track’ to achieve its 8,000 - 10,000bopd year-end target production rate.
“This extended test of the upper portion of the Jurassic will give us valuable information on production characteristics, market logistics and oil sales procedures within Kurdistan,” Gerstenlauer said.
“In addition, use of these prefabricated production facilities will serve as a model for future testing and production of other potential oil accumulations on our acreage."
According to Gulf Keystone, the facility commissioning, assay finalisation and sales contract negotiation are expected to take several weeks.
Nearby, the Shaikan-3 is currently being drilled to test a shallow oil reservoir.
The company highlighted that drilling is progressing at a depth of 837m, with the next casing point expected at 900m and the first zones expected to be encountered soon after that.
Gulf Keystone also updated investors on its other operations in Kurdistan, with its 20% interest in the Bijeel oil discovery being of most interest.
At the company’s joint venture Bijeel-1 well, on the Akri-Bijeel Block, testing and evaluation work is still ongoing.
Gulf Keystone noted that, with its previous 3,200bopd test, Bijeel-1 is already one of the more significant oil discoveries in Kurdistan.
So far the work is providing positive information for the partners. Notably Gulf Keystone highlighted that the initial indication of the oil-water contact in Bjeel-1 “is supportive of the concept of a single regional aquifer”.
“This further supports the upside oil volume scenario for all four blocks in which GKP has an interest.”
Additionally the company said that the Bijeel structure could be a southern extension of the much larger Bekhme structure.
The Bekhme exploration well is planned for late 2010 or early 2011.
Elsewhere, in reference to the Sheikh Adi-1 well, Gulf Keystone told investors that it has now drilled around an obstruction and the well is now at 500 metres - the 20" casing point.