Company Strategy

Key Technical Question - Macro-Permeability and Reservoir Continuity

In 2023, the Company took a strategic decision to move forward with development of the discovered resources, since the key technical question regarding lateral continuity of the reservoir horizons had been addressed by the Long Term Production Test of Alkaid-2. Prior to that operation, all of the flow tests had been short duration with the objective of gathering fluid samples and confirming that the permeability of the near wellbore pay was sufficient to support flow to surface. For the contingent resource to be considered recoverable (and ultimately classified as reserves) would require a demonstration of the sustainability of flow rates and to establish a valid type curve for development wells. This would be achieved by flowing the well for long enough to achieve a “radius of investigation” (a measure of the extent to which the reservoir was communicating directly with the wellbore) that proved continuity over hundreds of feet rather than hundreds of inches.

Perhaps a way to visualize the question is to compare a millefeuille dessert (where the thin layers of pastry are the low permeability barriers and the crème pâtissière is the reservoir quality sand) to a tray of profiteroles (again the pastry is sealing and the crème is reservoir).

If you cut a plug through the two desserts, you would simply see thin layers of pastry and crème on the walls of the plug and (aside from the difference between puff pastry and choux buns) you would not know which tray you had cut into unless you got lucky and hit the closed end of a profiterole.

However, if we pressured up the crème phase (by squeezing each of the trays with a flat board from above), the millefeuille would squeeze out more crème pâtissière at the edges because the crème layers are continuous whereas the profiteroles would not provide more than a dribble after a small initial rush from bursting the outside edge buns.

Continuity vs Capsules

Obviously, one must guard against over interpreting the analogy, but it does help explain how two geometries can look the same at the micro scale but be very different at the macro scale…

Analogues for Thinly Interbedded or “Tiger Striped” Deltaic Deposits

There are countless examples of successful developments in thinly bedded Deltaic deposits around the world. The developments of deltaic topsets and fans offshore have been very successful (although in offshore environments, the permeability of the pay has needed to be an order of magnitude higher than so far encountered in the Ahpun and Kodiak fields, notwithstanding the expectation of higher quality reservoirs in both the northerly and westerly extensions of Kodiak and the easterly extension of Ahpun). The majority of these other examples have been younger, less compacted deposits and may have suffered less mineralization that might restrict the pore throats. A plausible, geologically younger analogue (but still low permeability) is the Wilmington Field in California that has been producing both onshore and near shore for decades and is expected ultimately to yield around 1 billion barrels. There, the thin inter-bedding is an inconvenience for water flooding rather than a barrier to economic long term production. Nearer to the Company’s leases, the Tarn and Meltwater fields provide suitable analogues, particularly for the shallowest section of Kodiak.

If Pantheon’s reservoirs consisted of small “profiteroles” rather than “millefeuilles”, we would likely have already seen appreciable pressure decline in the initial tests. Extracting 150 bbl from around the wellbore does not sound like much but, if the reservoir were truly made up of micro-compartment of centimeter/decimeter scale, this would likely have revealed itself. As reported by Pantheon on the Talitha-A tests, the Theta West-1 test and the Alkaid-2 tests (both long term in the Alkaid ZOI and short term in the topset recompletion), this did not occur. The material balance calculations from the long term production test and the pressure transient analysis from the downhole gauge following the topset test also indicate a lack of near wellbore barriers.