Best Practices for Minimizing Environmental Impact
The Termo Company strives to reduce its environmental impact while expanding its operations to meet the growing energy demand in California and beyond. Our efforts include decreasing operational use of natural resources, advanced drilling techniques and investing in new technologies.
We’ve highlighted the technologies and practices implemented to minimize our environmental impact:
•Small Drilling Pads: Developments in drilling methods and technology are leading to efficiency gains for oil and natural gas producers. Modern pad drilling techniques allow rig operators to drill groups of wells more efficiently and improved rig mobility reduces the time it takes to move from one well location to the next, and this reduces the environmental footprint.
•Multi-Well Drilling Pads: New methods of drilling allow smaller surface pads to reach greater exploratory acreage beneath the surface. Multi-well pad drilling allows us to reach our target area without disturbing as much surface. Using this technique, we have drilled up to four wells from a single acre drill pad, significantly reducing the surface disruption from our operations.
•Well and Casing Integrity: We ensure that the wellbore is structurally sound and that no leaks exist: wellbore fluids are isolated from the surrounding earth by casing and cement, and the casing is pressure-tested prior to any hydrocarbon production. Casing integrity is ensured throughout the process by continuous monitoring of annular pressure. The casing and cement ensure zonal isolation of oil and gas during the producing life of the well.
•Reducing air emissions: The Termo Company is continuously evaluating emission-reduction technologies as its operations become more efficient. We recognize the global concern about the potential impact of greenhouse gas (GHG) and other air emissions on the environment. Our efforts include vapor recovery on production systems, dust control on roads and facilities, erosion control for disturbed areas, and quarterly equipment leak detection and repair audits. In addition, we use processing equipment to remove methane from produced water preventing possible escape to the atmosphere. Consistent with our environmental commitment, we continue to implement measures to reduce atmospheric GHG emissions and integrate air quality programs into our business practices.
•Health and operational safety: We live by these key health and safety principles: protecting the environment in which we work is a core value for The Termo Company. Workers communicate with us daily about operations and identify potential hazards. If an unforeseen event occurs, we will report the incident. Then we follow the procedure to clean it up properly, work diligently to determine why it happened and identify what we will do to prevent re-occurrence.
•Hiring and maintaining highly respected contractors: We use outside contractors to perform drilling operations on our behalf. We rigorously review the qualifications of each contractor, including environmental, health and safety records as part of our internal commitment to The Termo Company’s contractor selection process. We also retain independent third party inspectors to monitor operations on our drill sites.
In summary, we will always try to do the right thing and implement the appropriate management systems. This includes developing customized procedures, procuring equipment as necessary and using the best practices available. If a job can’t be done in a safe and environmentally conscious manner, we won’t proceed until we can do so in a responsible way.
Re-evaluation of Complex Geology in Existing Fields
The axiom “the best place to find oil is where it already exists” continues to be tested in Termo’s position in the Section 28 Field of Louisiana. Building off of the success of the Bull Moose Prospect in 2012 Penta Resources of Lafayette, Louisiana and Termo are once again partnering to test the axiom. This time the Keystone Prospect will drill through the complex faulting that can be found in these sub-surface isolated dome like structures that are characteristic of this part of Louisiana to test multiple oil and gas sands.
The test is a 13,500’ MD well on the north flank of Section 28 Field to recover reserves in the Stuart A-B, Bol mex 2 and Bol mex 4 Sands which produce in adjacent fault blocks. If successful in the development phase, an exploration tail could be drilled after protection pipe is set to test the Nonion struma and Nodosaria B Sands. The trap is a fault wedge between Faults A and B-1. The deeper exploration tail crosses Fault B-1 testing a fault wedge between Faults A and B. The Keystone East Prospect will be tested with a new directional-well (1200 ft. kick) from the Termo SMLC 16 location. Both the Keystone East and Keystone Prospects are undrilled fault blocks on the prolific north flank of Section 28 Field. Fault A, the key trapping fault, is controlled by eight subsurface fault picks. Fault B-1, the complimenting trapping fault, is controlled by four subsurface points. Both faults are seen on the reprocessed 3D data. The updip wells from Faults B and B-1 have under-produced indicating these wells are fault separated from downdip reserves. Amoco permitted but never drilled two wells which would have tested the Keystone East Prospect. The Bol mex 4 Sand has large downdip oil production from a stratigraphic reservoir. A substantial upside lies in the Nodosaria B Sand which is interpreted to be a turtle structure with a thick amplitude anomaly.
The estimated reserves associated with a successful test like this are significant. If the entirety of the project is successful, Penta’s analysis suggests up to 5 MMBO and 29 BCF. The affirmation of a correct interpretation of reprocessed 3D seismic data can boost confidence in further analysis of other overlooked or under-produced hydrocarbon zones. Other benefits of this kind of in-field drilling and re-evaluation are the opportunity to greatly lessen the environmental impact of new drilling by utilizing single existing locations for multiple production targets. This is important when considering the cost of construction and reclamation in the marsh ecology in this part of Louisiana and it provides Termo and Penta a great opportunity to balance the need for domestic hydrocarbon energy production and environmental protection.
More information about this project is available by contacting Termo or Penta Resources.
Infill and Development Drilling Studies
Los Angeles Basin, California
Termo's review of the geologically complex area of the Aliso Canyon and Oat Mountain oil fields has resulted in the drilling of new wells over the past ten years. Several pay zones were found in each well and are on production. Initial results have been very encouraging. New information from these wellswas incorporated into a geological interpretation to enable further development.
Termo went through the extensive (and expensive) process of designing and permitting locations for up to 10 additional wells in this area, designating a new project area, North Aliso Canyon, for which we have begun the environmental review process for local entitlements. Permitting in Los Angeles County is a rigorous and time consuming process, and Termo engaged the services of some of the best environmental and technical consultants in California to help us design and implement a sound and successful program for the area. We worked with stakeholders, held public meetings, and toured the field with local leaders.
However, forces beyond our control derailed the project and it has been put on hold indefinitely. A combination of unjustified NIMBYism and a large utility company accident resulted in a political climate which made it all but impossible to continue forward. We remain hopeful that we can work with local leaders to implement a project that is scaled down but reasonable and acceptable.
Oil and Gas Sands Test in St. Martin Parish, Louisiana
Termo is partnered with Penta Resources of Lafayette, Louisiana in the Bull Moose Prospect to test the reserve potential of the Marg Tex 2, Stuart A and Bol Mex 2 sands. The well has a proposed TVD of 11,500’ and is located on the north flank of the Section 28 Field. In adjacent fault blocks are the Amoco St. Martin Land #9 and Stanolind St. Martin Land #5 wells. The Amoco #9 has produced 1.19
The wells penetrated the Marg Tex sands up-dip from the apparent pay zone in the Amoco SML #20 well. In the up-thrown fault block, the Amoco SML #21 well is actively producing from the Marg Tex 2A sand. Downthrown on Fault T is the Amoco St. Martin Land #16 which is actively producing the Marg Tex 2A sand. In the fault block to the east and on strike, the Amoco St. Martin Land #7, #14 and #19 wells are productive in the Marg Tex 2 sand with cumulative production of 144 MBO and 208 MMCF.
Two cases were run with three sands productive by virtue of the down-dip or adjacent production, a likely case with the Marg Tex 2 having 48 MBO, and 144 MMCF, the Stuart sand having 100 MBO and 250 MMCF and the Bol Mex 2 having 412 MBO and 889 MMCF for total potential reserves of 312 MBO and 639 MMCF. An upside reserve estimate calculated for all three sands is 544 MBO and 1,582 MMCF. The proposed 11,500’ well is estimated to cost $1.2 million dry hole or $2.4 million dry hole if a liner over the Het sand is required. The completed well would cost an additional $720,000 or $1.92 million for a completed well if the liner is not required.
Lateral Pond Niobrara and Mowry Shale
Campbell County, Wyoming
Termo continues to study the potential for horizontal Niobrara and Mowry Shale development in our Lateral Pond project area near Gillette. With 15,000 gross acres in the project area, it has the potential to be a significant resource play for the company.
Our first attempt at producing from the Mowry was the Bishop #43-17 well, drilled in early 2010, and completed with a three stage ‘frac’ into the upper, mid, and lower portions of the zone. The first portion of the frac went off as planned, but the third stage did not work.
We have conducted some fairly extensive evaluation and diagnostic work on the well and it seems that the more data we get the more questions are raised. NuTech Energy Alliance of Houston conducted an extensive evaluation of the logs and the fracture stimulation. The evaluation tells us that we have approximately 100 feet of pay per shale zone, both contain significant volumes of oil and both have very low permeability. In addition, the frac impacted the Mowry interval to a distance of 250 feet from the well bore.
The bottom line from these studies is that oil is present but the ability to unlock it from the formation is the challenge before us at this time. We remain hopeful that we will find a way to access these reserves and make the Mowry a commercial venture. We have gone back to the drawing board and are ramping up our technical knowledge. We are also gaining knowledge by participating as a non-operator in another well in the area.
Based on other operator’s activities in the area, including Chesapeake, we remain confident that the secrets of the Niobrara and Mowry shale in this area will eventually be unlocked and we intend to be there when it happens.