The Group has a 16%, partner operated, working interest in two high quality exploration concessions in the central area of the Kurdistan Region of Iraq (“the KRI”), Shakrok and Dinarta. The past year has seen major progress towards establishing the resource potential on these licences with the selection of the first well locations to be drilled on both blocks, the construction of access roads and well pads and the contracting and mobilisation of two drill rigs to site. Following these preparatory activities, the Company’s first exploration well in the KRI, Shakrok-1, was spudded on 30 August 2013 and reached a total depth of 3,538 metres on 30 March 2014. Subsequently, a well testing programme is being carried out. The first well on the Dinarta block, Shireen-1, is expected to be spudded in May 2014.
The backdrop to these operational activities has been characterised by a shifting geopolitical landscape, with the recent installation of an export pipeline directly from the KRI to Turkey and the announcement of a gas sales agreement between Turkey and the KRI – both developments with the potential to reduce commercialisation risks with respect to any future oil or gas discoveries in the region.
With the completion of the seismic work programme on Dinarta in 2013, the joint venture, has now met its seismic acquisition commitments for the first phase of both exploration licences. In 2012, some 276 and 189 kilometres of 2D data were acquired on the Shakrok and Dinarta licences, respectively, fulfilling the Shakrok commitment but leaving a balance to be acquired on Dinarta. Therefore, in March 2013, Terraseis were contracted to complete the remainder of the Dinarta programme and between April and August an additional 326 km of vibroseis and dynamite source data were acquired, bringing the total on the block to 515 km. Seismic processing of these datasets is now complete and the subsequent seismic interpretation has been fully integrated with geological field work and structural modelling to mature the prospect inventory and potential drilling locations on each block.
The early part of 2013 was also devoted to preparations for the drilling campaign, building upon the well design, planning, permitting, mine clearance and tendering work initiated during 2012. The drilling sites for both the Shakrok and Shireen prospects are located on the top of mountains at around 1,650 metres and 2,200 metres above sea level, respectively, and preparing the locations has presented significant logistical and civil engineering challenges. These have included the construction of high quality access roads and river crossings to ensure the safe transport of personnel, the 2,000 horse power drilling rigs and ancillary equipment and supplies to and from the well sites. In addition, a water supply system has been installed at each location, involving the installation of around 40 kms of pipelines and pumping stations to transport water from specially commissioned water wells up to the well sites.
Shakrok-1 was spudded on 30 August 2013 using the Ensign 941 drill rig and reached total depth at the end of March 2014. A testing programme is on-going. Shireen-1 on the Dinarta block is due to spud in May 2014.
Both wells have multiple exploration targets in a series of stacked potential reservoir units in the Jurassic and Triassic formations, sealed by evaporite layers and sourced from organically rich intervals. On 7 April 2014, the Company announced that Shakrok-1 had reached its total depth of 3,588 metres and that a total of 4 Jurassic zones had been selected for testing. To date, the lower two zones have been tested without flowing hydrocarbons. Two further tests are planned on the Jurassic formation with results expected by late May.
These are the first wells to be drilled under the Shakrok and Dinarta Production Sharing Contracts (Hess 64% operator, Petroceltic 16% and the KRG 20%) and we are now at the threshold of understanding the resource potential of the Company’s assets in Kurdistan.