# Falklands Oil & Gas Makes A Gas Discovery In The South Falkland Basin

On September 17, Falklands Oil and Gas (OTCPK:FLKOF) announced the results of their Loligo well. The press release stated that all of the sands contained gas with the largest prize coming in the lower T5 zone. FOGL was unable to retrieve fluid samples from any of the zones.

The upper zones are relatively small compared to the size of the T5 zone. The press release details the T5 zone as follows:

Within the T5 target two main hydrocarbon bearing zones were encountered (3,462 to 3,558 metres and 3,608 to 3,705 metres). The net hydrocarbon bearing reservoir in these two zones was 46 and 59 metres respectively. Porosities ranged between 23% and 30%, averaging 24% and hydrocarbon saturations between 40% and 75%.

Since the T5 zone is the main zone of interest, I would like to try and quantify the amount of gas there using simple original gas in place (OGIP) calculations. Certain things will have to be assumed for a simple lack of data. My assumptions are as follows:

• I will assume a reservoir pressure of 5,500 psia. This is more or less a saltwater gradient and is likely correct or actually conservative. An actual pressure that is higher will increase the OGIP volumes.
• I am also assuming 250F reservoir temperature. This is simply an educated guess.
• Gas Gravity of 0.8
• Z-Factor of 1.05 based on correlations using the above pressure/temperatures with a corresponding formation volume factor of 0.00680438 RB/SCF
• I have assumed an area of 200 sq km. This is simply a very conservative guess based on the size range given for the upper zones (250-600 sq km).

Net pay height was given as a combined 105m (343 ft). Porosity is given as 24%. We will take the mid point of gas saturation which is 58%.

OGIP can be calculated as Area * Height * Porosity * Gas Saturation / Formation Volume Factor.

Combining all of the above into the OGIP calculation, I come up with 27 TCF gas in place for the T5 interval. Assume a 75% recovery factor and the FOGL WI of 75% and FOGL's reserves just from the T5 sand could be 15 TCF. Compare this to the 2011 reported US proved reserves of a few large companies:

• ExxonMobil (NYSE:XOM) 26 TCF
• Chesapeake (NYSE:CHK) 15.5 TCF
• BP (NYSE:BP) 13.5 TCF
• Devon (NYSE:DVN) 9.5 TCF