Stock Guru LXES Profile
Lexington Leading the Way in Coring Services to Determine What Lies Below
Lexington Energy Services offers cutting edge drilling and coring services in the oil sands of Canada.
Why is coring so important in the oil sands? High resolution, three dimensional seismic is not used in the oil sands for in situ development of the heavy bitumen deposits as an exploration tool, although it can be used to delineate known reserves. Drilling or coring a round core from the oils sands provides maximum information of the quality of the reserve.
Coring can provide detailed information that cannot be obtained in any other fashion and the knowledge gained from coring is constantly expanding which makes the process and the information gained more critical. Coring involves the cutting of a cylindrical sample out of the earth during drilling to allow geological analysis of the area drilled. That geological analysis can determine a well or oil sand location’s physical characteristics such as its porosity, permeability, fluid content, geological age, and its probable productivity.
Lexington Energy’s drilling/coring system is smaller and faster than conventional drilling/coring rigs. This system can be manufactured in months, as opposed to the years it currently takes to build a traditional drilling rig. Each drilling rig has a 30 foot drill pipe that can retrieve a 3-inch wide core up to 765 yards deep and is accompanied by a core van for the initial evaluation and storage of core samples.
Below you will find the fascinating new science which depends on coring for interpretation of ‘what lies below.’
George Pemberton – Leading the Way in Core Evaluations
George Pemberton is an ichnologist, a scholar who studies fossilized animal tracks and burrows. In the past, it was believed that shrimp or worm burrows were signs of a lack of permeability and porosity in hydrocarbon reservoirs, but the University of Alberta geologist says his research is proving the opposite to be true. “The big thing is that if you understand the dynamics of the system, the reservoir engineers are smart guys and they can figure out then how to best drain it. But they have to know what the dynamics of the system are.”
Coring is fundamental to Pemberton’s process. It’s important, says Pemberton, to look at a formation’s physical and biological origins. Coring is essential to his work, he says. “What we are finding out now is a lot of outfits now are understanding that. You can’t do it off of well logs, you can’t do it off of seismic, it has to be done off of the rock. I just got back from Cairo, where I did some work on the Nile delta for BP and they are cutting core all the time now because it’s just too valuable.”
Although Pemberton is only in his 50s, he was named a fellow of the Royal Society of Canada and became the first Canadian recipient of the R.C. Moore Medal from the Society of Economic Paleontologists and Mineralogists.
“In the past, trace fossils were generally used in exploration,” notes Pemberton, who conducts much of his research work on tight Triassic formations. “We would figure out facies determination and then paleo-environmental re-constructions. Right now, we’re using them more for production, where the burrows tend to be some of the primary pathways for flow within the reservoir.”
Pemberton concedes his is an “oddball” pursuit and says he was initially dismissed by oil executives in Calgary. “They would laugh me out of the building.” But they came around after a field trip to the oilsands piqued the interest of a couple of executives involved in the Hibernia development offshore Newfoundland.
“I was highlighting how the burrows in the McMurray oilsands helped us figure out what the depositional system was, and they came up to me and said all of the Avalon interval of the Hibernia oilfield is all burrowed, could I come down and look at it.”
At the time, Pemberton’s research was still focused on determining the environment responsible for the deposition of the rocks that the field was found in, rather than on reserves modeling. “When we do a geological analysis of a field, we are trying to figure out if it was deposited originally as a delta or a river or a shore face beach because that will then determine what the geometry of the reservoirs are, based on how it was deposited,” he says.
“The work that I do is closely linked to understanding those depositional systems. So for instance I could say that some of the Hibernia (field) was deposited as a deltaic system, so the sandstones will be lobate, they will trend in this direction or that direction, that kind of thing. Then they can start delineating the field a little better.”
Due to the number of companies then involved in the Hibernia project, Pemberton’s research was widely distributed. “That was my in to the oilpatch,” he says.
By the late 1990s, Pemberton was moving from exploration-related research to reserves modeling and estimating. Work in Canada and the Middle East convinced Pemberton that the burrows were assisting in the internal plumbing of a field and that a better understanding of the burrows could have direct implications on reserve calculations and deliverability.
In one case, his group’s findings on a pool in the Triassic Sag River formation of Alaska boosted one company’s reserves by 15%. “And it’s a 150-million-bbl field,” says Pemberton. “That’s 22 million bbls. At $28 a bbl, that’s $630 million.”
Pemberton found that the sandstone had a permeability of 50 millidarcies, but the burrow fills had permeability seven times greater and constituted 60% of the volume of the rock. “So if I do reserve calculations based on the plugs at 50 millidarcies, I’ve missed a lot of the reserves, because the burrow fills are 350 millidarcies,” he explains. “That makes a real big difference. Unfortunately when we do these reservoir models, none of them really take this into account.
“What commonly will happen is a company will do a reservoir model, production will outstrip the model and all they do is they cut the permeability down to account for all of this production. I have seen it where they have got the permeability down to about one millidarcy — they just don’t understand the internal flow dynamics of the reservoir.”
Since his research indicated the vertical permeability far outstripped the horizontal permeability, the company determined its best course of action was to attack the reservoir with horizontal drilling, Pemberton says. “Since the burrows are vertical, what I want to do is put the pipe right along the burrow horizon and drain the reservoir vertically by putting a horizontal well through it, because all the permeability is in that burrowed zone. In the Sag River those horizontal wells far outperformed the vertical wells.
He finds the respect for his work very gratifying. “I’m in an oddball field,” says Pemberton. “Oddball fields don’t get a lot of attention.”
Lexington is at the right place at the right time.
Source: Lexington Energy Services Inc. and Nickle’s Oil Register
CONTACT: Lexington Energy Services Inc., Mark Procknow, Investor Relations, Calgary, 1-877-279-4550
About Lexington Energy Services Inc.: Lexington Energy Services Inc. manufactures and leases innovatively designed oilfield service equipment. Through their wholly owned subsidiary, Lexcore Services Inc., we also provide a range of drilling services to meet the growing needs of the oil and gas industry, including Alberta’s oil sands.
Forward-Looking Statements: Except for the historical information contained herein, the matters discussed in this press release are forward-looking statements. Actual results may differ materially from those described in forward-looking statements and are subject to risks and uncertainties. See Lexington’s filings with the Securities and Exchange Commission which identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements.
Disclosure: Pentony Enterprises LLC has been compensated $48,000 and expects to be approximately 130,000 freetrading shares and $32,000 by noncontrolling third party Alliance World Limited for profile coverage. Pentony Enterprises LLC is not a registered investment advisers or broker/dealers. Pentony Enterprises LLC makes no recommendation that the purchase of securities of companies profiled in this web site is suitable or advisable for any person or that an investment such securities will be profitable. In general, given the nature of the companies profiled and the lack of an active trading market for their securities, investing in such securities is highly speculative and carries a high degree of risk.StockGuru.com is owned and operated by Pentony Enterprises LLC, 9555 Lebanon Road, Suite 103, Frisco, Texas 75035. Telephone: (214) 458-4258. Web: StockGuru.com. Email: Publisher@stockguru.com .