WesternZagros Resources Ltd. is continuing concerted efforts to bring the Kurdamir-1 well safely under control. The operational status of the well is unchanged; it remains shut-in, and there has been no release of hydrocarbons or hydrogen sulphide (H2S) at the surface. There have been no injuries. Specialists from Boots & Coots International Well Control Inc. are now on site and assessing the situation. The necessary equipment is being mobilized and has started to arrive, and drilling mud is being prepared to begin efforts to control the well. The equipment includes a snubbing unit, which is a hydraulic workover rig that enables well intervention to be performed while the well is under pressure.
The Emergency Response Teams in Calgary and in the Kurdistan Region of Iraq remain active, managing both the operational activities and the outreach required to assist approximately 100 local residents, who remain evacuated as a precaution. Those local residents live within the Emergency Planning Zone, and WesternZagros is working directly with them to ensure their needs are met during this period of dislocation. Human safety remains the top priority of the response efforts.
WesternZagros expects the well control activities to take at least 30 days. If these efforts are successful, it may be possible to resume drilling and testing the well as planned. As of May 24, 2010, the total cost of the Kurdamir-1 well, with the sidetracking operations, had reached approximately $81 million gross, or $49 million net to the Company. WesternZagros anticipates that the additional well control activities currently underway could add approximately $7 to $9 million gross to that cost (or $4 million to $5 million net to the Company), although that estimate is preliminary and may change.
The Company is currently pursuing a claim under its well control insurance coverage for the costs of the ongoing sidetracking efforts, and plans to submit additional claims for the current well control activities. The policy has a total claim limit of $75 million gross. As of May 24, 2010, WesternZagros and its partners had incurred in excess of $25 million gross for well control and sidetracking activity.
"We are grateful for the assistance we have received as we work through this difficult situation, and for the professionalism and commitment demonstrated by our employees and contractors," said Simon Hatfield, Chief Executive Officer of WesternZagros. "We are working closely with our partners, the Kurdistan Regional Government and Talisman, who have given us their full support. The petroleum operator and service community in Kurdistan has also been very cooperative. A number of companies have helped us by providing equipment or supplies for our operations."
Kurdamir-1 is a wildcat exploration well, located on the Kalar Bawanoor Block, in the Kurdistan Region of Iraq. WesternZagros is drilling the well with its co-venturers, the Kurdistan Regional Government (KRG) and Talisman (Block K44) B.V. Further operational updates will be provided as well control and drilling activities progress.