Gulf Keystone (LSE: GKP), the Kurdistan-focused oil explorer widely rumoured to be a takeover target, has announced the commencement of drilling operations on its Shaikan-3 appraisal well, effective September 2, 2010.
This is a shallow appraisal well, very close to the Shaikan-1 well, the site of last year's discovery of the giant Shaikan oil field. The Company has a 75 percent working interest in the Block.
The Shaikan-3 well will be drilled to 1,100 meters (depending on well results) and is designed to evaluate and test the Cretaceous age intervals for producible oil volumes. Much of the Cretaceous interval in Shaikan-1 could not be completely logged, tested or evaluated due to lost circulation and other drilling difficulties. A large percentage of the interval is saturated with various hydrocarbons such as tar and heavy oil.
The purpose of the Shaikan-3 well is to further evaluate these hydrocarbon volumes and determine if they are capable of commercial production. The total pore volume of the Cretaceous age interval is very large and, if the drilling and testing are successful, the presence of readily producible hydrocarbons could add significantly to the 1.9 (P90) to 7.4 (P10) billion barrels of oil in place already discovered in the deeper Jurassic and Triassic formations. Drilling and testing is expected to take two months.