Technical Update
Recent worldwide interest in underexplored Palaeozoic opportunities together with renewed interest in Coal Bed Methane (CBM) has seen a marked increase in exploration activities in the South Wales area. Following preliminary geological work undertaken on existing seismic, gravity and magnetic data, Sonorex Oil & Gas commissioned 28km 2D seismic in 2006 to investigate a potential Palaeozoic gas play hosted in Devonian Old Red Sandstones in ST38 & ST48 ( awarded in the 11th and 13th rounds of UK onshore licensing). Situated on the southern flank of the Usk Anticline, a similar 12km² fault-bounded anticline has been imaged with defined closure to the south and east. Regional dips would suggest additional closure exists along strike to the west and further seismic is being considered to confirm the structural configuration. This potential closure, termed the Newport Prospect, (lying to the east of Newport) could contain GIIP of up to 87BCF.
Secondary reprocessing of Sonorex 2D data has improved the definition of the Newport Prospect and further increased the clarity of several prominent unconformities which enable dating of large-scale Palaeozoic successions. A structural model developed from seismic, gravity and well data (Usk-1) indicates significant potential for Palaeozoic source presence and maturity in a previously unrecognized sub-basin at the north-eastern extension of the Bristol Channel Basin. This basin is situated immediately offshore of the Sonorex Licences and, encouragingly, shows little evidence of Variscan deformation which, further to the south, can adversely affect analogous Palaeozoic exploration.
The presence of a fault-bounded basin immediately offshore of the Sonorex license acreage provides an opportunity for northward migration of hydrocarbons sourced from a number of potential organic rich shales ranging from Cambro-Ordovician to Lower Carboniferous in age. Local reports of gas seeps to the north of ST38 & ST48, together with gas traces in poorly sealed Silurian rocks in Usk-1, indicate a strong possibility that hydrocarbon charging has occurred. Sonorex firmly believe that by exploring south of the Usk fold axis, it may be possible to locate preserved hydrocarbon accumulations.
An ongoing work program seeks to confirm trap geometry and determine the quality of Devonian reservoir rocks. A decision to drill a low cost 7,800' (2,377m) vertical exploration well to test primary Palaeozoic targets on the crest of the Newport Prospect will be made by 31st December 2009. Drilling can be expected to commence in late 2010 or early 2011. A number of important local markets have been identified for hydrocarbons including nearby gas-fired power station and steel mill. Low production costs and low environmental impact in this heavily industrialised area make this an attractive opportunity for investors seeking to tap into the growing market for low cost onshore exploration.