EXHIBIT 10.28
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EVALUATION OF STRESS FIELD
DETECTOR TECHNOLOGY
IMPLICATIONS FOR OIL AND GAS
EXPLORATION IN WESTERN CANADA
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This report has been prepared as an independent evaluation for Pinnacle Oil
International Inc. The evaluation is based upon field trials of their
proprietary SFD Technology conducted between September 16 - 28, 1996, over known
oil and gas accumulations in central Alberta, Canada.
Report Prepared By
ROD MORRIS
P. Geologist, A.P.E.G.G.A
September 30, 1996
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Evaluation of Stress Field Detector Technology
Implications for Oil and Gas Exploration in Western Canada
Rod Morris, P. Geologist
September 30, 1996
ABSTRACT
A field evaluation of the Pinnacle Oil International Inc.'s Stress Field
Detector technology (SFD) was conducted in southern Alberta between September
16 - 28/th/, 1996. The evaluation involved over 1,000 miles and 27 hours of SFD
recordings. Field tests were designed to assess the applicability and
reliability of the SFD technology in detecting significant oil and gas
accumulations over a variety of hydrocarbon trap types and reservoirs.
Discussions with Mr. George Liszicasz regarding performance of the SFD indicated
that the technology is currently more conclusive when looking for hydrocarbons
in Limestone and Dolostone reservoirs. Therefore, for the purposes of these
field tests, SFD Profiles were specifically directed at Mississippian and
Devonian age carbonate reservoirs. During the course the field trips a number of
Cretaceous clastic reservoirs were also traversed. Although they were not
intended to be evaluated in this report, one traverse is included as an example.
Six oil and gas trap types representing the primary hydrocarbon trapping
mechanisms of Mississippian and Devonian resevoirs in central Alberta were
evaluated by selecting and traversing 20 specific oil and gas pools. During the
evaluations the vehicle used to transport the SFD was driven by the author. The
SFD operator did not have any prior notice of the intended route nor the oil and
gas accumulations that were traversed. Several observations were made during the
field evaluations:
. The SFD system records an anomalous response over known oil and gas
accumulations;
. The SFD appears to become more definitive in proportion to the size
and quality of the hydrocarbon accumulation;
. Pools within the boundaries of larger regional hydrocarbon reservoirs
were detected substantiating the ability of the SFD to detect multiple
horizon oil and gas accumulations;
. Oil versus gas accumulations can be successfully differentiated as
experience in gained in an area;
. Existing boundaries of fully developed pools were delineated with
accuracy's approaching several hundred meters;
. The SFD only appears to become saturated over large hydrocarbon pools
which can extend their apparent size. Multiple traverses from opposing
directions must be conducted to minimize this effect;
. Signal saturation appears to be cumulative, decreasing instrument
sensitivity during extended use;
The field tests were directed at Devonian Leduc, Nisku and Wabamun formations;
and Mississippian Pekisko and Elkton formations. Oil pools evaluated ranged in
size from 6.6 million to 88 million barrels in place and from 0.25 to 6 square
miles in aerial extent at depths ranging from 5,200 to 7,300 ft. Gas pools
evaluated ranged in size from 25 billion to 1.9 trillion cubic feet of natural
gas in place and 2 to 112 sq. miles in aerial extent at depths ranging from
5,000 to 11,700 feet.
Definite anomalous SFD responses were recorded over 19 of the 20 targeted known
pools representing all of the six trap types surveyed. These responses clearly
demonstrate the effectiveness of the SFD to detect significant hydrocarbon
accumulations. Although SFD technology is in its infancy, it adds an entirely
new dimension to oil and gas exploration. This technology compliments and
significantly enhances the coventional tools of seismic, subsurface geology and
airborne geophysical surveys that are currently in widespread use by the oil and
gas industry worldwide.
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EVALUATION OF STRESS FIELD
DETECTOR TECHNOLOGY
IMPLICATIONS FOR OIL AND GAS
EXPLORATION IN WESTERN
CANADA
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Introduction
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Mississippian and Devonian aged reservoirs in central Alberta are well known for
containing large accumulations oil and gas. Over a period of seven days three
field trips with the Stress Field Detector technology (SFD) were undertaken to
survey 20 known oil and gas pools. The purpose of the surveys were to test the
applicability and reliability of the SFD in Alberta, as well as assess current
limitations of the technology. The field tests were not designed or intended to
find new exploration prospects. The SFD surveys and routes were designed and
selected solely by the author. The principals of Pinnacle Oil International had
no input in, or prior knowledge of, the objectives of the study.
Subsurface fluids are found in porous rocks geologists and engineers call
"aquifers". Over time portions of aquifers can become locally sealed to create
"traps" or "reservoirs". Initially, all reservoirs are filled with water. As oil
and gas are generated from the surrounding shale's called "source rocks", they
accumulate in the aquifers. Since hydrocarbons are lighter than the water, they
migrate upward within the aquifer until the aquifer terminates or a local trap
is created. If enough hydrocarbons collect in a trap an oil or gas pool or
reservoir is created. Therefore, in order to create an economic accumulation of
hydrocarbons three things must occur.
1. The trap must be sufficiently large;
2. The reservoir must be porous and permeable enough to store and transmit
fluids;
3. Enough hydrocarbons had to be generated and accumulated in the trap to
create an economic deposit.
To evaluate the SFD technology the field tests were designed to profile six
primary trap styles, as well as known water versus hydrocarbons filled aquifers
and reservoirs.
. Figure 1. illustrates a subcrop or erosional edge trap and is
representative of typical Elkton and Pekisko reservoirs evaluated in
central Alberta. These traps are profiled by SFD traverses of the
Chestermere Elkton oil pool; and the Carstairs and Crossfield Elkton gas
pools.
Figure 1. Subcrop Edges and Outliers
. Figure 2. is typical of Nisku pools that develop behind the Leduc reef
margins in Alberta. These traps are a combination of structural highs and
facies changes, SFD traverses of the Wayne-Rosedale and Drumheller Nisku
"B" oil pools are included.
Figure 2. Drape over Structures or Reefs
. Figure 3. represents a typical pinnacle reef development in the Leduc and
Nisku formations. SFD traverses of Nisku patch reefs at Mikwan; and Leduc
pinnacles at Fenn West are illustrated. At Fenn West drape of the Nisku
formation over the underlying Leduc Pinnacles creates multizone pools.
Figure 3. Isolated Pinnacle or Patch Reefs
. Figure 4. depicts a porosity pinch out and is the type of trap that
contains oil in the Nisku Fm. at Joffre and gas in the giant Wabamun pools
found in the Crossfield area of Alberta. A traverse of the Crossfield East
pool is illustrated.
Figure 4. Porosity Lenses or Pinch Outs
. Figure 5. illustrates a typical large Devonian atoll in which hydrocarbons
are trapped along the updip margins of the reef complex. Or in overlying
formations that drape over the reef margins creating a structural high. SFD
Profiles of the Wimbome Leduc and Nisku oil pools; and West Drumheller
Nisku "A" are representative of this type of trap.
Figure 5. Large Reef Complexes and Atolls
. Figure 6. is a simplified diagram of thrust faulted structural traps that
develop along the foothills of the Rocky Mountains. These traps are very
complex but can contain significant hydrocarbon accumulations in
Mississippian and Devonian reservoirs. A traverse of the Jumping Pound west
pool is illustrated.
Figure 6. Thrust Faults
Hydrocarbon accumulations in the above trap types were selected to document the
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Evaluation of SFD Technology Page 2 CONFIDENTIAL
performance of the SFD over a cross section of pool sizes and trapping
mechanisms.
The SFD field evaluations were made during three separate trips on trips on
September 18, 22 and 28, 1996. The trips were conducted on primary and
secondary roads covering a total of 1,000 miles and 27 hours of SFD
sampling throughout central Alberta. The author, Mr. George Liszicasz and
Mr. Dirk Stinson were the only people involved in the evaluations. Table 1
summarizes the SFD Profiles detailed in this report. These pools were
deliberately traversed in order to evaluate the SFD technology.
Table 1.
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SFD PROFILE # OIL / DEPTH AVG. PAY, PROVEN SFD SFD ANOMALY
POOL NAME GAS FEET POROSITY AREA RESERVES PROFILE
(SQ. MI.) REPEATED
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1) Chestermere Oil unknown new pool 2, E to W Excellent, repeatable oil
Elkton and W to E signature.
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2) Wayne Oil 5,800 up to 65', 12%, more than new pool 2, E to W Excellent, repeatable oil
Rosedale D2 "A" 3.5 and W to E signature
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3) Drumheller Oil 5,430 31', 7.6%, 4.7 36 MMBbls 2, S to N and Excellent, repeatable oil
Nisku B N to S signature
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4) Drumheller W Oil 5,500 46', 7%, 6.7 63 MMBbls 1, N to S Excellent oil signature
Nisku A
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5) Carstairs Gas 7,600 unknown est. 50 BCF + 1, N to S Good gas signature
Elkton NGL NGL's
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6) Crossfield Gas 8,526 31', 7%, 112 1.3 TCF 1, E to W Strong repeatable gas
East, Wabaman 3, N to S signature
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7) Crossfield Gas 7,520 34', 6%, 3.7 70 BCF & 6.6 3, N to S Excellent, repeatable gas
East, Elkton MMBbls signature
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8) Mikwan Nisku Oil 7,000 area less than 0.25 1.6 MMBbls 1, N to S Distinctive SFD Signature
D2-1
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9) Fenn West Oil 5,800 area less than 0.25 9 pools up to 9 1, N to S SFD profile questionable,
Nisku & Leduc MMBbls requires further field
work,
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10) Wimbome Oil 7,300 26, 5%, 6 & 620 BCF & 88 1, W to E Excellent gas and oil
Nisku B & Leduc 60, 8%, 24 MMBbls Total signatures
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11) Jumping Gas 9,400 - 180, 8%, 7 & 874 BCF & 1, E to W Strong, repeatable
Pound Area, 11,240 120, 6%, 30 2.76 TCF 2 W to E signature
Rundle
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12) Gadsby Gas 3,700 24', 20-25%, 15 BFC 1, N to S Excellent gas signature
Cretaceous less than 1.5
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Evaluation of SFD Technology Page 3 CONFIDENTIAL
Discussion
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Each of the 20 pools traversed were selected and profiled for specific reasons.
The traverses were designed to test the response, reliability and repeatability
of the SFD to various trap types, pool sizes, reservoir fluids and reservoir
quality.
In the Crossfield area natural gas is produced from wells that have encountered
multiple carbonate horizons. This area was profiled to test for the ability of
the SFD to detect smaller pools either above or below a regionally extensive gas
bearing carbonate reservoir.
Twelve of the 20 pools traversed are detailed in this report.
SFD PROFILE 1. CHESTERMERE ELKTON
The Chestermere Elkton pool is a recent discovery that produces 36 degrees oil
from an Elkton Fm. erosional subcrop edge or outlier. This trap type is shown in
Figure 1, and is typical of the majority of Elkton Reservoirs that produce oil
or gas in southern Alberta. The Chestermere traverse clearly demonstrated that
an erosional edge filled with oil could be detected. The proven boundaries of
this pool have yet to be defined. It is important to note that the detection of
hydrocarbons is best when done in a real time setting. Mr. Liszicasz was not
told of the pools existence until after he has emphatically stated, without
prompting. "There is oil here, it must be here!". When informed that we were
deliberately traversing a new oil discovery his response was a good natured,
"you are trying to tick me!". However, the SFD Profile and Mr. Liszicasz
immediate interpretation of a strong oil signature established strong
credibility for the SFD technology. This particular oil pool was traversed twice
and successfully identified in both directions. Subcrop plays can be difficult
to interpret using conventional seismic techniques, but if seismic and the SFD
Profiles were to be combined along known subcrop plays, the oil industry would
have a very powerful set of tools.
SFD PROFILE 2. WAYNE / ROSEDALE NISKU OIL
The Wayne / Rosedale oil pool was selected as the second pool to be traversed
for three reasons. First, the pool is a recent discovery that is being developed
with directionally drilled wells from central pads. Second, the pool does not
appear to be draped over a Leduc reef margin like other surrounding Nisku pools.
The third reason was that the Nisku Fm. is a blanket carbonate that extends over
hundreds of square miles in this area and is approximately 100 kilometers from
the Chestermere Elkton pool discussed above. There are no known hydrocarbon
accumulations in carbonate pools along the route that was taken between these
two pools. Furthermore the route was designed to remain in the continuous Leduc
and Nisku Fm carbonate complex. The purpose was to observe how the SFD reacted
in an area which has not produced any known carbonate pools, but has numerous
shallow gas pools and fields. In this situation many weak signals and changes in
the SFD recording were observed but, there were no violent or drastic changes
similar to the Chestermere profile.
Due to the nature of the development of the Wayne / Rosedale Nisku Pool the pool
boundaries are not obvious to the casual observer. Most of the surface equipment
is located at central pads with directional wells that are deviated up to 0.5
miles laterally. Although the terrain is open prairie the rolling land also
obscures any vision of the limited surface equipment as the pool is approached
from the southwest. Once again there was no prior warning that a significant oil
pool was being approached. At the south western margin of the pool the SFD
produced a strong anomalous reading that continued until 300m past the
northeastern most wells in the pool. Dramatic variations in the amplitude of the
signal were also observed which may indicate changes in the reservoir quality,
pay thickness or continuity. However, more comprehensive studies must be
undertaken to determine if detailed SFD profiling can be used in reservoir
characterization studies. The characteristics of the SFD waveform are
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Evaluation of SFD Technology Page 4 CONFIDENTIAL
very similar to those recorded over the West Drumheller Nisku "A" pool shown in
SFD Profile 4.
The Wayne / Rosedale Nisku oil pool was profiled on two separate field trips
from opposing directions. Both traverses recorded powerful SFD signatures. These
traverses strongly support the ability of the SFD to detect localized
hydrocarbon accumulations within regionally extensive carbonate banks.
SFD PROFILE 3. DRUMHELLER NISKU "B" POOL
The Drumheller Nisku "B" oil pool is approximately 7 miles north of the Wayne /
Rosedale Nisku pool and was discovered in 1961. It is interesting to note that
34 years elapsed before the next major Nisku oil pool was discovered only 7
miles to the south in this area.
The Drumheller Nisku "B" pool is formed by a combination of drape along the
underlying Leduc carbonate bank margin, structural highs and patch reef
development. This is similar to the trap shown in Figure 2. but with elements of
the traps shown in Figure 5. This pool is thought to be very similar to the
Wayne / Rosedale pool.
A traverse across this pool was done to observe how the SFD would profile a very
complex reservoir. The Drumheller Nisku "B" pool is well known for being
heterogeneous in geographic, as well as reservoir development. Especially along
its eastern flank, oil wells that produce hundreds of thousands of barrels of
oil can be offset by 200m and encounter water filled reservoir.
The SFD Profile of this pool is very abrupt with sharp boundaries. The full
meaning of this signature will require detailed waveform analysis and
comprehensive study of future surveys. However, there is no doubt that the SFD
reacted very dramatically when traversing this pool. The northern boundary of
the pool can be matched to within 200m of the SFD Profile.
SFD PROFILE 4. WEST DRUMHELLER NISKU "A"
The West Drumheller Nisku "A" pool is located 5 kilometers west of the
Drumheller Nisku "B" pool discussed above. This pool is typical of the trap
illustrated in Figure 5.
The trap is created by drape over the underlying margin of the Leduc carbonate
complex. In portions of the pool, both the Leduc and Nisku Formations contain
oil. This pool was traversed in order to compare its SFD Profile with that of
the more irregularly shaped and heterogeneous Drumheller Nisku "B" pool
discussed above. As shown in the SFD Profile the two pools have dramatically
different SFD signatures, even though they produce from the same formation and
are only 5 kilometers apart. These two profiles indicate that like seismic, SFD
Profiles are not unique signatures of the subsurface.
Further study is required to determine the significance of the Drumheller and
West Drumheller SFD Profiles. However, the SFD produced strong anomalous
readings over both pools.
SFD PROFILE 5. CARSTAIRS ELKTON
The Carstairs Elkton Gas pool was discovered in September 1995. The author was
directly involved in the exploration and approval process leading up to this
discovery. The pool is typical of the trap type illustrated in Figure 1. and is
essentially the same play type as the Chestermere Elkton pool in SFD Profile 1.
The major difference is that Chestermere is an oil pool and Carstairs is a gas
and natural gas liquids (NGL) pool.
The Carstairs pool was discovered using a combination of 2 - dimensional (2-D)
seismic and subsurface geological information from surrounding well bores. The
original 2-D seismic interpretation indicated that there was a potential
erosional remnant of the Elkton formation that had not been previously drilled.
The Elkton Fm. to the west of Carstairs had been producing natural gas for over
35 years. The seismic over the prospect was tied to the older Elkton "A" gas
pool and surrounding wells that had not encountered the Elkton reservoir.
Subsequent reprocessing of a key seismic line over the prospect indicated that
the proposed exploration well would not encounter any Elkton Fm. and would
likely result in a dry hole. The reprocessed seismic data was ultimately ignored
and the prospect was drilled based upon the original interpretation. The well is
currently producing 20-25 MMCF and 1000 Bbls of NGL per day.
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Evaluation of SFD Technology Page 5 CONFIDENTIAL
The key lesson in the above history is for the reader to understand that seismic
does not provide a unique interpretation of the subsurface. After fifty plus
years of development, the geophysical industry is still learning how to acquire,
process and interpret seismic data. Furthermore, only in very specific
circumstances can seismic make any indication of the type of reservoir fluids.
The purpose of the SFD traverse was three fold; to compare the signature with
that of the Chestermere oil discovery; determine if the SFD could detect
relatively small carbonate gas pools; and examine the potential size of the
Carstairs discovery. The SFD Profile of the Carstairs Elkton pool clearly
produced a strong anomalous reading. North and south boundaries of the pool were
well defined by the SFD. The profile is similar in character to that of
Chestermere Elkton (SFD Profile 1), except the profile is much tighter,
indicating gas.
SFD PROFILE 6. CROSSFIELD EAST WABAMUN
Crossfield Alberta is famous for the giant Wabamun and Elkton formation gas
pools that have been producing in this area since the late 1950's. The Wabamun
Crossfield member reservoir is a porous dolomito sandwiched between tight
limestone and sealed updip by anhydrite and salts. The trap is illustrated in
Figure 4. The traverse of this reservoir was designed to determine if the SFD
could detect pools that did not have a significant structural component, or a
major change in reservoir thickness that controlled the development of the
reservoir. The blanket like nature of the Crossfield reservoir and tremendous
aerial extent would also indicate to what degree saturation of the SFD can
become a factor. Finally, the Crossfield east pool has several overlying Elkton
pools that are completely enclosed within the boundaries of the Wabamun pool.
This would allow a perfect opportunity to observe SFD signatures over
multi-formation carbonate pools.
SFD Profile 6 is an extremely compressed representation of the SFD signals
recorded in the Crossfield area. The horizontal scaling is 350 to 1 versus 10 to
1 for most of the other profiles illustrated in this report. At the left or
northern end of the profile, a sharp drop is recorded just before the SFD
entered the Crossfield East pool. This drop represents the area separating the
Lone Pine Wabamun pool from the Crossfield East Wabamun pool. South of this
point the traverse clearly shows an elevated SFD signature that extends off the
profile to the south and east. The sharp drops in the profile were recorded in
areas where the Crossfield reservoir is not productive. On the north end of the
profile numerous oil signatures were also noted. In some instances these
coincided with shallow oil pools producing from the Cretaceous age Cardium fm.,
others have not been drilled as of this report. The southern half of the profile
has a very strong, high amplitude signature that occurred as the shallower
Crossfield East Elkton "A" pool was traversed. This high amplitude zone weakens
slowly to the south rather than forming an abrupt drop as seen at Carstairs.
This may be the result of saturation of the SFD. The salient points of this
profile are:
. Elevated base level of the overall SFD Profile,
. Sharp increases in amplitude across known Elkton accumulations,
. Oil signals observed across shallower Cretaceous oil pools,
. significant drops in the SFD signal amplitude in areas where the Crossfield
member of the Wabarmun is known to be tight and non productive.
The SFD Profile shown is not complete across the southern portion of the map
between Airdrie and the portion of the route traveled along Highway 566. This
was due to space and resolution limitations. However, the SFD recorded
anomalous gas signatures over the southern pools as well.
The results of three traverses of the Crossfield area were very encouraging.
They clearly showed repeatability of an SFD anomaly signature. They also
substantiate the ability of the SFD to detect multiple zone pools and their
boundaries, possibly with a high degree of accuracy and repeatability in areas
where regionally extensive hydrocarbon reservoirs are known.
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Evaluation of SFD Technology Page 6 CONFIDENTIAL
SFD Profile 7. Crossfield East Elkton "A"
The Crossfield East Elkton "A" profile is included in the Crossfield East
Wabamun SFD Profile. This SFD Profile is included to show the type of SFD
signature that was obtained from a pool within a pool. The pool is an Elkton
formation outlier that is typical of the trap type shown in figure 1.
The Elkton "A" pool traverse is important because it demonstrates the ability of
the SFD to detect smaller pools within the boundaries of larger pools. The SFD
recorded an abrupt increase in readings entering the Elkton "A" pool despite the
elevated background levels of the underlying Wabamun reservoir. The change in
signal strength closely matches the proven limits of the pool and demonstrates
the credibility of the technology. This ability to detect the Elkton "A" pool
was demonstrated on three separate field excursions.
A further implication is that the SFD could also be used to detect sweet spots
within regional reservoirs. Matching SFD signal characteristics with detailed
mapping of known reservoir production profiles, may expand the usefulness of SFD
profiling to reservoir characterization studies.
SFD Profile 8. Mikwan Nisku
The Mikwan Nisku D2-l pool was traversed to determine whether small patch reefs
could be detected with the SFD. The reservoir trap type is illustrated in Figure
3. It is a single well pool with less than 160 acres of aerial extent. The patch
reefs are encased in a tight anhydrite off reef facies that provides the lateral
and vertical seals. Although these pools are small they are very prolific
producers capable of producing hundreds of BOPD. These pools are very difficult
to detect, even on 3-D seismic.
Several Nisku tests that did not encounter any reservoir were passed en route to
the D2-l pool. These holes provided added credibility for the SFD in the area by
confirming the background signature of the SFD.
SFD Profile 8 illustrates the signature that was recorded approximately 300'
feet west of the producing well on a north to south traverse. The signature
shows an abrupt increase in amplitude and activity of the SFD recording.
There were other anomalous signals recorded in the Mikwan area that are
essentially identical to the Mikwan Nisku D2-l, pool. These anomalies have not
been drilled as of the date of this report.
SFD Profile 9 Fenn West Nisku and Leduc
The Fenn West area has several prolific Leduc pinnacle reefs that were
discovered in the early 1980's. After the initial discovery the area was the
target of intense exploration efforts by the oil and gas industry. However, the
reefs have proven to be a difficult and expensive target to explore for. This is
primarily due to the small aerial size of the pools. Figure 3 is a schematic
diagram typical of pinnacle reef traps.
The reefs are usually less than 320 acres (0.5 sq. mi.) in size and several have
been found that are believed to be less than 35 acres in size. Despite the small
aerial extent, these pools can hold significant oil reserves with the larger
reefs capable of producing several million barrels of oil.
The problem is in locating the reefs without having to shoot large grids of
closely spaced 2-D or 3-D seismic surveys. Therefore the purpose of the
traverses in the Fenn West area were to determine whether the SFD could detect
these small targets. Several producing Leduc reefs were profiled during the
field evaluations. The results were mixed and further work is required before a
conclusion may be reached as to the validity of SFD sampling for this play type.
SFD Profile 9 is the most interesting of the traverses done on this play type.
The SFD did not record any signals across an area that has three known Leduc
pinnacles within 1.5 square miles. However, closer inspection revealed that
three wells were directionally drilled virtually directly under the road that
was used to traverse the area. Two of these wells were dry holes and the third
did not produce enough oil to justify the cost of drilling. The producing wells
that were the target of the traverse can be seen 1000 feet east and west of the
roadway and therefore they were not directly traversed.
This profile raises many questions, especially after the success encountered in
detecting equally small Nisku patch reefs in the Mikwan
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Evaluation of SFD Technology Page 7 CONFIDENTIAL
area. The Fenn West area requires further field work to compare SFD profiles
over other Leduc pinnacle reefs before any conclusions can be reached regarding
SFD Profile 9. It should be noted that this was the only planned SFD traverse of
a known hydrocarbon pool that did not record an anomalous SFD reading.
SFD PROFILE 10 WIMBORNE LEDUC AND NISKU
The Wimborne Leduc and Nisku pools were selected to test the lateral resolution
of the SFD. These two pools represent the trap type illustrated in Figure 5.
They are situated along the updip margin of a Leduc reef complex that covers
several hundred square miles. These pools are different in fluid composition in
that the Leduc reservoir has a substantial associated gas column (45') above a
relatively thinner oil column (15'); while the Nisku D2-A pool does not have an
associated gas column.
During the traverse the Nisku pool was correctly identified as an oil pool,
furthermore the limits of the pool were very precisely defined.
As the Leduc pool was traversed Mr. Liszicasz correctly identified the limits of
the pool, but also made remarks regarding the signal that indicated a much more
gassy reservoir. These remarks were made without any prior knowledge of either
the producing zone, fluid type, or surface facilities in the area.
The results of this traverse lend credibility to claims that SFD Profiling can
provide further indication regarding the nature of the hydrocarbons in a given
reservoir.
SFD PROFILE 11 JUMPING POUND WEST RUNDLE
The Jumping Pound and Jumping Pound West pools are giant gas reservoirs found
along the eastern margin of the Rocky Mountains. The pools are contained in
traps similar to Figure 6, although this is an extremely simplified
representation of these complex traps. These pools were traversed on three
separate road trips with anomalous signatures recorded each time. The geology of
these pools is very complex due to the thrust faulting that has created the
traps. The reservoir and surrounding formations are often inclined at steep
angles or tightly folded, which makes seismic imaging of these reservoirs very
challenging. Thrust faulting creates fractures and fault planes that can enhance
the productivity of the reservoir, but also scatter seismic reflections.
These pools were selected for two reasons. First, to evaluate the ability of the
SFD to detect hydrocarbons in purely structural traps. Second to evaluate the
horizontal resolution of the SFD in heavily structured areas. The later would
provide clues as to whether the SFD would detect the pools at the surface
expression of the thrust faults, or actually above the underlying pool.
For this test the SFD was calibrated to acquire only high energy signals. This
was due to the SFD's propensity to react to strong faulting in the region. The
SFD traverse recorded the strong anomalous signatures directly above the Jumping
Pound and Jumping Pound West pools. Both of the signatures are comparable in
character, however, the larger Jumping Pound West anomaly is stronger and wider
than the signature of the smaller Jumping Pound pool.
These signatures add further credibility to claims that the SFD not only detects
hydrocarbon reservoirs, but inferences can be made to the relative size of the
two adjacent anomalies. Examination of the magnitude of two proximal SFD
signatures may allow geologists to place a relative ranking on the size of
separate prospects.
The clarity of the SFD response over these large structural gas pools was very
impressive.
SFD PROFILE 12 GADSBY CRETACEOUS GAS.
Although the field evaluations of the SFD were targeted at carbonate reservoirs
in central Alberta, many Cretaceous age oil and gas pools were traversed over
the 1,000 miles of surveys. Most of these pools were shallow gas pools (less
than 1,500 - 2,000 feet). However, several significant anomalies were
encountered that when examined in Calgary and were clearly recorded over
Cretaceous age clastic reservoirs. These reservoirs had
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Evaluation of SFD Technology Page 8 CONFIDENTIAL
one common characteristic: they have all produced abnormally high volumes of gas
in comparison to surrounding wells.
A more in-depth study is required before any more detailed conclusions can be
drawn regarding the SFD's effectiveness in clastic reservoirs. SFD Profile 12 is
included as an example of one of these anomalies that were encountered over
significant Cretaceous age clastic reservoirs.
EXPLORATION POTENTIAL OF SFD TECHNOLOGY
During the course of conducting field evaluations of the SFD, several major
anomalous reactions were observed that have not been drilled at this time. Each
of these anomalies requires further investigation before it would be selected as
a drilling prospect. Ultimately, subsurface geology and seismic would have to be
evaluated in conjunction with multiple SFD traverses from various directions.
These anomalous SFD recordings are both very intriguing and promising.
SFD PROFILE 13. UNDRILLED PLAINS AREA ANOMALY
This anomaly was recorded in the plains area of central Alberta. The anomaly
displays typical characteristics of a major gas, or gas and NGL's pool. Similar
SFD signatures were recorded in the Chestermere, Airdrie and Crossfield areas
where several large Elkton Fm. pools have been producing for up to 30 years.
It is noteworthy that this anomaly extends for over 2 miles in length, and is
untested.
SFD PROFILE 14. UNDRILLED POTENTIAL FOOTHILLS STRUCTURE ANOMALY
This SFD anomaly was recorded in the foothills of Alberta. Readers are
encouraged to compare this anomaly to the SFD signature of the Jumping Pound
West Pool, illustrated in SFD Profile 11, which has established reserves of 1.8
TCF of natural gas.
The above examples are two of the six promising anomalies that were encountered
during the field evaluations. These undrilled anomalies were documented to
illustrate the exploration potential of the SFD.
SUMMARY NOTES
SFD profiling produced a 95% success ratio in identifying known oil and gas
accumulations within carbonate reservoirs. Only one profile produced
questionable results. This profile was taken along a north south road which had
three wells drilled directionally under it. One of these wells encountered the
D-3 reef but was a marginal producer. The other two wells were abandoned, yet
300m, east and 300m west of the road two D-3 pinnacles are currently producing
oil and have produced in excess of 2 MMBbls of oil to date. If the SFD is
accurate in locating pinnacle reefs with an error of less than 250m, then this
apparent failure to produce an anomaly becomes an exceptional example of the
lateral definition of SFD. The SFD Profile for this traverse was discussed in
SFD Profile 9 above.
The immediate question that comes to mind is "what does SFD actually measure?".
The answer to this question is unknown to the author, but several possible
answers can be immediately ruled out.
. The SFD does not react to surface or airborne hydrocarbons. There would be
a massive reaction every time you approached a gas station if this was the
case, and the SFD does not detect gas stations!
. The SFD does not appear to output a signal and read the reflection or
reaction from that signal. It is a passive receiver of signals.
. The SFD does not appear to be influenced by high voltage power lines.
Dozens of high voltage lines were crossed during the field tests with no
reactions recorded.
. The SFD does not appear to react to the noise generated by surface or
underground oil and gas field
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Evaluation of SFD Technology Page 9 CONFIDENTIAL
operations. Identical SFD signatures can be found where one anomaly is
directly attributed to an existing oil or gas well and the next anomaly one
mile away has yet to be drilled.
. SFD signals are not influenced by input from the computer operator
monitoring the SFD signals, I tried.
. The SFD does not appear to react to, radio signals, microwave signals,
cellular phones or any obvious electrical / electronic interference outside
of the instrument.
. Furthermore during the field tests:
. The SFD was not linked to a GPS system during data acquisition.
. Time and date information was recorded automatically with the SFD signals.
This information cannot be altered without access to the software
developers source code. I confirmed this through an independent source that
the software developer will not, and did not, supply the source code to
anyone.
. Large portions of the SFD field excursions did not record any exceptional
SFD anomalies. A review of these areas was conducted using AccuMap and
knowledge of the regional geology. The findings indicated that significant
hydrocarbon bearing carbonate reservoirs were not expected.
The SFD field tests were conducted in all types of weather conditions (not on
purpose). During the tests weather ranged from plus 25 degrees C to freezing,
brilliant sunshine to heavy snow and light overcast to heavy rain (all on the
same day). After all this was Alberta. The weather conditions did not appear to
have any adverse affect on the performance of the SFD.
Advantages of SFD Profiling
- ---------------------------
SFD Profiling of oil and gas reservoirs has many advantages over currently
accepted remote sensing exploration and development tools.
The Key Current Advantages are:
1. Remote indication of reservoir fluid content, i.e. oil, gas or water.
2. Potential for very precise lateral definition of hydrocarbon accumulations.
3. Speed of acquisition and interpretation of the data dramatically reduces
the amount of time and cost required to conduct wide area evaluations.
4. Interpretations can be made in the filed on a real time basis.
5. Portability of the SFD instrumentation allows for rapid deployment.
6. Future development will allow for conducting airborne SFD surveys.
7. Large crews and expensive support equipment are not required to operate the
SFD unlike Geophysical Surveys.
8. SFD Profiling is a non-intrusive, environmentally friendly technology.
Current Limitations of the SFD
The field evaluations have raised questions and highlighted current limitations
regarding the applicability of SFD profiling in the Canadian oil and gas
industry.
The key current limitations are:
1. Surface access. The SFD is currently transported by a specially equipped
vehicle that requires smooth roads and speeds in excess of 10-20 kph. At
higher speeds better resolution appears to be obtained. The SFD appeared to
perform best at highway speeds.
2. The SFD has not evolved to the point where the anomaly can be tied to a
specific depth interval or formation.
3. Pool signatures change depending upon saturation levels of the SFD.
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Evaluation of SFD Technology Page 10 CONFIDENTIAL
4. The SFD does not record a unique signature for identical reservoirs.
5. Oil and gas have different SFD signatures, but the interpretation of these
signatures is a combination of both science and art.
6. Areas with complex, multi-layered oil and gas accumulations are more
difficult to interpret with the SFD. However, every known major oil or gas
pool that was traversed during the field tests was matched to an anomalous
SFD profile.
7. Direct well ties for evaluation purposes are impossible in most pools due
to the spacing regulations in Alberta. Given the apparent resolution of the
SFD this becomes a factor in field testing.
The above limitations are a combination of the following factors.
. The SFD is still in the early stages of development.
. Surface constraints are a physical barrier to the operation of the vehicle.
. Insufficient testing has been undertaken to determine whether the SFD can
be calibrated to convey information from specific depth ranges, formations
or hydrocarbon types.
Recommendations
The biggest limitation to the operation of the SFD at this time is surface
restrictions. The current method of transporting the SFD and conducting surveys
is by vehicle and reasonable quality road surfaces are required.
In order for the SFD to become more versatile and effective it must learn to
fly!
This will open large areas, that lack surface access, to be surveyed using the
SFD. This will also allow the technology to be utilized in remote basins,
frontier areas and ultimately in offshore surveys.
Further testing should be undertaken to investigate the applicability of this
technology to reservoir characterization studies.
Work should also be initiated to develop the technology to combine 2-D profiles
into three dimensional representations of the SFD data.
Conclusions
Based upon the field trips conducted and empirical results obtained from this
evaluation, it is clear that the SFD technology has excellent potential. The
technology cannot, and is not anticipated to be used in isolation from other
conventional oil industry tools and methods. However, this technology
introduces a new and powerful tool that should improve the industry's ability
to discover significant new hydrocarbon reserves.
Only through further research, field application and integration with current
exploration tools, will the full potential of the SFD ever be achieved. However,
the above noted potential can only be realized if the oil and gas industry
accepts the challenge of embracing this technology.
. It would be a tragic mistake to dismiss this technology simply because the
industry does not understand it.
About the Author
- ----------------
Mr. Morris is an independent geologist with 15 years of multidisciplinary
experience in oil and gas exploration in western Canada. He has been involved in
oil and gas exploration and development; seismic acquisition, processing, and
interpretation research; and new venture developments. He is currently a minor
shareholder in Pinnacle Oil International Inc. through participating in the
March 1995 public offering of Regulation D shares on the OTC NASDAQ Exchange.
At the time of undertaking this evaluation Mr. Morris did not have any direct
affiliation with Pinnacle Oil International, Inc. or any of its principles. The
report was prepared with the cooperation of the principals of Pinnacle Oil.
However, the design and planning of the field trip routes, selection of pools to
be evaluated, findings and conclusions are entirely those of the author.
The author accepts no responsibility for the actions or financial decisions of
third parties that are based upon the information or conclusions provided
herein.
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Chestermere - Elkton SFD Signature
West to East Traverse
SFD PROFILE 1
The Chestermere Elkton oil pool was discovered in 1995. The pool boundaries had
not been fully delineated when this SFD profile was recorded. Wells within the
pool can produce up to 800 BOPD. Older Elkton wells 1.5 miles north have
produced in excess of 950,000 barrels of oil and are currently producing
approximately 135 BOPD each. Both pools are approximately 7,000 feet deep. The
reservoir is a dolostone with 8-11% porosity and an average thickness of 40-50
feet.
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Wayne Rosedale Nisku - SFD Signature
South to North Traverse
SFD Portfile 2
The Wayne Rosedale Nisku "A" and "B" pools were discovered in 1994. The pool
boundaries had not been fully delineated when this SFD Profile was recorded.
The pool was traveresd on two separate occassions from opposing directions with
comparable results. Oils is drawn from a dolostone reservoir at 5,800 feet and
individual wells are capable of producing up to 1,200 BOPD.
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Drumheller - Nisku SFD Signature
South To North Traverse
SFD PROFILE 3
The Drumheller Nisku "B" oil pool was discovered in 1961. The pool boundaries
have been well delineated when this SFD profile was recorded. Wells within the
pool have produced at rates of up to 1,000 BOPD. The pool has proven reserves
of 36 million barrels of oil in place. The reservoir is a dolomite with an
average of 7.6% porosity and 30ft of pay thickness at a depth of 5,291 ft. The
pool was surveyed twice along the same route, but from opposing directions on
separate field trips. On both traverses the SFD produced an anomalous reading.
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W. Drumheller - Nisku SFD Signature
North To South Traverse
SFD PROFILE 4
The West Drumheller Nisku oil pool was discovered in 1952. The pool boundaries
have been fully delineated when this SFD profile was recorded. Wells within the
pool have produced at up to 800 BOPD. The pool has established reserves of 63
MMBbls of oil in place. The reservoir produces from a dolostone with 7-8%
porosity and an average thickness of 46 feet at a depth of 5.500 feet.
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Carstairs - Elkton SFD Signature
North to South Traverse
SFD PROFILE 5
The Carstairs Elkton gas pool was discovered in 1995. The pool boundaries had
not been fully delineated when this SFD profile was recorded. Wells within the
pool can produce up to 25 MMcf/d and 1,000 barrels of natural gas liquids per
day. The reservoir is a dolostone at a depth of 7,600 feet.
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CROSSFIELD E.- Wabamun SFD Signature
North To South Traverse
SFD PROFILE 6
The Crossfield East Wabamun "A" pool was discovered in 1954. Recent drilling in
the area indicates that the pool boundaries have not been fully delineated.
Established reserves are 1.3 TCF of sour gas, (33% H\2\S). The reservoir
produces from a porous dolomite sandwiched between tight limestones. The trap is
created by facies change to tight anhydrides and salts to the east. The average
thickness of the reservoir is 32' with 7% porosity at a depth of 8,500 feet.
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Crossfield E.- Elkton "A" SFD Signature
North To South Traverse
SFD PROFILE 7
The Crossfield East Elkton "A" pool was discovered in 1960. The pool boundaries
have been fully delineated. Established reserves are 70 BCF gas and 6.6 MMBbls
of oil. The reservoir produces from a porous dolostone subcriop outlier.
The average thickness of the reservoir is 34' with 6% porosity at a depth of
7,520 feet. The pool covers an area of 3.7 sq. mi. and lies 1,000 feet above the
Crossfield East Wabamun gas pool.
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Mikwan - Nisku SFD Signature
North To South Traverse
SFD Profile 8
The Mikwan Nisku D2-1 oil pool was discovered in 1994. The pool is a single
well patch reef that is encased in anhydrite. The well was producing at 170
BOPD when this SFD profile was recorded. It is approximately 7,000 feet
deep and produces from a dolostone with an average porosity of 9%.
Estimated reserves are 1.6 MMBbls in place. These patch reefs are less than
160 acres in size and are very difficult to detect on 2-D and 3-D seismic.
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Fenn W. - Leduc, Nisku SFD Signature
South To North Traverse
SFD Profile 9
The seven Fenn West Leduc (D3) and Nisku (D2) oil pools were discovered in
1982. The pools produce from Leduc pinnacle reefs that cover 34-160 acres,
as well as from the overlying Nisku. Wells within the pools can produce up
to 1,000 BOPD and have have produced in excess of 2 MMBbls of oil. The
reservoir is a dolostone with an average porosity of 7%. Pay thickness
varies from 60-180 feet at a depth of 5,800 feet. This small cluster of
pools was not detected by the SFD. However, only one very marginal pool,
the "D2-D/D3-G", was directly taversed with the SFD.
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Wimborne Leduc & Nisku SFD Signature
North To South Traverse
SFD Profile 10
The Wimborne Leduc and Nisku pools were discovered in 1954 and 1956. The
Leduc pool has established reserves of 82 MMBbls and 522 BCF, and produces
from the eastern margin of an extensive Leduc carbonate complex. The Nisku
pool is 1 mile west and produces from a dolostone with proven reserves of 4
MMBbls. The pools are approximately 7,300 feet deep. The reservoirs have an
average porosity of 7 & 3% respectively and average pay thickness of 60 and
62 feet respectively. The SFD Profile of the Leduc indicates a much higher
gas content while the Nisku pool's signature indicates oil.
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Jumping Pound West - SFD Signature
West to East Traverse
SFD Profile 11
The Jumping Pound West Rundle gas pool was discovered in 1961. The pool
boundaries have been fully delineated when this SFD Profile was recorded.
The pool is approximately 10,895 feet deep, with 6% average porosity and an
average pay thickness of 118 feet. Established reserves are 1.9 TCF of gas
in place. The pool is typical of the structural traps that are created
along the thrust belt of the eastern margin of the Rocky Mountains. Due to
the complex nature of the geology, seismic interpretation of these pools is
challenging.
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Gadsby Cretaceous - SFD Signature
North To South Traverse
SFD PROFILE 12
This profile was recorded while driving on an unmarked secondary road.
Later examination of detailed maps identified the location of the
signature which was matched to an offsetting Cretaceous gas well that
has produced in excess of 9 BCF of gas. The producing zone is at 3,700
feet and is approximately 25 feet thick. Estimated reserves are 13-15
BCF which is 4 times higher than would be expected from this area. The
profile is important because it clearly demonstrates the ability of
the SFD to respond to hydrocarbons in both clastic and carbonate
reservoirs. Only very prolific clastic reservoirs produced noticeable
anomalous SFD reactions during the course of these field evaluations.
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Undrilled Prospect - SFD Signature
North To South Traverse
SFD PROFILE 13
The SFD Profile shown above was recorded September 18, 1996. The
anomaly has similar characteristics to the Elkton profiles recorded at
Chestermere, Airdrie and Crossfield. The map shown below indicates the
scale of the profile. Map details have been removed in order to retain
confidentiality. This anomaly will be profiled with more North - South
and East - West traverses by Pinnacle Oil International Inc.
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Undrilled Foothills - SFD Signature
West to East Traverse
SFD PROFILE 14
The Jumping Pound West Rundle gas pool, (illustrated in SFD Profile
11) was discovered in 1961 and has established reserves of 1.9 TCF of
gas in place.
The SFD Profile above is not from the Jumping Pound West pool, but
displays remarkable similarities. The map below indicates the width
of the anomaly. All location and surrounding well information have
been removed to retain confidentiality.
[GRAPH APPEARS HERE]
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