A production test is to get underway on an oil discovery offshore Brazil that is expanding nicely in terms of its size and scope as operator Karoon Gas Australia continues to firm up more reserves.

The test of the Australian independent’s Kangaroo-2 appraisal well in Block S-M-1165 in the Santos Basin offshore Brazil will be carried out over the course of the next few weeks, along with a decision on whether to drill a potential side-track well and whether to also carry out a coring program on completion of the test.

The Olinda Star semisubmersible rig will next move to drill and evaluate the Kangaroo West prospect approximately 4.5 km to the west of the main Kangaroo salt structure. The Kangaroo-2 appraisal well is located approximately 300 m (984 ft) updip and 4 km south of Kangaroo-1, and is the first well in the current Santos Basin exploration and appraisal drilling campaign.

The Kangaroo-2 results will be crucial, says Karoon, in assessing the commerciality of the oil field, and will be the basis for the Front End Engineering and Design (FEED) phase bringing the project a step closer to commerciality. Karoon hired Worley Parsons-IntecSea last year to carry out a pre- FEED study on Kangaroo, to be carried out in parallel with the planned drilling campaign to help fast-track any potential development decision.

DI has previously reported that a leased FPSO is on the cards for Kangaroo (see DI, 16 December 2013, page 1, and DI, 27 October 2014, page 7), although at this early stage the operator still has plenty of options. The discovery lies in around 400 m (1,312 ft) of water.

Karoon has previously gone on record to say that prelim­inary internal economic evaluation on Kangaroo was “highly supportive of a commercially significant project”.

Karoon holds a 65% interest in, and is operator of the S-M-1165 block. An exploration and appraisal drilling campaign, operated by Karoon, will continue during the first half of 2015. The rig contract provides Karoon with two firm wells plus two option wells, and in the event of a successful drilling in the first two wells provides maximum flexibility for further appraisal of the Kangaroo oil discovery, including testing and appraisal of Kangaroo West, said the company. The Olinda Star rig is drilling the entire well program.

“Due to the large size and proximity to Kangaroo, a successful outcome at Kangaroo West-1 would materially add to any possible development of the Kangaroo oil field,” it stated.

The salt flank play was first proven by Kangaroo-1 with that well hitting a 76 m (249 ft) gross oil column, with oil recovered to surface from wireline DSTs. Results of the Kangaroo-2 well further confirm the viability of the play, says Karoon. Kangaroo West-1 lies on the western flank of the same salt structure as Kangaroo-1 and has the same trap type and reservoir and seal intervals that have been mapped into the prospect from surrounding wells.

The Kangaroo-2 well confirmed the presence of light oil in five separate zones, intersecting a larger than expected 250 m (820 ft) gross oil column, with 135 m (443 ft) net reservoir pay. No gas cap was penetrated. Work is continuing to assess the impact of the well results on the contingent resource size given the absence of an anticipated gas cap, and the impact of shallower oil water contacts in some of the sands, added Karoon.

Karoon is on the lookout for a farm-in partner or partners for the eventual likely development, but its options should increase substantially, especially if the Kangaroo West well comes in.

Karoon has 65% stakes in Santos Basin blocks S-M-1037, S-M-1101, S-M-1102, S-M-1165 and S-M-1166.

Other development options for Kangaroo could include possible subsea tieback options to other fields in the vicinity such as Bauna and Piracaba (formerly Tiro and Sidon) in block BM-S-40. They have been producing since 2013 via the 80,000 b/d capacity Cidade de Itajai FPSO on Bauna.

Petrobras also has another discovery, Piracuca, about 5 km east of Karoon’s blocks in a similar water depth, that has estimated reserves of 550 MMbbl of oil and could also be a factor in any development decision. Karoon also has its operated Bilby discovery nearby, as well as the Emu and Emu East prospects. Bilby, which hit a 320 m (1,050 ft) oil column with a probable gross oil column of 560 m (1,837 ft) and oil of 28 degrees API, has a lower net to gross ratio and a poorer reservoir than Kangaroo, which means it will need further appraisal and evaluation work.

Karoon also has two nearby pre-salt targets, Stingray and Great White, that it has carried out preliminary engineering studies on, examining the technical challenges of drilling these targets.