1/14

Project Report

N° PR-GE-08.01

West Medvezhye 1

Siberia

Russia

Project N° PR-GE-08.01

Operated by GeoDynamics Research S.r.l., Rovereto (TN) Italy

June 2009

Abridged version for publication

2/14

DISCLAIMER

The technical results, conclusions and recommendations contained in this report are

based on the Low Frequencies Passive Seismic Spectroscopy Method provided by

GeoDynamics Research IPDS® Technology with the objective to reveal prospective oil and

gas areas and substantiate the results from a prior gas seismic tomography survey.

The work was carried out according to the standard of skill and care that is expected of

professionally qualified and experienced consultants. However, GeoDynamics Research

does not warrant operational decisions based on any results, conclusions or

recommendations and accepts no liability for any loss, damage or costs that may be

incurred or sustained through the use of results, conclusions or recommendations of this

report.

3/14

Table of contents

1. Summary ........................................................................................................4

2. Data Acquisition ...............................................................................................5 2.1 Description of Acquisition ..................................................................................5 2.2 Field Acquisition and Quality Check.....................................................................8

3. Processing Techniques ......................................................................................8

4. First Results.....................................................................................................9

5. Discussion of Results ...................................................................................... 10

6. Conclusions and Recommendations................................................................... 13

4/14

1. Summary

This project report presents the results of the Geospectra IPDS® survey conducted in the

West Medvezhye area for “Victoria Oil and Gas” Plc, London.

The survey area as a part of the West Siberian Plain is located in Siberia, Russia, 25 km

South-West of the Medvezhye gas field and 12 km to the North-East of the Nadym oil

and condensate field.

The main purpose of the Spectrometric IPDS® survey was to substantiate the results

from a prior gas seismic tomography survey conducted in the West Medvezhye license

area of the client. The survey area included Well 103 which was drilled in the center of

the survey area in 2006 and revealed the presence of hydrocarbons.

The acoustic recordings acquired in the field were processed at the Head Office of

GeoDynamics Research in Italy, allowing state-of-the-art quality control, signal

processing and filtering.

The processed results show two areas displaying relatively high Low Frequencies Energy

(RHI = Reservoir Hydrocarbon Indicator) values which have been highlighted in Figure

with Well 103 being at the edge of one of the two areas.

These two areas represent interesting exploration targets according to the GeoDynamics

Spectrometric IPDS® technique. The present survey therefore indicates areas with higher

prospectivity and areas with lower prospectivity within the limits of the anomaly

measured during the geochemical survey completed in 2006.

5/14

2. Data Acquisition

2.1 Description of Acquisition

From the base camp at the border of the survey area tracked vehicles were used to reach

the measurement points due to the surface conditions.

The measurements took place along profiles which were agreed with the client (Figure 4).

Daylight lasted four hours a day. Therefore, in general, three setups per day were

achieved (6 data points).

Each measurement setup consisted of three Recording Stations. Two of them were

Kinemetrics Quanterra Q330 24 bit ADC and one station Kinemetrics K2 24 bit.

All the Seismometers were GeoDynamics Seismometers SM-3Kv verticals with

electromagnetic sensor that measured simultaneously at 500 m from each other, as

presented on the Figure 1.

Before the acquisition campaign started, all the Seismometers were tested in a low

temperature laboratory at the Physics department of University of Trento to guarantee

their functioning [as per internal report “GDR Report - Test at Low Temperature on GDR

Seismometers SM-3kv”]. The working performance of the Seismometers at -37 °C was

flawless.

All ADC converters have temperature limits down to -40 C°, so the acquisition team did

not have any particular technical problem with the GDR Equipment.

Figure 1: Acquisition setup

Mobile and independent measurement units were used. These units are suited for the

extreme weather conditions and working environment of this survey.

Each measurement point was located with a Garmin GPS unit. Synchronization of the

measurements was also achieved by accurate GPS timing of each recorder in a continue

loop modality.

6/14

The third recorder and seismometer couple was used as a reference unit and measured

continuously on Well 103 throughout the entire measurement day.

To avoid additional unwanted artificial noise, measurements started after all crew

members and vehicles had reached a distance of at least 500m from each measurement

point.

Figure 2: Seismometer placement

Figure 3: Shows examples of the units used, with the Seismometer coupled to

the frozen ground

7/14

Figure 4: Data point map

8/14

2.2 Field Acquisition and Quality Check

After each measurement, the recordings were checked directly in the field to control the

reliability and quality of the data.

No significant artificial noise source was recorded in this remote area, as evidenced also

by inspection of the spectrograms and PSDs of the measurements. As an example of the

calibration measurement points, at CAGE 12 and CAGE 13 no artificial noise was

recorded and the PSD and Spectrogram were clean.

At the beginning, in the middle and at the end of the survey calibration measurements

were performed to calibrate sensors and recorders.

In general, calibration is also used to verify that the coupling with the ground was

optimal and consistent. The analysis was made by using coherence methods, as it is

necessary that the Seismometers are equally calibrated, i.e. they produce the same

response when they are close to each other. The Seismometers are calibrated within 5%

which is within our calibration limits.

3. Processing Techniques

The total number of measurements was 84.

These included 38 calibrations and 4 reference measurements.

The total number of useful data points measured was 42 (this number did not include

calibrations or reference measurements).

The total number of measurements processed was 38.

The survey was conducted in an area of the West Medvezhye license area where a prior

gas seismic tomography exploration identified an anomaly.

To better define and localize the measured anomaly, several data points (Figure 4) were

measured outside the limits of the anomaly.

The data received from the field crew was reviewed by staff at GeoDynamics Research

offices in Rovereto, both in the time domain and in the frequency domain to ensure that

all recordings used were of acceptable quality.

This was especially important because of the very low temperatures (-36°C to -8°C) at

which the Seismometers and recorders were used. No significant problems were

encountered and no artificial noise had a negative impact on the data analysis.

The objective of the Geospectra IPDS® approach is to process passive seismic data, using

different types of signal analysis methodology, to identify and isolate particularities,

related to hydrocarbon reservoirs.

The objective of the passive seismic data pre-processing in the time and frequency

domain is to clean the signals from potential human noise, and then find out as clearly as

possible, using particular methodologies of analysis, the earth seismic background. We

include the Oceanic Peak at 0.25 Hz, as we use it as a reference during all the steps of

the processing.

9/14

4. First Results

Result of the data processing is the creation of the RHI map (Reservoir Hydrocarbon

Indicator).

Results are reviewed by reference to all the processing procedures adopted by

GeoDynamics and applied to many fields in different parts of the world. The only

difference is in the order of filtering and windowing of the signals to reflect the

background noise of particular areas where the signals were acquired.

Figure 5: Iso-Energy Spectrometric map measured in terms of RHI values.

Values at the rim of survey are the result of only one measurement.

10/14

All the Iso-Energy curves in the RHI map are created from the Low Frequencies Energy.

The Iso-Energy map from the passive acoustic spectroscopy shows then 3 types of

Area:

• very low (Yellow),

• low (Light Red) and

• potential exploration targets (Red)

5. Discussion of Results

Most surveys conducted by GeoDynamics Research have revealed a positive correlation

between hydrocarbon presence and the RHI values measured. The positive correlation

appears to be linked to the cumulative thickness of hydrocarbons from all hydrocarbon

bearing reservoirs. Red Areas thus contain potential exploration targets.

Any parameter that influences hydrocarbon content and distribution will be expected to

influence the RHI indicator. These parameters include structure, stratigraphy and as well

as porosity and permeability. The combination of these factors will determine the

distribution of hydrocarbons in the subsurface. The RHI map might reveal structural

elements, but only where these have a major influence on the distribution of

hydrocarbons in the subsurface.

By analyzing the Spectrographic map and making a path between the measurement

locations we can analyze all the Power Spectral Densities (PSD) inside the Hydrocarbon

potential Areas. We can also see from the analysis that all the PSDs have similar

characteristics.

High RHI values in certain areas are related then to an increase in the Energy content of

the measured signal with respect to the same frequency window from measurements

displaying lower RHI values.

This means that RHI values are always relative to the local acquisition, and should not

be considered as an absolute indicator.

The low number of data points collected in the West Medvezhye survey does not allow us

to achieve the necessary resolution and, therefore, we have had to increase the

uncertainty in some areas as shown in the yellow zones. The uncertainty could also be

connected with actual lower hydrocarbon potential.

Values at the rim of the survey area which result from only one measurement should be

considered less reliable, as the case for example of the acquisition point CAGE28A to the

west of the measured area, shown in the Figure 6.

To have more resolution on the Spectrographic map and avoid systematic errors that

may have occurred during the survey and to improve the processing in the border area of

the survey, a greater number of data points could be collected on a subsequent survey

for West Medvezhye.

11/14

Figure 6: Iso-Energy RHI map with measurement points. Values at the rim of

survey are the result of only one measurement and thus less reliable.

12/14

Figure 7: Iso-Energy Spectrographic map with measurement points.

Red Areas as potential exploration target

13/14

Figure 8: 3D Iso-Energy Spectrographic map with measurement points.

RHI values are on Z. Red Spot is the most interesting potential exploration area

6. Conclusions and Recommendations

The Iso-Energy Spectrometric map (RHI map) is the final result of the Passive Seismic

Interferometry Geospectra IPDS® processing technique.

• Areas with higher values of RHI represent areas with higher likelihood of

hydrocarbon accumulations.

• Two areas have been highlighted in red in Figure 7 and they represent

potential exploration targets.

• The location of Well 103 is placed at the limits of one of these areas.

• Only where there is consistent well control would it be possible to derive a

direct correlation with hydrocarbon column thickness. One well is not

sufficient to determine a reliable correlation.

14/14

• The surrounding measurements play an important role to close the Iso-Energy curves

(Figure 7). Without additional measurements we are not able to close the Iso-Energy

paths completely. Consequently, we have had to make extrapolations which may not

always be consistent.

• In order to improve the resolution, it would be advantageous to take additional

measurements in our next survey campaign, and thus reduce the uncertainty which is

always present.

• The Iso-Energy map generally gives an estimation in terms of quantity, but in this

case we are not able to provide a reliable estimation of the NPZ (Net Pay Zone), due

to insufficient data to make a correlation.

It is important to remark that any Passive Spectroscopy IPDS® survey should be

used as a complementary approach to existing exploration methods and should

not be expected to produce 100% correlations with hydrocarbon accumulations.