Second drilling to target alternative structure after low gas saturation deemed uneconomical

The Korea National Oil Corporation (KNOC) announced on the 21st that it will no longer proceed with drilling the "Daewang Whale" structure in the East Sea deep-sea gas field. Analysis of samples collected during the first drilling in early this year revealed that the gas saturation rate was only in the 6% range, far below the initially expected 50-70%, and even this level was deemed uneconomical. Consequently, the company concluded that further drilling was unnecessary. The second drilling, which will involve investment from foreign companies, is expected to target one of the remaining structures excluding the Daewang Whale.

On the same day, KNOC stated that no recoverable gas was found in the Daewang Whale structure drilled earlier this year. The actual gas saturation rate was 6.3%, significantly lower than the projected 50-70%. Additionally, only "biogenic gas from the decomposition of organic matter like fish and plankton" was discovered, not "thermogenic gas" formed under heat and pressure.

For economically viable oil or gas, four conditions -- reservoir rock, cap rock, source rock, and a trap -- must be met. However, no "trap," a space that prevents oil or gas from leaking, was formed, and there was no evidence of migration of thermogenic gas from the source rock. A source from KNOC stated, "Based on these results, we have no plans to pursue additional exploration of the Daewang Whale structure."

Nonetheless, the reservoir and cap rocks were found to be similar to initial expectations. The reservoir rock, initially projected at 69 meters thick, measured 68.5 meters, while the cap rock, expected to be 209 meters thick, was confirmed at 269.5 meters. The porosity rate also exceeded the anticipated 18-30%, recording 30.8%.

As the analysis of the first drilling concludes, the outline of the second drilling project is gradually taking shape. KNOC revealed on the same day that multiple foreign companies participated in the second drilling bid. After a thorough review of the companies that submitted bids by the final deadline on the 19th of last month, the corporation plans to designate a preferred negotiator if a suitable investor is identified. Earlier, KNOC initiated the bid for investment in the East Sea offshore block in March and extended the bidding period by three months at the request of investors.

Since KNOC has definitively ruled out further exploration of the Daewang Whale structure, the second drilling is likely to proceed at one of the remaining structures. If the future preferred negotiator does not accept Actgeo's analysis of the "seven promising structures," there is a possibility of re-evaluating all promising structures. However, even in this scenario, the likelihood of re-exploring the Daewang Whale structure remains low.

Korea National Oil Corporation Halts Daewang Whale Drilling