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June/July 2003 |
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Industry News |
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Department of Industry and Resources Director General, Jim Limerick, and Geological Survey of WA Executive Director, Tim Griffin, officially open the new Perth Drill Core Library on April 16th. |
New $5 MM Perth Core Library Opened A $5 MM state-of-the-art core library, with a capacity to store 1,000 km of core samples over the next 15 years, was opened by the WA Department of Industry and Resources Director General, Jim Limerick, recently. Limerick said the core library would allow oil and gas and mineral explorers to examine drill core from all key prospective areas throughout WA before they made a financial commitment to invest in more capital-intensive exploration programs. Limerick said the new library would provide companies with an opportunity to re-evaluate an area's prospectivity and try out new mineralisation models on old data. "The results can be pivotal to a company's success when deciding to go ahead and make further investigations", he said. The library collection will also be available electronically through the internet. The Perth Core Library is the second and complementary phase of the State Government's $9 MM WA core library commitment to help WA's exploration industry in its quest for new discoveries. "The core libraries in Perth and Kalgoorlie are some of the many ways the Geological Survey continues to assist explorers", Limerick said. "This vast repository of geoscientific knowledge is a tremendously valuable asset for academic researchers." Drill core representing all petroleum wells drilled in the State, both onshore and offshore, as well as examples of mineralisation styles found outside the Goldfields, are documented and stored at the library located in the Perth suburb of Carlisle. "Access to such comprehensive data will give WA explorers in particular a head start when formulating their new exploration programmes", Limerick said. |
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Northern
Australia Release Areas
Northwestern
Australia Release Areas
Southwestern
Australia Release Areas
Southeastern
Australia Release Areas
Southern
Australia Release Areas. |
Government Releases 35 New Areas For Offshore Exploration The potential for petroleum discovery in Australian waters has been substantially boosted with 35 new offshore areas set to be opened up for exploration. The sites being made available for open bidding include: 15 areas off Western Australia; seven areas off the Northern Territory; four areas off Victoria and Tasmania; two areas off South Australia; and three areas off the Ashmore and Cartier Islands. Federal Resources Minister, Ian Macfarlane, said the areas will be the principal release of offshore acreage this year and will be subject to the work programme bidding system. "I'm confident Australia's attractiveness as a place to invest will lead to strong bids for these areas", Macfarlane said. Bids for 18 of the areas will close on September 25th, 2003. Bidding for the remaining 17 areas will close on March 25th, 2004. WA State Development Minister, Clive Brown, said the fact that 15 of the federal releases were off WA showed that the State is a highly prospective petroleum province. Brown also called for expressions of interest in 21 exploration permits located in coastal waters or onshore within the Bonaparte, Carnarvon and Perth basins. "All areas are subject to the work programme bidding system and the successful applicants will be offered exploration permits for initial terms of six years", Brown said. WA coastal waters and onshore release areas close on September 18th. Information about WA's release areas is available from the Department of Industry and Resources' Web site at: http://www.doir.wa.gov.au. A CD-ROM on the release areas is also available from the Department's Petroleum Division on (08) 9222 3622. Northern Territory Business, Industry and Resource Development Minister, Paul Henderson, said the release of the acreage off the Northern Territory and Ashmore and Cartier Islands would lead to millions of dollars worth of investments in oil and gas exploration in the region. "The released acreage is in close proximity to the Greater Sunrise fields and traverses the imminent gas pipeline from the Bayu Undan field", Henderson said. "It includes five areas in the Bonaparte Basin, just south of Greater Sunrise and in the vicinity of the Petrel and Tern fields, which possess high prospectivity for oil and gas. A further two areas in the Arafura Sea will attract explorers to assist in locating further oil and gas resources." The three blocks in the Ashmore and Cartier Islands area, administered by the NT, are adjacent to the ex-Skua oil field. Meanwhile, Geoscience Australia is now providing free online access to a range of vital information for petroleum explorers. For the first time, any exploration permits arising from this release will be subject to a maximum of two, five-year renewals. This new initiative follows from the 2000 review of petroleum legislation against competition policy principles. Information
on the release areas is available at www.industry.gov.au/petexp.
Copies of the 2003 release CD-ROM can be requested from the Department
via e-mail to petroleum.exploration@industry.gov.au |
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WA To Push For Flow Through Share Scheme The Western Australian government will lobby the federal government to introduce radical tax changes aimed at boosting exploration in the State. Speaking at a conference in Perth recently, Premier Geoff Gallop said a healthy exploration environment was critical to the mining industry. "While there are signs that conditions are improving, the long-term decline in exploration expenditure is of serious concern", Gallop said. "For this reason, the State Government is making strong representations to the Commonwealth to introduce what is called a flow through share scheme. The scheme allows for companies to pass on to shareholders tax deductions they receive in return for spending money on exploration." The flow through scheme was a key recommendation of the Bowler Inquiry into exploration investment. It argues for 150% tax write-offs for investors with taxable incomes who buy shares in greenfields exploration companies. "For example, if a person on a 40% tax rate invested $10,000 in an exploration company, that person would be entitled to a rebate of 40% of $15,000. That is, the investor would receive a return of $6,000", Gallop said. He
said a similar scheme introduced in Canada had revived that country's
exploration industry. Gallop said he was expecting the issue to be debated
at Cabinet level in Canberra in the lead-up to this year's Federal Budget. |
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Oil And Gas Underpins WA Economic Growth Western Australia's oil and gas industry is underpinning the continued growth of the state which, according to latest forecasts, is predicted to grow at around 7% in 2003-04. Western Australian Department of Industry and Resources' Director Petroleum Division, Bill Tinapple, said the oil and gas industry, and associated industries, were helping to fuel the state's strong economic growth. Tinapple said the forecast growth rate was the strongest of all of the states and territories and twice as high as the national economy. "A bright spot for 2002 was appraisal drilling tripling to 18 wells, compared to the previous year", he said. Tinapple said the outlook for oil and gas developments in WA remained positive, despite a recent decision by Canadian-based company Methanex to review its plans for construction of a methanol plant on the Burrup Peninsula. But construction is expected to start soon on the world's largest ammonia plant being built for Burrup Fertilisers. "Add to that the $344 MM in committed oil and gas exploration and 42 exploration wells during 2003-04, and you have a strong foundation for continued growth and development in WA", Tinapple said. He said 27 exploration wells have already been drilled in the first quarter of the 2003 calendar year, more than the total drilled in 2002. "Apache Energy plans to continue active exploration by drilling 20 exploration wells", he said. "Woodside will participate in four commitment wells and a further two elective wells. BHP Billiton Petroleum, ROC Oil and Santos each have three or more exploration wells scheduled for drilling in 2003. A complete profile of WA's oil and gas exploration, development and production is contained in the latest edition of Petroleum in Western Australia. Produced by the Department of Industry and Resources, Petroleum in Western Australia is released twice a year. Copies
of Petroleum in Western Australia are available from the Department of
Industry and Resources' 1st floor counter and library at Mineral House,
100 Plain Street, East Perth. Online copies are also available from the
Department's website at http://www.doir.wa.gov.au/Petroleum/petweb/publicationsPWA.htm. |
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New Power Stations For Remote WA Towns One gas and five state-of-the-art diesel power stations will be built for towns in the mid-west of Western Australia, with most facilities being operational before the end of this year. The WA government has contracted StateWest Power Pty Ltd to build the power stations at Meekatharra, Mount Magnet, Cue, Yalgoo, Wiluna and Sandstone to replace ageing and inefficient systems. Deputy Premier and Energy Minister, Eric Ripper, said the Mount Magnet station would be gas fired while state-of-the-art diesel technology would fire the power stations in the other five towns. "Work will start in Cue as early as next month [May] with construction to start on the other power stations in the following months", Ripper said. It
is expected that Cue, Meekatharra and Yalgoo will start operations in
November. Mount Magnet and Wiluna will be commissioned in December. The
construction timetable for Sandstone is not clear as land issues are still
being finalised. |
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Queensland Government Backs CSM Gas Project The Queensland Government is supporting the development of coal seam methane (CSM) gas projects to help meet increasing energy demands, while trying to reduce greenhouse gas emissions. Queensland Energy Minister, Paul Lucas, said the government was committed to supporting a number of CSM gas projects in central and northern Queensland as part of its campaign to support the growth of sustainable 'green power' energy use. Lucas said the government was "working hard" to maintain a balance between meeting consumer demand for reliable, secure and competitively priced energy and the need for developing sustainable energy. "This is of particular importance to Queensland as we are experiencing rapid growth in electricity demand, mainly due to the combined growth in energy intensive industries such as light metals and our changing lifestyles, particularly the increased use of air-conditioning", he said. Lucas said the government was also promoting environmentally friendly business practices. "Cleaner production processes are more cost effective and green power can be used as a marketing tool to attract consumers who are increasingly more environmentally conscious", he said. "Developing sustainable energy resources creates a number of challenges for governments, business and industry…but the Queensland government is up to the challenge and ready to become renowned for its sustainable energy commitment" he said. |
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Minerals, Petroleum and Energy organised their annual Open Day on April 8th in the form of a Core Workshop, held at the PIRSA Core Library, Glenside. Over 50 local and interstate geoscientists got their hands dirty and skills upgraded on cores from oil, gas and coal bearing basins in SA. The event was a great success in stimulating debate and discussion over the rocks and showcasing SA petroleum prospectivity as well as expertise from Adelaide University and MPE. Cores from the oil and gas producing Cooper and Eromanga basins and the gas producing Otway Basin were laid out in stratigraphic sequence. A selection of cores from key South Australian coal deposits were also displayed in order of their potential to produce Coal Bed Methane, an exciting new resource currently being explored in the eastern States. Preceded by a short theory section, the hands-on activity emphasised the integration and use of concepts, more than the particular content of the displayed cores. Five leaders-in-their-fields examined and discussed the specially selected cores with groups of 10-11 delegates, over an hour of guided exercises and discussion for each area of expertise. The five topics covered were sedimentology (Prof. Simon Lang and Dr Jochen Kassan), geomechanics (Prof Richard Hillis), coal seam methane (Malcolm Bocking), reservoir engineering (Prof Peter Behrenbruch) and seal assessment (Prof John Kaldi and Dr Peter Boult). In a highly professional, enthusiastic and fully interactive manner, the experts demonstrated how much geoscientists and reservoir engineers can learn from looking at and analysing core samples, and they drew delegates' attention to the key economically significant attributes of the cores to resource exploration and development risk reduction. Mineral Resources Group contributed with an online demonstration of the petroleum database in the SARIG system. Congratulations to the University of Adelaide experts for transferring skills, organiser Dr Peter Boult, Barry Goldstein for developing the concept and the Core Library staff for ensuring the smooth running of the core layout and catering on the day. Additional short courses were presented during the week at the University of Adelaide by the local geological and engineering experts for interested workshop attendees and were very well supported. The success of the Core Workshop has been noted, and it has now been agreed the event will be run again in September 2004, in conjunction with the Eastern Australasian Basins Symposium II. For
further information contact |
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Koreans Farm In To Whicher Range Gasfield Amity Oil and US-based GeoPetro Resources Company have entered into a major farmin agreement with two Korean energy giants in an attempt to obtain gas from the tight reservoirs at the Whicher Range gasfield south of Perth. Under the terms of the agreement, Korea National Oil Corporation (KNOC) and Seoul City Gas Company (SCG) will spend up to $6.7 million in EP 408 and, in exchange, will earn a 20% and 15% interest, respectively, in the permit that is said to have in-place gas resource in excess of 3.7 Tcf. The field is a 'tight gas' reservoir and has not yet been developed due to uneconomic gas flow rates from the low permeability sandstone reservoir. Amity Oil Executive Director, Peter Allchurch, said analysis of the extensive data collected from the first four Whicher Range wells has shown that drilling operations significantly damaged the reservoir and subsequently reduced the gas flow rate from the wells. "In the upcoming Whicher Range-5 well, the joint venture will use underbalanced air mist drilling, a proven technique that has been used successfully on tight gas reservoirs in North America and Australia", he said. "This technique will prevent damage to the reservoir and provide the best possible access to Whicher Range's enormous gas resource." Allchurch added the joint venture believes that most customers and the State Government would welcome the security that an alternate gas supply would provide industry and domestic consumers. "In addition, there are several major mineral refining and petrochemical projects in the region waiting for a less expensive gas supply, with many existing contracts due to expire in the next five years", he said. The new joint venture interests are Amity 47.957%, GeoPetro 17.043%, KNOC 20% and SGC 15%. |
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BP Chief Executive, Lord Browne, said the North West Shelf LNG Project is the jewel in the crown of the company's investments in Australia and the oil giant wouldn't mind having a greater slice of it if the opportunity came about. While the opportunity to acquire an additional stake is not available at present, Lord Browne told Channel Nine's Business Sunday program that the NWS is a great business and "it would be very nice if we owned more", he said. "It has tremendous legs for the future, there is plenty of gas there, and it is something that Australia as a country should benefit from for many, many, many years to come." The North West Shelf, which is Australia's biggest resource development, has six participants - Woodside Petroleum, BHP Billiton, BP Development, ChevronTexaco, Japan Australia LNG (MIMI) and Shell Development (Australia). Lord Browne said BP was very enthusiastic about its investments in Australia. "And that is not just a statement of good intentions," he added. Lord Browne said BP's retail business in Australia is improving and the company was investing large sums of money in refineries in order to make clean fuels better. While Lord Browne would not be drawn to comment on the military action in Iraq, which has the second largest known oil reserves in the world, he did say certainty was always good for business. "Business does operate with certainty, with confidence, better than it does with uncertainty and no confidence", he said. "Obviously, BP is big in the oil and gas business and it has to plan for a tremendous amount of uncertainty, you know, we never know what the price of oil and gas is going to be because it is a political commodity." |
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Magellan Increases Stake In Browse Basin Permits Magellan Petroleum Australia has increased its equity in Browse Basin permits, WA-306-P and WA-307-P, from 37.5% to 50%. The additional 12.5% interest is half of the 25% interest previously held by Rawson Resources, who withdrew from the venture after failing to raise $6.25 MM from the issue of 25 MM ordinary shares. Antrim Energy Australia, operator and the other remaining venturer, has similarly increased its interest to 50%. Magellan told the stock exchange that acquisition of seismic commenced in late April and, after evaluation of the results, the joint venture will seek additional industry partners to fund the drilling of the earlier defined Galapagos prospect. |
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Woodside Looks To Cut Costs By $250 MM Woodside Petroleum is looking to cut operating costs by $250 MM over the next two years as part of its Profitability Enhancement Program. Woodside, operator of the North West Shelf, said about $60 MM of the cuts will accrue directly to the Perth-based company with the remainder flowing back to joint venture partners through cost-sharing arrangements. The program, instigated at the end of 2002, is part of Woodside's business strategy of optimising current production, accelerating new projects and growing reserves through exploration. Woodside said, in addition to savings in operating expenditure, at least $300 MM of savings in capital and exploration costs have also been identified over the next three to four years. The company said these savings will be achieved through improved delivery of currently planned project development and exploration activity. Woodside's Director of the Profitability Enhancement Program, Dr Jack Hamilton, said the company aimed to achieve a 20-30% improvement in efficiencies through working smarter with greater cost discipline. "The savings initiatives, some of which have been implemented, include improving and simplifying business processes, an organisational restructure, and new approaches to working", Dr Hamilton said. Unfortunately, about 300 jobs from current activities will be lost over the next two years as a result of the program, through natural attrition, redundancies and re-deployment. |
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Consolidation Of Perth Basin Interests Begins Consolidation of Perth Basin interests has begun in earnest after Arc Energy struck a deal to sell its stake in the Cliff Head oil discovery to Roc Oil for $12.7 MM. Under the deal, Arc will sell its 7.5% stake in WA-286P, which contains the offshore Cliff Head oil field, for $9 MM in cash and additional payments of up to $3.75 MM based on reserve levels. The deal will take Roc Oil's stake in the field, said to contain up to 30 MMbbl in recoverable reserves, to 37.5%. Roc Oil is the operator of the field in partnership with Australian Worldwide Exploration, Wandoo Petroleum, Norwest Energy and Voyager Energy. Arc Energy Managing Director, Eric Streitberg, said the Cliff Head deal eliminates net debt and will allow it to focus on its primary activities at Hovea and Eremia. "The
key parts of this strategy are to put new oil and gas discoveries on production
as quickly as possible using the company's infrastructure and knowledge
base, and to drill as many exploration prospects as possible to replace
and increase reserves”, he said. |
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Santos Plans To Boost Oil Production Australian
oil and gas major, Santos, told shareholders at its annual general meeting
in April that it is planning to boost oil production both in the short
and long term. It is seeking to trial advanced technology on previously uncommercial Cooper Basin oil reservoirs, drilling up to 16 wells at a cost of $25 MM. It will also participate in infill drilling in the Legendre oil field in the Carnarvon Basin and possible development of already discovered fields in the Timor Sea. Managing Director, John Ellice-Flint, also updated shareholders on progress with two of the company's flagship growth projects, the Bayu-Undan liquids development and the Mutineer-Exeter oil development, which will also begin to contribute to oil and liquids production in 2004 and 2005. The Mutineer-Exeter fields are estimated to have approximately 120 MMbbl of proven and probable oil reserves - a 50% increase in Santos' total oil reserves. John Ellice-Flint said the current target was to achieve full Mutineer-Exeter project sanction before the end of 2003, with first production in 2005. "A Floating Production and Offloading facility concept has been selected for development of the oil fields", Ellice-Flint told shareholders. "In order to progress the development as efficiently as possible, four major internationally recognised contractors have been pre-qualified and a technical definition phase has commenced." This will be followed by a commercial tender phase for the lease of the facility to be completed by end June. Ellice-Flint said the Mutineer-Exeter oil discoveries were part of a profile of growth projects being assembled by Santos to take the company forward in the longer term. Ellice-Flint added Santos' growing portfolio of exploration acreage also provides potential for future growth. "Today, we have more exploration acreage in Australia than any other company as a result of acreage awards in the offshore Otway, Sorell, Duntroon, Browse and Houtman basins", he said. Commenting on the immediate outlook, Santos Chairman, Stephen Gerlach, said over the next two years, the company's future growth providers will be in the development stage. "Accordingly, 2003 will probably see a marginal decline in production, and sales volumes and oil prices during the remainder of 2003 will obviously impact on our revenue and profit line", Gerlach said. "However we have made a solid start to the year as is reflected in our report to the Australian Stock Exchange for the first quarter." Ellice-Flint also commented on initiatives to control costs to increase margins, with an increased target of $100 MM of cumulative savings by the end of this year. "We
have been successful in reducing capital costs. We are now focusing on
operating costs. Santos is a low cost operator but we are constantly searching
for ways to improve our performance." |
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Petsec Awarded Third Gulf Of Mexico Lease Junior oil explorer Petsec Energy has increased its Gulf of Mexico interests after being awarded a third lease on the Vermilion oil field off Louisiana. Petsec Energy was the highest bidder for Vermilion 246 and 257 leases at the March 2003 Minerals Management Service lease sale, but had to wait until May for the MMS to formalise the Vermilion 246 lease deal. The lease adjoins Vermilion 258, which Petsec acquired in November 2000 for $US2.7 MM, and is said to hold 8 Bcf of undeveloped gas. The company plans to drill two wells in the later half of this year to test the prospect. |
