oil strike worth cool 1bn dollars

http://www.news.com.au/adelaidenow/story/0,22606,22514645-910,00.html

Oil strike worth cool $1bn



CAMERON ENGLAND, CHIEF BUSINESS REPORTER

October 02, 2007 02:15am

A BILLION-DOLLAR oilfield has been discovered in the state's Far North, the find touted as one of the biggest of its kind on the Australian mainland.

Closely following the announcement by BHP Billiton of a massive copper and gold resource at Olympic Dam, Queensland-based Innamincka Petroleum said yesterday it had discovered 120 million barrels of oil in the Cooper Basin.

The discovery opens a new frontier in the resources boom in the South Australian desert and opens the way for yet more exploration and development.

The $1 billion price tag is a conservative figure.

At yesterday's oil price of $US81.64 per barrel, the field would be worth more than $10 billion , although oil fields typically give up only about a third of their contained oil.

Depending on the recoverable amount, the find could be on the scale of Santos's remaining Cooper Basin oil reserves, which stood at 39 million barrels of oil in the company's 2006 annual report. But even a 10 per cent recovery of the oil would be worth more than $1 billion at current prices.

The State Government stands to receive a windfall, with petroleum royalties set at 10 per cent of the sales value, after various development costs are removed.

Premier Mike Rann yesterday welcomed the find.

"Last week, in announcing that Olympic Dam had become the largest base metals deposit in the world, I made the point that in terms of mining, South Australia is the land of giants," he said.

"What many people don't realise is that South Australia's oil industry is thriving and exploration for oil in our state is growing significantly."

Innamincka Petroleum said yesterday it had shown that its Flax and Juniper 1 oil discoveries were connected underground, leading to a "substantial increase in the assessed in-place oil resource". "There is now a reasonable basis for concluding the Flax and Juniper discoveries will prove to be one of the largest onshore oilfields in Australia," the company said.

Innamincka's shares jumped a staggering 283 per cent on the news, closing $1.105 higher at $1.495.

Innamincka managing director Ross Wecker said there was the potential to find substantially more oil, but at this stage the company was focused on getting the wells into production.



Mr Wecker said the company did not yet know what the recovery rates would be.

He said the company was predicting 1000 barrels of oil a day from five wells by the middle of next year.

The company will now employ consultants to calculate a resource figure for the field.

That would allow the company to raise money to construct a pipeline to Moomba and do more drilling, he said.