Updated September 6, 2019 — 2.41pmfirst published at 12.28pm
Cooper Energy has discovered a new gas field in the Otway Basin off the coast of Victoria, the first found in the basin in more than 10 years.
Annie-1, the first of two gas exploration wells, made the discovery on Wednesday and Cooper's managing director David Maxwell said the find had the potential to supply customers within just over two years.
"It is very pleasing as exploration is a risky game and you can't guarantee success," Mr Maxwell said.
Drilling on location at Annie-1.Credit:Cooper Energy
The drilling project is the first offshore gas exploration Cooper Energy has conducted in Australia and the first of an $80 million joint venture drilling campaign with Mitsui E & P Australia.
"It is very encouraging for future exploration in the offshore Otway Basin and for our strategy to build gas production around the hub of the existing Minerva Gas Plan," Mr Maxwell said.
In the coming months, the company will make further assessments to estimate the size of the field, with production expected to be up and running by the second half of 2021.
The company has previously said it was targeting 70 petajoules of gas with the Annie prospect.
"Preliminary analysis of the geological data from Annie-1 is consistent with the mid-range of our pre-drill estimates," Mr Maxwell said.
Cooper Energy managing director David Maxwell.Credit:Ben Rushton
The east coast of the country faces a gas shortage with a recent report predicting Victoria will have a shortage of gas by winter 2022 with declining levels in old fields and a ban on onshore gas exploration in Victoria and New South Wales.
Cooper Energy's shares jumped 10.3 per cent to 64.50 cents, an 11-year high, making the company the best performer on the S&P/ASX 200 in early trading. The shares briefly rose to as high as 68.50 cents.
Royal Bank of Canada oil and gas analyst Ben Wilson said the firm had recently upgraded Cooper Energy to a "outperform rating" compared to the sector average over the coming 12 months, based on the development of the Sole gas field in the Gippsland Basin.
"First-up success from the Otway exploration campaign strengthens our conviction on Cooper," Mr Wilson said.
Mr Wilson predicts that given its proximity to the company's other fields and existing infrastructure it could be a simple development.
Annie-1 is located about nine kilometres off the Victorian coastline between the Henry gas field and the Minerva gas plant. Related Article
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The discovery comes after the Australian Competition and Consumer Commission (ACCC) warned last month of ongoing high prices and tight gas supply unless barriers to exploration were lifted.
Onshore gas extraction was restricted in Victoria in 2014 following anti-fracking campaigning by farming and environment groups. But the Andrews government will consider loosening restrictions to allow conventional gas exploration from June next year. In NSW, the gas ban is unofficial, but is considered by many an "implicit" ban as projects are not proceeding.
Mr Maxwell said the gas industry needed certainty from government in terms of policy, arguing the bans were not based on science.
"We are very mindful of the environment but at the same time if you want to maximise supply you have to maximise the opportunity for people to develop new supply."
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