ENP - Offshore Canning basin delivers an oil play

Good article discussing the huge impact PS-1 is having on the industry

Offshore Canning basin delivers an oil playThursday, 21 August 2014
David Upton

THE big news in the background to this week’s Phoenix South-1 discovery in the Offshore Canning Basin is that it represents an entirely new oil play.

The Apache-operated well found oil in four discrete columns ranging between 26m and 46m plus two further hydrocarbon-bearing sands in the Lower Triassic Keraudren formation. This is of huge significance because Phoenix South-1 is the first well anywhere in that vast expanse between the Carnarvon and Browse Basins to successfully test the Lower Triassic. Previous explorers had side-stepped the region on the basis of a handful of unsuccessful wells aimed at prospects in younger Triassic and Jurassic rocks. These younger rocks are the foundation of the petroleum wealth in the Carnarvon and Browse basins, so previous explorers naturally went looking for the same targets in the Offshore Canning. When that failed, they concluded the region simply did not have the same prospectivity at its famous neighbours. In a sense, it was easy to walk away because the Offshore Canning is something of an oddity. In broad terms, the Carnarvon and Browse Basins have a similar origin and depositional history generally associated with the separation of India from Australia. Thanks to Phoenix South-1, we now know the Offshore Canning has fabulous hydrocarbon potential, and not just gas. Explorers simply need a different exploration model to the one that has worked so well in the Carnarvon and Browse Basins. Its still early days in understanding the Lower Triassic play. In fact, until Phoenix South-1 there was little information on the deeper sequences in the Offshore Canning. Phoenix South-1 seems to have recognised a thick and widespread shaley interval at the top of the depositional sequence that acts as the main seal, with some interbedded shales acting as additional intraformational seals. The source rocks for the oil seem to exist within the Lower Triassic as well, but there is more work to be done. Apache, JX Nippon and its fleet-footed junior partners, Finder Exploration and Carnarvon Petroleum were properly jubilant this week. Carnarvon and Finder can be especially proud, having jointly spotted the opportunity back in the dark days of the global financial crisis. The company put its foot on 20,000sq.km of a basin that had been discounted on the basis of incomplete information and pre-conceived ideas, carried out 3D seismic and worked the opportunity into a compelling farm-in deal for Apache and JX Nippon. If you listen carefully outside 240 St Georges Terrace, you might also hear some cheering from Woodside’s executive suite as they will be seeing their own acreage somewhat de-risked. As I wrote back in March, Apache and Woodside were in a race to answer the big question about whether the Offshore Canning Basin was as rich in hydrocarbons as its famous neighbours. Apache got there first, but Woodside is not far behind. In its most recently quarterly, Woodside advised that Hannover-South-1 – the first of eight wildcats in the Offshore Canning Basin – was due to spud in this quarter. Woodside (55%) and Shell (45%) have taken a big plunge on the Offshore Canning, which includes a $US442 ($A476) million contract for the services of the Deepwater Millennium drillship for two years. Woodside and Shell went into the campaign with the aim of finding multi-TCF gas fields, but now it looks like they also have a very good prospect of finding oil. Apache and its partners were also targeting gas, which is where the story of this week’s discovery gets really interesting. Back in 1980, BP drilled Phoenix-1 and actually went as deep as the Lower Triassic-aged Lower Keraudren Formation. BP had technical troubles and did not have the equipment to evaluate what it had actually found. Unable to make a drillstem test or recover samples it concluded it merely had gas shows near the bottom of the hole. BP was sufficiently encouraged to drill Phoenix-2 in 1982, but this time around the reservoir sands were not as good and its campaign ended. It had identified the Phoenix South prospect, but this was outside BP’s acreage. Carnarvon Petroleum managing director, Adrian Cook, told Energy News this week the old Phoenix-1 well, located only 13.5km from Phoenix South-1, is set to yield even more clues. “Phoenix South-1 has intersected the same stratigraphic intervals as Phoenix-1 and 2,” he said. “It puts into question now what was really discovered in Phoenix-1 in 1980, so for the next few months our geologists and the Apache team will be taking the old mud log and logging material and back-solving it with the new well. “It could be that Phoenix-1 was an oil discovery that was misdiagnosed. That might add a lot of information for us about any commercial development, even before we drill our second well next year at the Roc prospect.” Roc is closer to shore and has the potential to be an even bigger discovery than Phoenix. “We have mapped a larger trap at Roc, and we also know the Keraudren Formation is sandier and shallower — and therefore less compacted ¬— as we move inboard,” Cook said. “The other bonus is Roc can be drilled with a jack-up rig, unlike the semi-submersible we needed for Phoenix South-1. “Carnarvon is free carried through Phoenix South-1 and Roc-1 up to a drilling cost of $70 million per well. “We always knew we could use a lower-cost rig at Roc, but kept the cap at $70 million so we could afford to keep the rig longer and run many more tests than at Phoenix South-1.” Cook said the next information to look for was the results from side-well cores. “We know we have oil of good quality, and the rocks have already shown in the sampling process that there is permeability,” he said. “Now we are waiting on the sidewall cores to get into the labs and be assessed to give us definitive data on the reservoir properties. “We have taken many steps forward, but there is still some more to go.”