Another giant oil play on the northwest coastThursday, 25 July...

Another giant oil play on the northwest coast

Thursday, 25 July 2013
David Upton

INNOVATIVE thinking by MEO Australia’s exploration team has produced another play for a giant oil field near the shores of Australia’s northwest coast.

The Melbourne-based explorer revealed last week the exciting ideas behind its bid for WA-488-P in the shallow water of the Bonaparte Basin.

The area was put up for work program bids in May 2012 at the nomination of MEO, which then faced an agonizing 12-month wait of to see whether it had alerted any other explorers to the area’s hidden potential.

In May this year, MEO was awarded the permit on the strength of a program to spend $20.3 million over the next three years, including one exploration well.

In fact, there were no other bidders for the area. MEO was alone in spotting in old 2D seismic a large prospect it has named Beehive.

The prospect is actually hard to miss because it covers an area of up to 600 square kilometres at the deeper of two target horizons.

Beehive is a stacked carbonate oil play in Ordovician and Carboniferous rocks, with combined mean prospective resource of 1584 million stock tank barrels.

It is the second giant oil play to emerge recently in the near shore area of Australia’s northwest coast.

IPB Petroleum has developed a stratigraphic play in paleo river channels in the near shore area of the Browse Basin.

MEO’s carbonate play is not entirely new. Western Mining found oil in carbonate rocks when it discovered the small, sandstone-hosted Turtle field immediately east of WA-488-P in the 1980s.

However, MEO has been particularly clever in taking a fresh look at the potential of carbonates in the area.

The company’s interest was triggered by Buru’s Ungani oil discovery in early 2011 in the onshore Canning Basin, several hundred kilometres to the southwest, but in the same geological setting.

MEO commercial manager Robert Gard told Energy News, that Ungani provided the catalyst to look for the same play type in a geological setting where all the play elements were optimized.

The search for the most favourable setting for this play type resulted in the focus on the area that would become WA-488-P.

“Ungani broke the mould in a number of ways,” Gard said.

“Australia is renowned as a gas province and the older rocks were not considered prospective for hydrocarbons notwithstanding that some of the world’s largest fields are hosted by rocks of this age.

“The result at Ungani gave us extra confidence in the potential of carbonate build up we had identified at Beehive to host a significant oil resource.”

Carbonate-reef hosted oil is rare in Australia, with the Blina and Ungani fields in the onshore Canning Basin the only producers.

These carbonate reefs host 60% of the world’s proven oil reserves and are prolific producers in the Middle East and North America.

The Kirkuk field in Iraq is a barrier reef that still pumps out 1 million barrels of oil per day, almost 70 years after production began.

Until the Ungani discovery, carbonate reefs were scorned by many local explorers because of the failure of the Blina discovery in the early 1980s to live up to the original high hopes of up to 900 million barrels of oil in place.

However, Ungani is clearly changing perceptions in Australia, with MEO’s Beehive prospect the latest example.

Onshore, Santos also recently finalised a farm-in to Central Petroleum’s carbonate reef play in EP 97 in Devonian-aged sediments of the Warburton Basin, beneath the Pedirka and Eromanga Basins.

Gard said Beehive was a very large structure and unusual among carbonate reefs in that time period.

“Beehive is a rare structure because it was created by an outlying, buried hill in the Paleo-Tethys Ocean,” he said.

“That provided a large platform for the buildup of carbonates, in contrast to Ungani and similar prospects that are relatively small pinnacle reef structures.

“Beehive is a much larger carbonate reef buildup from the same time period as Ungani.”

MEO is seeking a partner to help carry the costs of exploring WA-488-P. It opened a data room last week and has an October 31 deadline on offers from potential partners.

It will be hoping to repeat its recent success in WA-454-P, immediately northwest of WA-488-P and south of the Frigate, Tern and Petrel gas fields that are the basis of the Bonaparte LNG project being progressed by GDF Suez and Santos.

MEO picked up WA-454-P in June 2011 in its own right after some earlier impressive work by its exploration team, now led by industry veteran and former Tap Oil CEO Peter Stickland.

The team identified the Breakwater prospect, with an estimated prospective resource of up 2.4 trillion cubic feet of gas and 276 million barrels of oil and condensate.

Earlier this week, MEO secured a farm-out deal with Origin Energy for WA-454-P. That deal provides for Origin to earn a 50% stake and take over as operator by reimbursing MEO $5.6 million representing 80% of its costs to date, and contributing 80% of the costs of an exploration well.

The deal is a timely recognition for MEO’s growing expertise in the Bonaparte Basin, and shows the company’s experience in the region can create significant value for its shareholders, despite years of frustration with developing its Tassie Shoal methanol and LNG projects.

The prospects for developing Tassie Shoal are also improving thanks to a wave of appraisal drilling about to get underway on a number of long-dormant fields in the region.

ENI Australia, which is partner with MEO in NT/P68 adjacent to Tassie Shoal, is also a joint venturer in NT/P48 containing the Evans Shoal gas discovery.

The Italian oil major is kicking off a four-well drill campaign in the region next month with an appraisal well at Evans Shoal, the first since the 8 trillion cubic feet field was discovered back in the 1990s (not including a dry hole drilled by Santos a few years ago at Evans Shoal South).

The Evans Shoal gas field is less than 10km away from the Tassie Shoal location.

ENI will drill Blackwood-2 in the adjoining NT/P68 permit and pay for MEO’s 50% share of the costs.

Korea’s SK Energy is also funding a three-well drilling campaign in early 2014 at the Barossa gas field, which could hasten development after many years of inactivity.

http://www.energynewspremium.net//StoryView.asp?StoryID=798534271