See the Australian oil and Gas Review this month.Promoted from...

See the Australian oil and Gas Review this month.
Promoted from the homepage.

Full page article on page 21-22

http://www.miningoilgas.com.au/aogr/latest.html

Two pics in the article - a good pics of action man JH next to a plane as well as a camel (in that order thankfully). The caption are "Central Petroleum managing director John Heugh" and "Camels are a major road hazard at night, with more than five million in the Northern Territory" - i'm hoping they didn't mix up the captions.

Article below.

OPERATING the largest holding of
prospective onshore acreage in Australia,
junior explorer and producer Central
Petroleum?s mining and petroleum permits
cover about 270,000 square kilometres. The
holdings are mainly within the Pedirka and
Amadeus Basins in the Northern Territory,
and cross the borders into Queensland, South
Australia and WA.
?It possibly represents one of the biggest
exploration acreage holdings in the world
under the one 100 per cent ownership in
contiguous permits,? Central Petroleum
managing director John Heugh said.
With the successful Mereenie and
Palm Valley oil and gas fields having been
discovered in the region in the late 1960s,
Central Petroleum considered the acreage
holdings to be highly prospective for both
conventional and unconventional oil and
gas, helium and condensate. Mr Heugh said
Mereenie and Palm Valley were the biggest
fields in Australia when discovered, and had
been put into production by the Northern
Territory Government to provide gas to power
the Port Darwin area.
He stated that while Palm Valley was
almost depleted of resources, gas was still
being produced at the Mereenie field, which
had about 300 million barrels of oil in place
when discovered. Due to geological challenges,
however, only 25mmbbls had been extracted
so far.
In addition, Mr Heugh said that Central
Petroleum had an exploration target of 500
billion tonnes of coal above 1000 metres in
the Pedirka Basin, which was ?probably the
biggest tonnage of coal in the world, under 100
per cent ownership in contiguous permits?.
Despite the company?s optimism,
Mr Heugh said Australians didn?t seem
to comprehend the potential of its coal
exploration target.
?There are companies with big coal
holdings around the world, but this total
resource is a major milestone in the company?s
history and people out there just don?t get it,?
Mr Heugh said.
?The coal is relatively low to average grade
steaming coal, and it is isolated and a long
way from market. So people have just simply
ruled it off and said you can?t do anything
with it.
?There are things you can do with the coal.
You can mine it, wash it to remove some of
the ash, beneficiate it, dry it, pelletise it and
export it in massive quantities to places like
China and India,? Mr Heugh suggested. ?We
also have a lot of people interested in mining
the coal and running it through a coal to
liquids plant like they?ve been doing in South
Africa for many years very successfully.?
Mr Heugh said the third way to monetise
the coal was through an underground coal
gasification (UCG) to gas to liquids (GTL)
plant to produce liquid transport fuels.
Another concept the company had been
having difficulty selling to the Australian
market was unconventional oil and gas
exploration, which until recently hadn?t been
considered in the region.
?We were the first people in Australia
to promote the idea that unconventional ?
that is, shale gas and shale oil ? in Central
Australia could be a viable exploration ?fairly conservative? total at P50 (50 per cent
probability) middle case estimates of about 40
trillion cubic feet of gas and 5 billion barrels of
oil recoverable.
Acknowledging that the Canadian market
has more confidence in unconventional
exploration, Central Petroleum has planned
to list on the Toronto Stock Exchange (TSX)
Venture Exchange in late September or early
October.
?The TSX resources ? that is, the mining/
oil/gas energy sector ? is about five times
bigger than the same sector in the ASX,? Mr
Heugh said.
?The other reason we are attracted to
Canada and Canadians is that these people
seem to have a much clearer ?big picture?
understanding of frontier basins than most
other nationalities in the world, particularly
the Australians.
?Our price is markedly undervalued and
we have put out some independent reports
that say that, but nobody?s taking any notice
in Australia. If we list on the TSX we know
already from promotional work we?ve done
over there that these people do get it and I?ve
been so impressed with that that I?ve brought
out two Canadians to work with us in key
management roles,? Mr Heugh added.
He said that there were very few people
in Australia who had any unconventional
drilling experience as there were no producing
unconventional wells in Australia as yet,
and therefore it was vital for the company to
?beef up? its team?s unconventional drilling
expertise.
History and milestones
The company was formed by Mr Heugh
and fellow director Richard Faull in 1997 to
focus on areas of Central Australia that were
underexplored but had obvious geological
potential.
?We saw an opportunity with low oil
prices at US$10 to 12 a barrel to secure large
acreage holdings in areas that didn?t have
much attention being paid to them,? Mr
Heugh said.
Central Petroleum?s first major milestone
had been listing on the ASX in 2006.
Following this, a major seismic survey had
been completed that outlined new structures
and prospects. Mr Heugh said the seismic
acquisition and mapping had been a major
continuing development that was now
approaching a total of 200 prospects and
leads.
To date, five conventional wells had been
drilled in Central Petroleum?s permits, with
four finding good oil shows.
?In the fourth of those four wells we have
what we believe is a discovery on our hands
? at the Surprise-1 well in the western
Amadeus [Basin],? Mr Heugh said.
With independent assessments, subject to
logging and flow testing, suggesting the zone
had the capability to produce at about 500 to
1000 barrels of oil per day, Mr Heugh believed
this represented another major milestone for
the company.
The next six months
Central Petroleum?s plans for the second
half of 2011 include a three-well drilling
program comprising further drilling of: the
Surprise oil well; Madigan, a very large
4bbls of Undiscovered Oil Initially In Place
(UOIIP) oil prospect; and Mt Kitty, a gas,
condensate and helium prospect. Mr Heugh
said the company planned to start drilling by of completing the three wells before the end
of the year to avoid drilling during the wet
season.
?We are fairly well advanced with the
drilling program. We have casing secured,
most of our hardware and equipment has
been secured, [and] we are upgrading roads
into the first site as we speak,? Mr Heugh
said.He added that the upgrade of the roads
should be completed, and a Letter of Intent
sent to a rig operator, in early August. To
date, all that remained to be done was the rig
and service company selection.
In a prospects update released in
early July, Central Petroleum stated that
dependent on the results of final analysis and
interpretation, the Simpson East prospect
in the Exploration Permit (EP) 97 Simpson
farm-in block (in which the company has an
80 per cent interest) could be an additional
well, or an alternative to Madigan.
Meanwhile, the company recently
announced the signing of a commercial
partnership with Allied Resource Partners
covering some of Central Petroleum?s coal
deposits in the Pedirka Basin.
Mr Heugh said Allied was now tasked with
managing coal exploration, and the design
and funding of a major UCG to GTL plant, as
part of the $7.5 billion Pedirka Basin Clean
Fuel Production Project. The project will
also enable carbon capture and permanent
underground storage of carbon dioxide.
In a statement announcing the
joint-venture partnership, Allied joint
managing director David Shearwood said,
?The proposed project is world-class in size,
expected profitability and environmentally
because it is a giant leap towards lower
emission fuel. It has the potential to
be expanded many fold with enormous
benefits to government, regional economies,
indigenous communities and Australia?s
long-term oil self-sufficiency.?
Allied is currently searching within
major global and Australian sources for
$300 million in funding and technology
partners for a Bankable Feasibility Study
(BFS) including drilling to resource status. Mr
Heugh said that after this had been achieved,
Central Petroleum would join the project as a
joint-venture partner and contribute its share
of project finance.
The 12-month outlook
?Within 12 months, it?s my firm hope that
we have made successful discoveries and we
can be gearing up to get into production,?
Mr Heugh said. ?For example, if Surprise is
a successful producer, we should be able to
get into production and sales within 6 to 12
months.?
Mr Heugh outlined the program for next
year: ?Subject to the success of Surprise
we aim to do a 3D seismic survey over the
Johnstone and Surprise areas, and drill
three, maybe four, horizontal wells there that
will have multi-stage fractures to increase
any potential oil flow from that area?.
?We would also aim to drill three or four
horizontal wells with multi-stage fractures
in the southern Georgina [Basin] permits
because we have three of those that we?re
anticipating will be granted in the next few
months,? he added.
In addition, Mr Heugh said the company
had one well in EP 105 and one in EP 107
to drill as part of a commitment program:
?We have a number of targets there but we
haven?t selected which target yet or made a
well design because we have until the year
after next to drill them?. He said this drilling
would not start until mid-2012.
?The second aim in the next 12 months is
we are in discussions with quite a number of
Indian and Chinese companies, particularly
over our coal and gas resources, and a number
of very big North American companies
interested in our oil and gas acreage,? Mr
Heugh said.
?We hope to seal the deal with one of
the more substantial companies in farm-ins
or joint ventures over acreage,? he said.
?Certainly in the next 12 months from now,
we should see a few of these joint ventures get
off the starting blocks.?
Future plans for expansion
Mr Heugh asserted that with all of
its gas produced from Central Australia,
the company had ?no plans whatsoever?
to sell its resources on the domestic gas