"Hot rock haven" leads renewable energy push

Transcription

1 ID BRIEF SACOME_SA PAGE 1 of 6 "Hot rock haven" leads renewable energy push DANICA NEWNHAM ACCORDING to the Department of Resources, Energy and Tourism's Australian Petroleum Statistics, South Australia (SA) sold a total of 310,045 kilolitres of petroleum products in November While not the most lucrative state for total petroleum production, SA remains Australia's largest onshore oil and gas producer. with production primarily deriving from the Cooper-Eromanga Basin in the north of the state. Although SA's long history of oil and gas exploration dates back to the 1860s, today the state is also focussing on renewable energy for a cleaner, greener future and has secured almost the entire portion of investment so far in geothermal exploration in Australia. The Cooper-Eromanga Basin Forming Australia's largest onshore petroleum province, the Cooper-Eromanga Basin stretches from northeast SA to southwest Queensland. Statistics from the Bureau of Resources and Energy Economics' (BRE E) Resources and Energy 2011 report showed that the basin produced 920 meg,alitres of crude oil from 2010 to It also produced 560ML of LPG, 239ML of condensate and 3021 gigalitres of naturally-occurring ethane and natural gas. The first exploration licence in the Cooper Basin was granted to Santos in The company made its first commercial gas discovery in the Gidgealpa field in 196$ and achieved first production in with gas sales transported to Adelaide. Gas sales to Sydney, NSW started in 1976, and ethane sales followed 20 years later. Gas sales to Brisbane and Mt Isa, Queensland, began in 1997 and 1998 respectively. Since its beginnings, gas production in SA has been dominated by the Santos-operated Moomba field. The company stated on its website that the Cooper Basin contained about 190 gas fields and 115 oil fields currently in production. Its fields reportedly contained about 820 producing gas wells and more than 400 producing oil wells that fed into production facilities at Moomba and Ballera (Queensland) through about 5600km of pipelines and flowlines. The facility also incorporated substantial underground storage for processed sales gas and ethane. As the operator. Santos holds a 66.6 per cent interest in Moomba. Through its wholly-owned subsidiary Delhi Petroleum, Beach Energy holds a per cent stake, and Origin Energy holds the remaining per cent interest in the project. In its December 2011 quarterly report, Senex's Vintage Crop-1 well being drilled in May 2011

2 ID BRIEF SACOME_SA PAGE 2 of 6 Beach stated that the joint venture had achieved first gas from the Middleton gas production facility on the western flank of the Cooper Basin in January The company stated that the initial production rate after ramp-up was 2 million cubic feet per day, comprising about 15 terajoules per day of sales gas and 1250 barrels per day of LPG and condensate. Meanwhile, Beach has been involved in other significant activities in SA during the last few months. At its 40 per cent owned and operated PEL 91 asset, the company reported the successful drilling of the Bauer-2 and Batter-3 wells. The wells were drilled 380m to the west and 300m southeast of Bauer-1. Beach reported that the wells had delineated the western and southern structural extents of the fields. Both had been cased and suspended for future oil production following the intersection of a 6.5m gross oil column at Bauer-2 and a 10m oil column at Bauer-3. The company estimated that the Bauer oil field was currently 3.5 million barrels in size. Meanwhile. Beach also announced a 20-cent per share on-market takeover of Adelaide Energy valued at $94 million in November. Following the close of bid in late December. Beach had a per cent interest in Adelaide Energy and subsequently lodged a notice to compulsorily acquire the company. As a result, Beach now wholly owns and operates PEL 218 in which a vertical exploration well, Moonta-1, was spudded on January 23. Moonta-1 will target the shale and basin-centred gas play in the Nappamerri Trough and is planned to be drilled to a depth of 3800m. Beach stated that the well will be the first of a five vertical well shale and basin-centred gas exploration program planned for this year. Workover operations were currently under way at Encounter-1 in preparation for the planned fracture stimulation program expected to start in mid-february. Another major player in the Cooper- Eromanga Basin is Senex, which now holds 65,854sqkm in the region following its acquisition of Stuart Petroleum's assets via an off-market takeover in May In its 2011 annual report. Senex projected that it would produce at least 700,000 barrels of oil during the year. This production was expected to be sourced from Senex's western flank oil fields, including the recently acquired Worrior, Acrasia. Harpoon and Padulla oil fields, in addition to new oil fields coming online at Vintage Point and Cuisinier. Following flooding in the Cooper-Eromanga Basin during 2011, Senex stated in its September quarterly report that production had restarted at its 60 per cent owned and operated Growler oil field. Meanwhile, the company and its JV partner Beach had agreed on a project to connect the Growler field with the Moomba processing facility. The project would involve the construction of two flowlines that would be constructed and operated by Beach. Senex also started an aggressive five-well drilling campaign in the area. with Growler-6 being spudded in mid-october. The other four wells were planned to be drilled during the 2012 fiscal year and were expected to make an immediate contribution to the production of oil. At Senex's wholly-owned PEL 516 project, Vintage Crop-1, an exploration well drilled in May had exceeded expectations, confirming the presence of at least 100m of shale gas, continuous gas shows from both shales and coals, the presence of liquids-rich gas and favourable mineralogy. Based on positive results, the company planned to drill three dedicated unconventional gas wells in the permit during the 2012 fiscal year. The wells would be cored, fracture stimulated and flow tested in all gas-bearing formations. The first well was drilled in December. The Otway Basin The onshore Otway Basin in SA stretches to Victoria and offshore Tasmanian waters. While not as prosperous as the Cooper-Eromanga Basin, undiscovered recoverable sales gas resources have been estimated at 2760 petajoules for the onshore and 2000PJ for the offshore portions of the region. BREE's Resources and Energy 2011 report recorded the Otway Basin as having produced 265GL of naturally-occurring ethane and natural gas, 148ML of LPG and 97ML of condensate from 2010 to The Bight Basin Spanning an area of more than 800,000sqkm, the Bight Basin lies across the border of SA and WA, extending onshore and offshore. While exploration in the Great Australian Bight began in the 1960s. no commercial discovery has been found to date. However, interest in offshore exploration in SA has increased in recent years. Granted

3 ID BRIEF SACOME_SA PAGE 3 of 6 four permits covering 24,570sqkm of the offshore Bight Basin in January 2011, BP has committed to a $1.4 billion investment to explore the basin for a period of six years. The permit areas lie in waters ranging from 800m to 4000m deep. and are about 300km southwest of Ceduna and 400km west of Port Lincoln, SA. In an SA Mines and Energy Journal, January February 2012 article by the South Australian Chamber of Minerals (SACOME), it was reported that one of BP's government approval conditions was that the company must undertake a three-year guaranteed work program in each permit area, including a 3D seismic survey and the drilling of four exploration wells. At the end of last year, a specialist seismic vessel arrived in the Bight Basin to start surveying a total area of 12,500sqkin. SACOME's article stated that completion of the survey was planned for May this year. "We are still at a very early stage of the project and until the seismic data is processed and the exploration wells completed, we won't know for sure what is there and whether it is viable to commercially develop." BP managing director of exploration Dr Phil Home said in the article. Geothermal energy A SACOME document entitled Renewable Energy reported that the State Government was committed to increasing renewable energy production to 33 per cent by 2020 well above the nation's target of 20 per cent within the same time period. SACOME described the state as "Australia's hot rock haven", with enough geothermal energy to contribute electricity for 450 years. According to the South Australian Department for Manufacturing, Innovation, Trade, Resources and Energy (DMITRE), the last few years have seen a rush for licences to explore the variety of geothermal energy plays. DMITRE reported on its website that the state's hot rock resource potential and supportive frameworks had attracted nearly 100 per cent of all investment in licenced geothermal exploration. A change in policy was enacted in 2004 that enabled applications for geothermal exploration licences (GELs) to be accepted on lands anywhere in the state with the exception of current GEL sites and lands excluded from any exploration. As a result, the number of GELs and applications rose from 3 in August 2004 to 248 at the end of DMITRE stated that while not all projects may eventuate, the aggregate investment for guaranteed and non-guaranteed research (exploration), proof of concept (appraisal) and demonstration (pilot development) in these 248 GELs and applications was estimated to be more than $1.2 billion for the 14-year term from 2002 to This figure did not include deployment projects. Geothermal tenements have been granted in the Cooper-Eromanga Basin and the Great Artesian Basin, and companies involved in geothermal exploration projects in SA include Green Rock Energy, Eden Energy, Clean Energy Australia and Geodynamics.

4 ID BRIEF SACOME_SA PAGE 4 of 6 South Australia 0 20 KILOMETRES Moonta-1 Encounter-I SA QLD Unconventional well Beach's Moonta-1 exploration well was spudded in January NAPPAMERR1 TROUGH Shale and Basin Centred Gas Drill Test Locations CE12-C614

5 ID BRIEF SACOME_SA PAGE 5 of 6 Are CAJEEMSLAND Srrn,witkh a PLIELAWC Achs 14Pirikentpit Pr im Frt./mango h son MkrhapJli iii:fikjiy 6popolor. lvirror Wm.., FUR ha,lp, 1 Ctd.P. tkaark. P.D. UNA. PiimiLt - FIP MID P E.F1r17...q.1.%N.C" , '.1 I - Priam.,. P A..,,,,,,N.,...,. U ; ilrommion, IPLPIPdfril ' 4,-.1'.. J t1ii..iii. lin". PlkkPliP:PP r' ip -.. P A.P.poititr.1. MP oiparup--.- R. 41P4:41. mudrormly.51.,411 Cooper idy,. AR IlEdel Gam c 5.iiccmihn Idar,lirm 'Air.. Basin,A. ' d ""r41 tielliiie. r 4'.: Nhpp. /6z...:NN; A1 IRV.. 1..r.:....P., Mir,. FL II n klit C.631,441IIidnurEjl ME OP PH, a See..Z..111 Oil and gas fields in the Cooper-Eromanga Basin Image - Primary Industries and Resources SA

6 Oil & Gas Review, National ID BRIEF SACOME_SA PAGE 6 of 6 Eighr SnNeu5A-ci arae wruerry (OPGGS4 2044V sa-u-sui NA** 17 POO ElOn &Min Map showing the offshore Bight and Otway Basins Image - Department of Resources, Energy and Tourism Aerial view of Santos' Moomba processing plant in the Cooper Basin i;.q I