SOUTH PACIFIC

Seeking markets for new developments

Higher oil / gas prices encourage exploration / development drilling, and oil production is up. Bringing gas / LNG projects onstream is more complicated

Australia

Click for enlarged view

After several years of high economic growth, Australia suffered negative GDP movement in fourth-quarter 2000. Only 1.8% GDP growth is expected this year. Nevertheless, the E&P sector has rebounded in tandem with higher oil and gas prices. Foreign operators are playing a larger role, evidenced by Phillips Petroleum’s takeover of Petroz. However, Shell last April finally gave up on its bid to acquire Woodside Petroleum.

Nationwide statistics. There were 202 wells and 1.43 million ft of hole drilled last year, up 15% and 4%, respectively. Offshore drilling totaled 87 wells and 660,931 ft. There were fewer oil completions but more gas wells. This year, 240 wells are forecast, including 95 offshore.

Thanks to new fields going onstream in Western Australia, oil production climbed 32% higher, to 722,779 bpd. Gas output was 3% greater, at 1.99 Bcfd. Australian analysts expect oil production to peak this year and decline in coming years. However, LNG production and exports should increase.

Table: Australian discoveries, July 2000 – July 2001

Western Australia. State officials said that 2000 was a record year. Value of petroleum production more than doubled to nearly A$10 billion ($5.1 billion), and oil and gas accounted for 39% of state earnings. Offshore drilling hit a record high, at 62 wells. Overall, 75 wells were drilled, 55 of them exploratory. A dozen or more discoveries were struck during the last 12 months by Apache, INPEX, Kerr-McGee, Santos and Woodside (see "discoveries" table). This year’s drilling is likely to equal 2000’s figure. The state released 26 offshore tracts for bidding last April, as part of the 2001 nationwide release. By late May, operators had applied for 17 new permits, more than in all of 2000.

Woodside made a major decision in April, opting to build a fourth LNG train at the North West Shelf Venture facilities on the Burrup Peninsula. Construction on the $816-million (A$1.6-billion) project will begin in September, with first output expected in mid-2004. The project gained life after Osaka Gas Co. signed a deal to purchase 1 million t/year of LNG.

Syntroleum Corp. received approval in August 2000, to construct a 10,000-bpd gas-to-liquids plant on the Burrup Peninsula. The $306-million (A$600-million) Sweetwater project is set to proceed, after design changes were finalized in June 2001.

Woodside gained approval of its concept for developing Echo / Yodel gas / condensate field. Two subsea gas wells will be tied back to the Goodwyn "A" platform. Echo / Yodel will produce 37 million bbl of condensate during five years, beginning in 2002.

Apache’s Legendre oil field went onstream offshore during May 2001, at about 25,000 bopd. Output should climb to 40,000 bopd, as more wells go onstream. Nexen exercised its pre-emptive right to acquire BHP’s 50% interest in Buffalo oil field. The acquisition gives Nexen 100% interest.

Offshore Western Australia, BHP Petroleum boosted production by 20,000 bopd after the Griffin 8 and Scindian 3 wells were tied in last year. Output is routed to the Griffin Venture FPSO, shown here. (Photo courtesy of BHP Petroleum)

Victoria. The first half of 2001 was kind to Santos, which struck five gas discoveries, including McIntee 1, Tregony 1, Croft 1, Lavers 1 and Naylor 1 (see "discoveries" table). Santos’ local general manager, Jon Young, said, "The use of 3-D seismic technology helped the South Australia Business Unit achieve a 100% success rate from five wildcat wells." Offshore, Origin Energy’s Geographe 1 found a 787-ft gross gas column in permit VIC/P43 during June 2001.

Victorian operators last year shot 376 sq mi of 3-D seismic (344 mi offshore) and 60 mi of 2-D seismic (all onshore). Eight wells were drilled, three onshore and five offshore. Strike Oil and Esso expected to conduct 3-D seismic programs offshore in the Otway and Gippsland basins, respectively.

Austria’s OMV has proposed development of the Patricia-Baleen field offshore by linking subsea completions to a pipeline running to the coast. Progress depends on successful gas sales negotiations. Esso and BHP are evaluating the building of a 32-mi (51-km) pipeline from the Bream "A" platform, to enable production of Bream’s gas reserves. Preliminary design and engineering are underway, with a final decision due at year-end.

Queensland. Santos struck another string of gas / condensate discoveries, onshore in the Cooper / Eromanga basins. Finds include Roti West 1, Coonaberry 1, Raworth 1 and Quasar South 1 (see "discoveries" table). Santos also made a deeper-pool gas find (4 MMcfgd, 223 bcpd) in Roti 2. Meanwhile, Mosaic Oil in July 2001 drilled Spring Grove 2 to a 6,486-ft TD and intersected a 79-ft gross hydrocarbon column of gas and light oil.

Queensland operators shot 1,093 mi of 2-D seismic and 239 sq mi of 3-D seismic, all onshore. Officials said that 29 wells were drilled, and they predict 66 for 2001. Four onshore tracts in the Bowen and Surat basins are also on offer. Santos focussed development work on the southwest Queensland gas program, where two wells went online, and four new wells were drilled. Statewide production was 16,164 bopd and 354.8 MMcfgd.

A draft Petroleum and Gas Bill has been released for public comment. It would replace the Petroleum Act of 1923 and Gas Act of 1965 as a single act covering all stages of the industry.

South Australia. Santos struck a gas find (Burke East 1, see "discoveries" table) and oil discovery (Moomba 136) in the Cooper basin. Origin Energy also hit gas in Belnaves 1 (9,426-ft TD, 1.39 MMcfgd) in the Otway basin. Queensland seismic work totaled 1,531 mi of 2-D (1,331 mi offshore) and 330 sq mi of 3-D (all onshore). About 60 wells were drilled, and 85% were development wells.

Development is centered on Santos’ Cooper basin gas program. During first-quarter 2001, the firm drilled nine wells as future gas producers. Another 17 wells went onstream, and 15 wells were fracture-stimulated. There was one oil completion.

Northern Territory. Woodside, Shell, Phillips and Osaka Gas are pushing forward with development of the Greater Sunrise gas fields in the Timor Sea. The project was spurred by a deal signed with Phillips by U.S.-based El Paso Corp., to take 4.8 MMt/yr of LNG from a plant in Darwin. The project will run in cooperation with development of Phillips’ Bayu-Undan field in the Joint Petroleum Development Area, (former Zone of Cooperation). Please see our JPDA (ZOCA) summary for details.

Northern Territory operators last year shot 1,331 mi of 2-D seismic and 1,025 sq mi of 3-D seismic, all offshore. Wells drilled rose 20%, to 12. Footage drilled increased 17%, to 111,293. Officials forecast 18 wells in 2001. Newfield Exploration has slated two more Timor Sea wildcats during second-half 2001.

Production from 44 oil wells was 159,000 bpd. Output from 12 gas wells was 61.9 MMcfd. Magellan Petroleum completed the North Flank Gas Injection Project at Mereenie field. The onshore project constructed an in-field gas supply pipeline and recompleted two wells as gas reinjection wells. Additional oil will be recovered from four adjacent wells.

Tasmania. A$400-million project to produce gas at Yolla and White Ibis fields offshore – and move it to the mainland – is gaining life. Last March, Origin Retail signed a heads of agreement to buy 20 petajoules / year (about 18.5 Bcf/year) of gas from Australian Worldwide Exploration, CalEnergy Gas and other partners in the "BassGas Project." Yolla is in 262 ft of water, and two existing wells contain 300 PJ (about 280 Bcf) of proved and probable gas reserves. BassGas is seeking development approval by year-end.

After no drilling in 2000, one offshore wildcat is expected for 2001. The Department of Mineral Resources also forecasts 482 mi of 2-D seismic and 140 sq mi of 3-D work.

New South Wales. Activity has reappeared after a lapse in 1999. There were 10 coalbed methane wells drilled last year, and 6 mi of 2-D seismic were acquired. This year, the Department of Mineral Resources expects 300 mi of 2-D seismic, plus two onshore wells and additional coalbed methane wells.