ACCORDING to government and industry estimates, Western Australia’s minerals exploration and processing industries are going to need an extra 500 terajoules of energy per day over the next 25 years.
ACCORDING to government and industry estimates, Western Australia’s minerals exploration and processing industries are going to need an extra 500 terajoules of energy per day over the next 25 years.
This is the equivalent of an additional five trillion cubic feet of gas.
Energy production for WA is already at $10 billion a year, and the State has the largest industrial gas market in Australia.
The increased energy focus in the minerals sector, plus the distance between large supplies of offshore gas and potential minerals development further south, is now highlighting the importance of areas of the State that previously sported a relatively low production profile.
The Perth Basin is one area that was, until recently, thought to offer insignificant prospectivity for petroleum activity, and for which local market opportunity was considered almost non-existent.
Coupled with the talk of industry expansion in the south, a string of discoveries in this basin, both offshore and on, over the past 18 months has sparked some renewed interest.
Production activity to date has involved mostly small to medium players, some entirely local and others with international portfolios.
However, larger companies, including Apache Energy, began showing more interest in the latter half of last year, and Origin Energy, a player with commitments across the Australian energy market spectrum, is increasing its influence.
While some offshore disappointments this summer have dented the hopes of smaller explorers, continued success onshore and comparatively inexpensive drilling is expected to keep investment flowing into the area.
Hardman Resources and Bounty Oil & Gas are planning an oil exploration well, Leafcutter, in theAlthough a new exploration play, Leafcutter is covered by a production licence, and if the reservoir and field qualify, early commercial production is expected. Hardman has a 75 per cent interest here, and as operator, is using its own rig. Sales to the Kwinana refinery are a certainty and trucking is simple, so for Hardman, any production would be a quick substantial cash boost.
Hardman is also a partner in last year’s onshore Jingemia oil discovery, and with operator Origin Energy and co-venturers Australian Worldwide Exploration and Voyager Energy, is awaiting approvals to commence long-term production testing, possibly in May. Sales have already been achieved from Jingemia-1, and expectations are that the well will bring Hardman an additional $2 million per year, starting this year.
Another local Origin partner, Arc Energy, has already significantly boosted reportable profits from its nearby Hovea oil field production.
Arc’s entire portfolio focus is the Perth Basin, and development plans for Eremia, also a 50-50 Origin-Arc oil venture, and the basin’s latest oil discovery, will be fast-tracked, using the Hovea processing hub.
The disappointment of some nearby offshore wildcat drilling this summer has not deterred players from continuing with further seismic and exploration activity.
The Cliff Head partners gained the most from the season’s drilling, with confirmation of oil in Cliff Head-4.
Hence, operator Roc Oil, and partners Australian Worldwide Energy, Arc, Voyager, and Norwest Energy, are hoping to announce a commercial development decision soon.
The likely threshold reserve for such a decision has been put at 15 million barrels recoverable at $US17 per barrel, and estimates of the reserves following Cliff Head–4 are now between 20 million and 30 million barrels.
Onshore separation and processing is likely, via an 11-kilometre pipeline to Dongara, and transport options include an offshore buoy mooring.
Proximity to infrastructure and an improved outlook for gas markets, are also offering div-idends for Perth Basin explorers and producers.
Australian Worldwide and Origin are already producing Perth Basin gas from Beharra Springs, and Bounty and Hardman from Woodada, while Arc and Origin have also located gas in Hovea.
New production is not a problem from a transport point of view, with the nearby Parmelia line still offering some capacity.
Arc also operates the older Yardarino, Dongara, Elegans and Moondarra fields, Empire Oil & Gas the Gingin gasfield, and Ausam Resources the Walyering gas find.
Older oil fields and discoveries include the Mt Horner, operated by Petroenergy, and North Yardanogo, with operator Australian Worldwide.
Further south, Amity Oil is hoping to further assess the Whicher Range gas field, and Wesfarmers and Griffin Energy have each attracted Japanese partners to mount separate proposals to provide baseload coal-fired power to Western Power.
Of the current opportunity to supply Western Power in the south of the State, Griffin Group executive general manager business development Gary Jeffery said it would make sense to have two coal and two gas competitors fighting it out.
Both Wesfarmers and Griffin want to supply coal-fired power from their Collie bases, and face stiff competition from gas.
“If we don’t make the shortlist, there’s some-thing wrong with the system,” Mr Jeffrey said.
He said a balanced energy plan would be one that looked at all options and considered what was happening elsewhere. Both New Zealand and Britain were running out of available gas, because much was in deep offshore locations.
Those who submitted expressions of interest to Western Power to provide additional baseload capacity, could know this month if they will be invited to submit a proposal.