ONE of the most controversial chapters in the history of oil exploration in Western Australia is set to be re-opened next month, when drilling resumes at the infamous Cornea oil field, 400 kilometres north of Derby.
ONE of the most controversial chapters in the history of oil exploration in Western Australia is set to be re-opened next month, when drilling resumes at the infamous Cornea oil field, 400 kilometres north of Derby.
On December 18, a drilling rig will arrive on location to drill the first well at Cornea in more than a decade, on behalf of a consortium associated with Melbourne oil veteran Geoff Albers.
By New Year’s Day, the consortium led by the Albers-chaired Moby Oil & Gas should know whether Cornea is as jinxed, as local legend would suggest.
Cornea burst into the spotlight in January 1997, when a joint venture comprising Shell, Chevron and small Australian explorer Cultus Petroleum announced a major oil discovery with their Cornea-1 well.
On the back of that first strike, Shell believed the structure may have hosted as much as 2.6 billion barrels of oil, making it a potential rival to the North West Shelf and Bass Strait.
Shares in Cultus, the only Australian-listed partner, quadrupled to more than $4 as the partners promised to spend at least $150 million drilling 46 wells to secure the adjoining permits.
But things quickly went awry as all 10 follow-up wells and production tests were failures.
Facing the prospect of having to complete a further 35 wells with no chance of success, the partners sought to surrender their permits without completing the promised work.
The call sparked widespread condemnation within government and industry, with critics arguing that releasing the partners would destroy the integrity of the work-bidding process because companies would no longer feel bound by their commitments.
Under the work-bidding program, the successful permit winner is obliged to undertake all the work it has committed to undertake.
The matter was finally resolved in October 1999, when the partners committed to spend the outstanding amount in new permits elsewhere. By that time, Cultus shares had crashed and it was taken over by Austria’s OMV for just 84 cents a share.
Since then, the Cornea name has been synonymous with failure.
But for Mr Albers, who secured the permit for next to nothing in mid 2003, Cornea has remained an enigma.
According to James Willis, managing director of the Albers Group of companies, a forensic review of the original data has improved understanding of the geology and generated fresh enthusiasm.
In September, Moby released the first-ever public contingent resource estimate for Cornea of up to 85 million barrels of recoverable oil, with a best estimate of 37 million barrels. Just how realistic that is should be known by the end of the month.
“The conclusion we have come to is that there are potential sweet spots in the reservoir,” Mr Willis said.
“It’s got the potential to be quite sizeable, but we really need clear evidence that we’ve got liquid hydrocarbons in a reservoir that is capable of producing.
“The right ingredients are there, but you will never know until you drill it.”
Even a modest resource may be viable if oil rebounds to $US100 a barrel as is widely expected, he said.
“At higher prices, we think Cornea is one of those extremely rare examples of a known but undeveloped oil accumulation, so we are pretty excited about it,” Mr Willis said.
As soon as the $17 million Cornea-3 well is complete, the rig will move 20km west to test Moby’s bigger Braveheart target. It lies just 40km east of the massive Ichthys gas-condensate field.
But first, Moby shareholders must approve the company’s farm-in to both Cornea and Braveheart, and the purchase of a small stake in another major gas target at Artemis, near the North West Shelf.
The transactions will more than double Mr Albers’ stake in Moby to 74 per cent, but will also approve a $22 million placement to fund the company’s exploration commitments.
