03/03/2020 - 11:11

Onshore options attract attention

03/03/2020 - 11:11

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SPECIAL REPORT: The Perth Basin could be in for a transformational year.

Onshore options attract attention
Rob Towner says the Arrowsmith production plant has a capacity of 15,000 barrels a day. Photo: Gabriel Oliveira

The Perth Basin could be in for a transformational year.

Three companies with connections to prominent Western Australian business figures plan to spend more than $110 million in the Perth Basin starting this year.

That follows years of promise in the basin, which covers the area about two hours north of Perth.

Mineral Resources, headed by Chris Ellison, has said it would allocate about $30 million to the basin this financial year.

The two main items will be seismic survey work across nine tenements and one conventional gas well.

(click here to view a PDF version of this special report)

MinRes has partnered with Norwest Energy on the Lockyer Deep prospect, where the well is to be drilled this year.

The company has also crept up Norwest’s register, increasing its holding to 19.9 per cent in February.

The biggest potential Perth Basin investment would be the Waitsia stage two gas project, owned by Japanese business Mitsui and Beach Energy.

Beach counts Kerry Stokes’ Seven Group as a major shareholder.

Last year, the partners agreed to a small expansion of the existing Waitsia facility, doubling capacity to 20 terajoules a day. But an investment of at least $100 million, of which Beach would be expected to contribute $50 million, would raise capacity to as much as 150tj/d.

That represents roughly 15 per cent of WA’s domestic gas market.

An expansion of this nature has been on the radar for years, but now seems closer to fruition after the completion of front-end engineering and design work, with a final investment decision targeted by the end of the 2020 financial year.

Beach said it would spend $35 million in the year to June on capital expenditure in the Perth Basin, including appraisal drilling and long lead items for 2021 exploration.

Mitsui and Beach also share an interest in Beharra Springs, which was drilled in October and hit gas.

Strike Energy, which boasts John Poynton as chairman, raised $31.4 million for appraisal drilling at West Erregulla in the Perth Basin and for operations on the east coast.

West Erregulla is jointly owned by Strike and Warrego Energy.

Strike hopes to deliver first gas from the field by 2022.

Long life

There is a series of smaller, existing production facilities in the Perth Basin, in addition to Waitsia.

Triangle Energy operates the Cliff Head oil field and Arrowsmith production plant, which it acquired in 2016.

The company produces about 1,000 barrels of oil daily, trucked to the BP Kwinana refinery.

Chief executive Rob Towner told Business News Triangle was analysing data on a number of prospective nearby fields.

Production at the existing wells will decline in the next five or six years, so the focus will be on potential fields nearby to keep Arrowsmith running.

Arrowsmith had capacity of 15,000 barrels a day, Mr Towner said.

“We see a lot of value in the [processing] infrastructure,” he said.

“For that to be valuable, we’re looking at our own Cliff Head field, how we can increase production through opportunity in what we now produce.

“For identification of additional prospects and leads to drill, we’d potentially look at partnering, with a company wanting to come into the basin to look for oil.

“It is production relatively quickly that can be taken to market.”

In the short term there would be investment of up to $6 million at Arrowsmith, Mr Towner said, to optimise the plant.

“We’ve got the ability [now] to reinvest revenue into infrastructure for the longer term,” he said.

“Of all the basins in Australia at the moment, there’s not one ... large ASX or global oil-focused company in the basin looking for oil at all.

“They have been in the basin before but they, like everyone else, have done no extensive drilling at all.

“The amount of investment that’s gone into Cooper Basin, Eromanga Basin, and up into Queensland has not been mirrored in the Perth Basin at all.”

Further north (of Perth Basin) in the Canning Basin, Buru Energy has assumed titles to three exploration permits, with a farmout process on the company’s Kimberley exploration portfolio to begin in March.

Buru’s Ungani oilfield is pumping about 1,500 barrels a day, the company said in February.

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