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Small players warm to Perth Basin

RECENT oil discoveries in the Perth Basin have highlighted remaining opportunities in the WA oil and gas sector, in particular those for small players.

Voyager Energy managing director John Begg said that, while the largest companies went offshore, there were opportunities on or near-shore for the smaller ones without the same finance or access to technology.

These are the companies who could make the big finds in vast onshore areas that have been left languishing, regarded as less prospective, Mr Begg said.

He said niches were always being created for smaller companies. When oil prices waned, so did competition for territory, and when giant companies merged or larger companies took over medium companies, selected portfolio projects were deemed non-material and off-loaded.

Much of onshore WA remains frontier territory and there is a lot of oil and gas that can still be found through conventional means.

WA’s size made it easy for areas to be overlooked, and therein lay the opportunities for small companies who could come up with ideas, get the extra work done and then make the finds, Mr Begg said.

“Another province will turn up in WA and all the ideas of low prospectivity will be thrown out,” he said.

Local companies were less likely to be put off by Native Title and heritage issues than foreign companies, and government subsidisation for exploration activity might be the thing to encourage further activity by the smaller players, producing new information for these basins and leading to major discoveries.

Some onlookers are expecting ExxonMobil to sell down some of its acreage in the Carnarvon Basin, creating opportunities for medium-tier companies.

Among the local players, Tap Oil’s takeover bid for Arc Energy is seen as a play to combine Tap’s prospective Carnarvon Basin acreage with Arc’s 2001 onshore potential 80-million barrel Hovea Field oil discovery and gas production in the Perth Basin.

As with small and medium companies in most industries, a complementary partner with which to create some critical mass, and hence become more competitive in acquiring other assets, is of obvious benefit – if the right price can be agreed.

Onshore exploration began in the Perth Basin in the 1940s and offshore in 1965, but for many years the Perth Basin has been considered low in prospectivity and not commercially attractive to the larger companies.

But since the Cliff Head and Hovea oil discoveries, within three months of each other from late last year, competition for a slice of the Perth Basin has been considered almost feverish.

Local, national and international companies moved quickly earlier this year to increase or broaden their interests in existing permits.

Eastern states player and operator of the Hovea oil find licence, Origin Energy, grabbed a 30 per cent interest and operational control of the WA 226 permit to the north of the Cliff Head discovery in WA 286P, while Aberdeen-based Dana Petroleum held onto its 52 per cent stake.

Arc Energy and WA 286P operator, Sydney-based Roc Oil, have exercised options to take a piece of TP/15, between the Cliff Head find and the Dongara coast.

Norwest Energy, also in on WA 286P, is another to have secured some of TP/15.

Bids for new permits in the Perth Basin closed last week, with many companies said to have sought data. Both Federal and local departments, however, were tight-lipped about the number of final applications now to be assessed.

Amity Oil had planned to further drill the onshore Perth Basin Whicher Range field this year, but remains in discussion with potential partners after a proposed farm-in fell over last year.

Hardman Resources, a 10 per cent Arc shareholder and a partner in TP/15, is drilling the Woodada #19 gas development well in the producing Woodada field north of Eneabba.

Hardman purchased the Woodada field for $3 million in 2001 and signed a memorandum of agreement with Arc, whose Dongara gas also goes into the Parmelia pipeline.

Other gas fields in production in the Perth Basin include Yardarino and Origin’s Beharra Springs operation.

Further drilling on the Cliff Head trend is planned for next summer.

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