Analysis, Basin Profiles, Exploration, News, Policy, Projects, Shale, Tight Gas

Exploration in the Perth Basin

In this instalment of our regular feature profiling Australian geological basins, we take a closer look at the Perth Basin. This WA basin is thought to contain significant tight gas, shale gas and shale oil resources, which may be suitable for commercial development. As a result, exploration activities in the basin have increased in recent years. The Perth Basin also contains Western Australia’s only currently producing unconventional play, in the Corybas tight gas field.

Key Statistics

Unconventional resources

Tight gas, shale gas, shale oil

Prospective resources

160Tcf shale gas overall; 14 billion barrels shale oil, tight gas not formally assessed (EIA, 2013)

Risked recoverable amount

32Tcf shale gas; 0.5 billion barrels shale oil (EIA, 2013)

Main unconventional formations

Dandaragan Trough, Carynginia Formation, Kockatea Formation, Irwin River Coal Measures, Yarragadee Formation, Dongara/Wagina Sandstone, High Cliff Sandstone, Sue Coal Measures

Key active companies

AWE Limited, Norwest Energy, Origin Energy, Empire Oil and Gas,Transerv, Alcoa, Bharat PetroResources, UIL

Key projects

Arrowsmith Exploration Project (AWE Energy, Norwest, Bharat PetroResources), Warro Gas Field Project (Transerv, Alcoa)

Unconventional gas in the Perth Basin

The Perth Basin is an onshore and offshore sedimentary basin located across approximately 172,300 square km in Western Australia.

The basin has seen commercial oil and gas production from conventional reservoirs since 1964. The majority of conventional activity has been located in the northern onshore sections of the basin, which are extensively explored, with fewer discoveries in the onshore southern sections.

The Perth Basin is also thought to contain significant tight gas and shale gas and oil resources.

The northern basin’s primary depocentres with unconventional hydrocarbon potential include the Carynginia Formation (prospective for shale gas and oil), the Kockatea Shale (prospective for shale gas and oil); the Irwin River Coal Measures (prospective for tight gas, shale gas and shale oil); the Yarragadee Formation (prospective for tight gas); the Dongara/Wagina Sandstone (prospective for tight gas and shale oil); and the High Cliff Sandstone (prospective for tight gas and shale oil).

The primary depocentre in the south of the basin is the Sue Coal Measures, prospective for tight gas.

Currently the only unconventional play producing in the Perth Basin is the Corybas tight gas field, located in the Irwin River Coal Measures.

The US Energy Information Administration (EIA) has assessed the potential shale gas and oil resources of two main shale formations in the basin, the Permian Carynginia and the Triassic Kockatea shales.

The Carynginia Shale is estimated to contain 124Tcf of gas in­-place, with a risked, technically recoverable shale gas resource of 25Tcf (EIA, 2013). The prospective area was inclined to dry gas, and not thought to contain shale oil.

The Triassic Kockatea Shale was estimated to contain gas in-­place of 36Tcf, with a risked, technically recoverable shale gas resource of 7Tcf.

It is also estimated to contain 14 billion barrels of shale oil­-in-­place, with a risked, technically recoverable shale oil/condensate resource of 0.5 billion barrels.

The Government of Western Australia’s Department of Mines and Petroleum (DMP) estimates that known Perth Basin tight gas fields hold between 9­12Tcf of recoverable gas, located in the vicinity of existing pipelines (DMP, 2014).

Perth-Basin-aus-mapUnconventional activity in the region

A number of exploration, assessment and development activities are underway targeting the Perth Basin’s unconventional oil and gas resources.

Companies currently active in the basin include AWE, Norwest Energy, Origin Energy, Empire Oil and Gas, Transerv, Alcoa, Bharat PetroResources and UIL Energy.

Western Australia’s first producing tight gas well is the Corybas 1 exploration well. This well was drilled in the northern section of the Perth Basin in 2005 by ARC Energy (which was acquired by AWE in 2008) and flowed gas from the Irwin River Coal Measures.

In 2009, AWE conducted hydraulic fracturing on the vertical well, increasing gas flow rates. Following encouraging results, the well was linked by pipeline to the nearby Dongara gasfield’s processing facility.

An extended production test from April to September 2010 resulted in a recoverable reserves estimate of 2.9Bcf (DMP 2014). A number of other production tests followed and the well is currently the only commercially producing tight gas well in Western Australia.

AWE and Norwest Energy have been targeting prospective Triassic and Permian shale targets within the Perth Basin.

The first well targeting shale gas, Woodada Deep 1, was drilled in 2010 by AWE to investigate the Carynginia Formation, the Kockatea Shale, and the Irwin River Coal Measures.

The initial core testing results for the middle interval of the Carynginia Formation were favourable compared to US gas shales, resulting in further evaluation.

Extensive coring programs were carried out at Woodada Deep 1 and Arrowsmith 2 in 2011. In 2012 three shale gas wells were fracced in the northern Perth Basin (Woodada Deep 1, Senecio 2, and Arrowsmith 2) (DMP 2014).

The Arrowsmith exploration project is located within exploration permit EP413, north of the town of Eneabba.

This permit is operated by AWE Energy (44.252 per cent via subsidiaries) with Norwest Energy (27.945 per cent) and Bharat PetroResources (27.803 per cent) and contains prospective tight gas plays in the Carynginia Formation, Irwin River Coal Measures, High Cliff Sandstone and fractured lower Kockatea Shale, in addition to containing conventional gas targets.

Norwest fracture stimulated Arrowsmith 2 in 2012 to assess the Carynginia Formation for its shale gas potential.

Five zones over four formations (the High Cliff Sandstone, Irwin River Coal Measures, Carynginia Formation and Kockatea Shale) were fracced.

Gas flowed from the tight sands in the High Cliff, the Irwin River Coal Measures and the lower and middle Carynginia shales, culminating with both oil and gas in the Kockatea Shale (DMP 2016).

Testing on Arrowsmith 2 was completed in early 2014 and results suggested that the Carynginia Formation and the Irwin River Coal Measures were potentially suited for development. A 3D seismic acquisition program was conducted in 2015 and the data is being used to identify the optimal targets for a shale gas well in the field, as well as conventional hotspots.

Additionally, AWE holds stakes in a number of other permits in both the northern and southern sections of the Perth Basin (including permits in the Woodada gas field, Dongara and Yardarino gas field and Watsia gas field), and has conducted a range of exploration activities targeting both conventional and unconventional oil and gas.

Norwest operates within a range of permits in the northern sections of the basin, and is expanding its footprint in the southern sections. Norwest retains interests in seven permits within the northern Perth Basin, and is operator of four of these, with a significant total net footprint of 3,100 square km.

According to Norwest, the company’s current primary focus is on progressing the emerging shale gas industry in the northern Perth Basin.

The Warro gas field project is operated by Transerv (through its subsidiary Latent Petroleum) with funding provided by farm­in partner Alcoa. This project is targeting tight gas within Retention Leases 6 and 7. Transerv estimates that the field contains 7­10Tcf in place and potentially 1­3Tcf of recoverable gas.

The field is located conveniently close to both the Dampier­Bunbury Natural Gas Pipeline and the Dongara­Perth Parmelia Pipeline.

In 2012, independent analysis of the available data (including 3D seismic data) on the Warro Gas Field by a group of experts confirmed significant quantities of gas are held within the field with the potential to flow at high rates.

As a result, the Warro Joint Venture decided in late 2014 to continue its evaluation of the field by the drilling of Warro­5 and 6 during the second half of 2015. These wells were completed in early 2016 and are currently part of an extended well test program.

In March 2016, it was announced that the Warro-4 well would be re­-entered and tested to gain further insight to the whole of field. The results of the re-testing, released in July 2016, were encouraging.

Transerv stated that the increased flow rates achieved were in line with outcomes seen in US tight gas fields where sweet zones are targeted for production. The newly acquired data will now be analysed along with data from Warro-­5 and 6 to determine the appropriate next steps for the Warro project.

Meanwhile, Empire Oil and Gas holds the largest net acreage in the highly prospective Perth Basin with its production licenses and permits covering more than 10,000 square km.

While the company is primarily targeting conventional oil and gas plays, independent analysis suggests that considerable unconventional targets may also be located within its permits.

UIL Energy is targeting onshore conventional and unconventional oil and gas plays within the north and central Perth Basin. In 2016 it acquired two additional permits from Eneabba Gas.

In late 2015, Pilot Energy acquired the exploration permits EP416 and EP480, originally owned by Empire Oil and Gas.

Origin Energy, which holds a number of stakes in both conventional and unconventional plays in the Perth Basin, is currently looking to sell its WA assets as part of its plan to sell at least $800 million of non­-core assets by the end of 2017.

The Perth Basin assets are reported to be receiving interest from a number of industry participants.

Commercial viability

The proximity of parts of the Northern Perth Basin to pipelines and other vital infrastructure means that it is likely to be the first area in Western Australia to supply shale gas to the market.

Furthermore, the basin contains the only tight gas fields in the state that have progressed to the contingent stage of exploration, and the producing Corybas 1 well.

It is likely that the unconventional plays located close to existing infrastructure will be developed first, with resources located further from infrastructure in the southern parts of the basin taking longer to be developed.

The regulatory environment in WA is generally favourable to oil and gas development, with a number of initiatives underway to support the industry.

However, Western Australia currently has a domestic gas reservation policy in place which requires new gas developments to supply the equivalent of 15 per cent of their gas exports to the Western Australian domestic gas market.

The Perth Basin is one of WA’s most attractive unconventional oil and gas hotspots, and is likely to see further exploration and continued development over the coming years.

Discussion

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