Tap Oil Limited (Tap) advises that at 0900 hours (AWST) today the Atwood Eagle semi-submersible drilling rig commenced drilling the Tallaganda-1 exploration well in the WA-351-P permit.
The Tallaganda-1 prospect straddles both the WA-351-P and WA-335-P permits in the Carnarvon Basin, offshore Western Australia. The well will target 0.8 to 1.3 Tcf (mean to P10) of gas within WA-351-P (Tap estimate).
The prospect will test the gas potential of sandstones in the prolific Triassic age, Mungaroo Formation, in a well defined horst block as imaged by high quality modern 3D seismic data. This is the primary play type of the North West Shelf.
The well will be drilled as a vertical well in a water depth of 1,141 m and is expected to take 37 days (trouble free) to drill with a projected total depth of 4,250 m. Weekly updates will be provided on Wednesdays during drilling operations.
Tap’s cost for the well will be carried up to a cap of $10 million following Tap’s farmout of 25% of its participating interest in the permit to BHP Billiton Petroleum (North West Shelf) Pty Ltd in 2011.
Tap’s Managing Director/CEO, Mr Troy Hayden, said:
“We are pleased to have commenced the Tallaganda-1 well which has the potential to deliver a resource multiple times larger than Tap’s current 2P reserves. Success at Tallaganda-1 will also give greater certainty as to the prospectivity of the Triassic potential on the permit.”
The Operator completed a detailed assessment of the plays, prospects and leads in the permit in 2010 including the 3D seismic acquired in 2008. Further leads and prospects have been defined in the Triassic Mungaroo Formation which Tap has assessed as a 2-3 Tcf combined speculative resource on block.
Additional leads have been identified in WA-351-P in the Jurassic and Early Cretaceous, both of which are productive elsewhere in the Carnarvon Basin. Current indications are that this shallower potential is larger, but higher risk, than the Triassic in this permit. Further work will be done on these objectives.
WA-351-P Joint Venture Participants
BHP Billiton Petroleum Pty Ltd (Operator)
BHP Billiton Petroleum (Northwest Shelf) Pty Ltd 55%
Apache Northwest Pty Ltd 25%
Tap (Shelfal) Pty Ltd 20%
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Tap Oil Ltd. said Monday it will consider selling its 10% stake in the Zola gas discovery offshore Western Australia before any liquefied natural gas development occurs, and has already received several enquiries about its plans.
“Tap has recently received several enquiries from large overseas industry players about Tap’s plans for Zola,” the company said in a statement to the Australian Securities Exchange.
The Zola-1 exploration well in the WA-290-P permit area in the Carnavon Basin discovered a mean contingent resource of 378 billion cubic feet of natural gas. The block is operated by U.S. producer Apache Corp. .
The entire Zola structure–located south of the giant Gorgon gas field being developed by a Chevron Corp.-led consortium–contains a mean 2.33 trillion cubic feet of gas, according to a report by independent experts RPS Energy Services Pty Ltd.
“It is appropriate for a company of Tap’s size and funding capabilities to consider monetizing an asset like Zola prior to the incurrence of the large scale LNG development costs which are likely required to bring the asset into production in a timeframe of at least five years,” Tap said.
Tap, which has a market value of A$170 million, said it is “confident that it can maximize the value of Zola by monetizing the asset on attractive terms at the right time.”
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The decision comes just days after Chevron and its Wheatstone foundation partners, including Apache Corp, sanctioned development of a two-train 8.9 million tonne a year LNG operation near Onslow. The partners have regulatory approval for five trains.
The Zola-1 well, which is thought to have hit a field containing up to two trillion cubic feet of gas, is located within striking distance of the path of the Wheatstone trunk line, which will link the project’s fields with the Onslow LNG plant.
Apache (30.25 per cent) is the operator of WA-290-P.
Santos (24.75 per cent), OMV (20 per cent) and Nippon Oil Exploration (15 per cent) are the other equity holders and expected to be interested in Tap’s 10 per cent stake. It is unclear whether the WA-290-P partners hold pre-emptive rights over each other’s stakes.
Tap managing director Troy Hayden would not discuss his WA-290-P plans but pointed to the portfolio restructure that he started since joining the company in December.
“We are always trying to add value,” he said yesterday.
Zola’s attractiveness to other gas players will have increased now that Chevron has sanctioned Wheatstone because it provides a tangible development option for Zola’s gas. However, any go-ahead for Zola’s development, as part of Wheatstone’s expansion, is not expected for several years. The necessary delay is thought to have prompted Tap to try to realise its stake in the permit now.
By Peter Klinger, The West Australian
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