sue slater - rlms - where are we now? a review of galilee basin petroleum exploration since the 2008...

Where are we now? A review of Galilee Basin petroleum

exploration since the 2008 land release

Sue Slater| November 2013 GALILEE BASIN COAL & ENERGY CONFERENCE

Outline

Historical perspective Results of the 2008

Land release Four years on, where

are we now? Impact of regulatory

changes, such as Wild Rivers

Future uncertainty?

Information Sources

• This presentation utilises publically available databases from the Queensland Department of Mines and Energy

• Additional information from various company websites and press releases

• Some additional information has been provided by individual companies

• For historical information, PJ Hawkins & PM Green, 1993: Exploration results, hydrocarbon potential and future strategies for the northern Galilee Basin. The APEA Journal, 1993 Volume 33 Part 1

GALILEE BASIN

Early exploration Petroleum exploration in the Galilee Basin

began as early as 1922 when HNT (Tambo) 1 was drilled, followed by MCO (Nive River) 1 in 1929 and DON (Barcaldine) 1 and 2 in 1930

But it was in 1957 when a more sustained effort began and continued to the mid-1970s

This phase of exploration was focused on the deep sandstone reservoirs of the Galilee Basin; and wells penetrated up to 2000m of section

During this period, the Bureau of Mineral Resources also carried out stratigraphic drilling, although most of these wells were quite shallow

Early seismic exploration

Eight seismic surveys by 5 companies totalling 1385km were completed during the 1960s

In the 1970s American Australian Energy Ltd and Australian Aquitaine Petroleum Pty Ltd acquired 689km of 2D seismic; 618km of this was by Australian Aquitaine in 3 surveys

In 1976 the Bureau of Mineral Resources ran regional lines with 230km acquired over the Galilee Basin

Early exploration

Two things happened in the early 1970s which impacted strongly on this phase of exploration

The withdrawal of income tax concessions for explorers in May 1973

and the termination of the federal Petroleum Search Subsidy Scheme in June 1974

This generally made greenfields exploration less attractive for investors

Second phase of exploration A second phase of exploration in the 1980’s

included over 32,800 line km of seismic of which over 17,000 line km were acquired by Esso Australia Ltd

This phase of exploration tended to be focused on shallower targets with wells penetrating around 500m of sequence and was dominated by the extensive regional program of Esso Australia Ltd in the northern Galilee Basin

Second phase of exploration

During this phase Esso drilled seven wells Other companies investigated the Lovelle

Depression and the Koburra Trough Thirty-one wells, and a further five stratigraphic

bores by the Queensland government, were drilled during this phase but no economic hydrocarbon discoveries were made

This exploration phase ended in the late 1980s

1990s to early 2000s In 1992 Enron Exploration Australian Pty Ltd was

granted ATP 529P over 602 graticular blocks, and commenced drilling in the Rodney Creek area

The target for this exploration has been the coal seam gas of the Betts Creek beds

Drilling was in the Rodney Creek and Crossmore areas

An early pilot program at Rodney Creek proved inconclusive

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Drilling prior to 2008

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Deep Stratigraphic

Drilling prior to 2008 Total for this period = 136

RLMS GALILEE BASIN COAL & ENERGY CONFERENCE| NOV 2013 Drilling pre-1979

RLMS GALILEE BASIN COAL & ENERGY CONFERENCE| NOV 2013 Drilling 1980 - 1999

RLMS GALILEE BASIN COAL & ENERGY CONFERENCE| NOV 2013 Drilling 2000 - 2009

RLMS GALILEE BASIN COAL & ENERGY CONFERENCE| NOV 2013 Drilling 2010 to present

RLMS GALILEE BASIN COAL & ENERGY CONFERENCE| NOV 2013 Seismic 1960s

Acreage position prior to 2004

Fourteen ATP applications were lodged prior to the 2004 legislation coming into effect

Three of these applications are still not granted Only two of these have grant dates prior to 2004

and are still current (ATP 529 and ATP 560) The remaining nine ATPs were granted under

the new legislation between 2005 and 2009

Land releases in the Galilee Basin

In 2007 a Land Release included some areas in the southern parts of the Galilee Basin

Five of these ATPs are still current, one was relinquished in full by holder (ATP 866)

However it was the 2008 Land Release over the northern Galilee Basin that has had the biggest impact

Fourteen ATPs from that release are still current, two remain as applications

In 2010 a further five areas in the Galilee were released, two of these are still applications

In 2011 another two areas were released, both of which are still under application

2008 Land release Six of the ATPs were granted in 2009 Eight were granted in 2010 This means that 2013/2014 will see a significant

turnover of land as the mandatory 1/3 relinquishment from each ATP takes effect

Together, the 2008 land release covered about 1368 graticular blocks

This means that relinquishments in 2013/14 will comprise a minimum of about 373 graticular blocks (excluding the tenures not yet granted)

2008 Land release results

Application number PLR

No. of tenders

Successful tenderer ATP number

2008-1-1 4 Nazara Energy Pty Ltd 974

2008-1-2 6 Nazara Energy Pty Ltd 978

2008-1-3 3 Queensland Energy Resources Ltd 984

2008-1-4 4 Pangaea Galilee Pty Ltd 989

2008-1-5 4 Stardrift Pty Ltd and others 991





2008 Land release results

Application number PLR

No. of tenders

Successful tenderer ATP number



2008-1-12 2 Galilee Coal Pty Ltd Name change to Tambo Coal & Gas Pty Ltd

1020


2008-2-2 5 Pangaea Galilee Pty Ltd 1041

2008-2-3 1 Energetica Resources Pty Ltd (not granted) 1043




Exoma Energy

RLMS GALILEE BASIN COAL & ENERGY CONFERENCE| NOV 2013

Took over Stardrift’s five successful bids, and the areas were granted in 2009

Drilled eleven wells across four of the ATPs Undertook extensive analytical programs on those wells Identified three independent hydrocarbon plays

– Conventional oil in the Jurassic Hutton and Adori Sandstones – CSG in the Permian Betts Creek beds and Aramac Coal

Measures – Shale oil and/or gas in the Cretaceous Toolebuc Formation

On October 4, in an article in the Longreach Leader, announced that their 5 tenures would not support commercial development of CSG or shale gas – although they did make non-commercial oil discoveries in

Katherine 1 and Katherine West 1 on ATP 999 Recently submitted LWPs and relinquishments on each tenure


Source: www.exoma.net

http://www.exoma.net/

QER


Successfully bid for 5 areas, one was granted in August 2009 (ATP 984), the others in 2010 (ATP 1032, June; ATP 1010, July; ATP 1015, 1044 November)

Recent farm-out agreement with Comet Ridge over part of ATP 1015

Reprocessed a significant number of seismic lines and acquired additional lines in ATP 984 and ATP 1015

Eight wells drilled over two ATPs (984 and 1015), two of which were part of the farm-out agreement

Relinquishment was due in August 2013 for ATP 984, and 574 sub-blocks were relinquished

Subsequently the ATP 984 has been relinquished in full because of thinning coals at depths in excess of 1400m

First relinquishments for the remainder of the tenures due 2014

Pangaea Resources


Successfully bid for two areas, both granted in December 2010, as ATP 989 and ATP 1041

Initial work program in ATP 989 comprised 750km reprocessing, drilling 3 wells (Year 1 and 2) with 31 wells and 7500 line km of aerial full tensor gradiometric gravity survey (Year 3 and 4)

In ATP 1041 the initial work program was 300km reprocessing and 3 wells (Year 1 and 2), with a further 10 wells plus the gravity survey in Year 3 and 4

Drilled 4 conventional wells, Minion 4, 5, 8 and 9 between June and September 2012

– Total depths from 1038m to 2177m

Drilled 2 coal seam gas wells, Minion 3 and 6 between August and September 2012

– Total depths 1829m and 1892m

WestSide Corporation


Nazara Energy successfully bid for two areas, ATP 974 and ATP 978;

Acquired and operated by WestSide Corporation Granted in July 2010 For each ATP, the Initial work program comprises seismic

reprocessing, 8 core wells (Year 1 & 2); with a further 35 core wells (Year 3 & 4)

In ATP 974, Glenlyon 1 and 2 were drilled in 2011 The tenures are now held jointly by WestSide (51%) and

Mitsui E&P Australia (49%) First relinquishments due next year

Tambo Oil & Gas


Successful bid for the area in 2008, granted as ATP 1020 on 20 April 2009

First relinquishment occurred April 2013 Original grant was for 4 years, renewal is pending Initial work program comprised

– 600km reprocessing – 180km 2D seismic – 20 wells (Year 1 & 2) and 10 wells (Year 3 & 4) to a depth of 200m – 15 wells to a depth of 150m

Actual work – Lodestone 1A drilled to 200m, finishing within the Adori Sandstone – Lodestone 2 drilled to 345m, finishing in the Hutton Sandstone – the hole

did encounter coal in the Birkhead Formation but only 0.07m – Unable to confirm seismic acquisition or reprocessing

Comet Ridge Ltd Two existing pre-2004 Act applications were granted in 2009

as ATP 743 and ATP 744 In mid-2012 Comet Ridge entered a three-stage farm-in

agreement with QER to expand the Gunn project area into part of ATP 1015

Five wells have been drilled in ATP 744 Additional seismic has been acquired in the south-west of ATP

744 An additional two wells as part of the ATP 1015 farm-in,

complete stage 1 of the farm-in agreement Comet Ridge will earn an initial 20% interest Comet Ridge has identified 1870 PJ of 3C resources in ATP

744 (Gunn Project)


AGL Energy


The existing ATP 529 was subject to a farm-in agreement announced 11 July 2008, AGL has earned a 50% interest

Since 2008, 13 wells have been drilled, including the Glenaras pilot

AGL is operating the Glenaras pilot on ATP 529, which has produced a small amount of gas to surface – but progress is slow – in June 2011, announced 259PJ of 2C and 1090PJ of 3C

resources from within 450km2 of ATP 529 Construction of a large water storage facility at Glenaras to

hold the produced water from the pilot Last relinquishment was made in November 2012, comprised

625 sub-blocks Renewal and LWP lodged, still pending ATP 529 is subject to only one more renewal in 2016, before

the authority ends

Blue Energy


Pre-2004 Act application was granted in 2006, under the new Act as ATP 813

Commenced their drilling program with Carolina 1 in 2008 First relinquishment of 650 sub-blocks was made in 2010 Second relinquishment is due next year Since 2008, five wells have been drilled Additional seismic has been acquired and existing seismic

reprocessed Kanaka 1 intersected 26.7m net coal, Stainburn Downs 1

20.5m and Myross 1 17.8m, across the Betts Creek beds and Aramac Coal Measures

Ballyneety 1 is the most eastern well and intersected 12.3m net coal in the Betts Creek beds and Aramac Coal Measures

Gas in place estimates for ATP 813 are 554PJ contingent resource, 1,142PJ prospective resource

Galilee Energy


Rodney Creek 8 drilled in 2007 on ATP 529 was encouraging with 24m of gassy coal

A farm-out agreement for ATP 529 with AGL was made in 2008

Galilee retain a 50% interest through subsidiaries Capricorn Energy Pty Ltd and Beaconsfield Energy Development Pty Ltd

The Glenaras Pilot was part of the farm-in agreement

ATP 799 was a pre-2004 Act application granted in 2009 as under the new Act

On ATP 799P three wells have been drilled and seismic acquired

Confirmed that the coals intersected in the Rodney Creek wells continue into ATP 799

Origin Energy


Three pre-2004 Act ATP applications were granted in 2006/2007 as ATP 666, ATP 667 and ATP 668

Since then twelve wells have been drilled across the three ATPs

Potential commercial areas on ATP 666 and 667 have been under application since April 2010 – These are still undecided

Relinquishments were made in 2010 – ATP 668 made the entire mandatory relinquishment, but – ATP 666 and 667 relinquished areas were restricted to

those not subject to the pending PCA applications

Relinquishment requirements

ATP Sub-blocks offered

Commencement date

Relinquishment due date

Minimum relinquishment area (sub-blocks)

974 1800 1 August 2010 31 July 2014 600

978 2350 1 August 2010 31 July 2014 784

984 1649 14 August 2009 13 August 2013 550 (has been relinquished in full)

989 2500 16 December 2010 15 December 2014 834

991 1850 1 September 2009 31 August 2013 617





Relinquishment requirements

ATP Sub-blocks offered

Commencement date

Relinquishment due date


1010 1549 1 August 2010 31 July 2014 517

1015 1290 1 December 2010 30 November 2014

430

1020 2150 1 May 2009 30 April 2013 717

1032 2064 1 July 2010 30 June 2014 688

1041 2475 16 December 2010 15 December 2014 825

1044 1200 1 December 2010 30 November 2014

400

1047 1990 Not granted

1049 1811 Not granted

Other relinquishments

ATP Relinquishment due date


Next relinquishment due date


743 4 September 2013 675

744 31 October 2013 682

799 28 February 2010 500 28 February 2014 492

813 28 February 2010 650 28 February 2014 650

529 11 September 2012 1250 30 November 2016 1250

780 9 February 2010 850 Relinquished in full in 2013

666 30 April 2010 250 Remaining area covered by PCA applications lodged in 2010

667 30 April 2010 50 Remaining area covered by PCA applications lodged in 2010

668 29 April 2011 850 30 April 2015 834


In 2013, a minimum of 5350 sub-blocks have been relinquished from the granted 2008 land release blocks

By the end of 2014 there will be a significant percentage of the Galilee Basin no longer under an ATP when a further minimum of 5078 sub-blocks are relinquished

Additional relinquishments from other tenure in 2013 included a minimum of 1142 sub-blocks, plus a relinquishment of 1650 sub-blocks when ATP 780P was relinquished in full

And a further minimum of 1357 sub-blocks due in 2014 from these other tenures

Relinquishments

Mixed results?

Exoma Energy, on October 4, in an article in the Longreach Leader, announced that their 5 tenures would not support commercial development of CSG or shale gas – although they did make non-commercial oil discoveries in

Katherine 1 and Katherine West 1 on ATP 999 Comet Ridge has identified 1870 PJ of 3C resources in ATP

744 (Gunn Project) – and farmed in to part of ATP 1015

Blue Energy has gas in place estimates for ATP 813 of 554PJ contingent resource and 1,142PJ prospective resource

AGL is operating the Glenaras pilot on ATP 529, which has produced a small amount of gas to surface – but progress is slow – in June 2011, announced 259PJ of 2C and 1090PJ of 3C

resources from within 450km2 of ATP 529


Mixed results?

73 wells drilled in the period 2009 to current This compares to 110 over the previous 50 year

period (excluding government stratigraphic drilling programs)

Approximately 1870km seismic acquired Reprocessing and reinterpreting of existing seismic Additional analyses on water and gas undertaken Local and regional interpretations Basin-wide water study commissioned by the

Galilee Basin Operators’ Forum (GBOF) and released in 2012


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Drilling between 2009 and 2013

CSGPetroleumStratigraphic

Downloaded October 2013

Total for this period = 74

Wild Rivers

In 2011 the State Government made the Cooper Creek Wild River Declaration

This was shortly followed by the Georgina and Diamantina Basins Wild River Declaration

Although not intended to apply to existing activities, these declarations caused uncertainty amongst explorers

The declarations have subsequently been amended by the Newman government which took effect on 10 May 2013

Further change is proposed under the Regional Plans, with the introduction of Prescribed Environmental Areas


Galilee Basin Development Strategy Infrastructure, or the lack thereof, remains a

considerable impediment to future development for any petroleum resource

Whilst there is significant infrastructure development associated with the proposed coal mines, it will be of limited value in getting gas to markets

In the Galilee Basin Development Strategy, the Government has acknowledged the difficulty of development in an area that lacks essential infrastructure and

The challenge for investment in current and forecast market conditions


Galilee Basin Development Strategy Clearly the focus of the strategy is the coal mining

projects on the eastern margin of the basin, however the challenges equally apply to petroleum exploration activities in a basin like the Galilee

Any gas accumulations identified cannot be commercial in the foreseeable future without pipeline infrastructure in place

We would hope that future approval assistance and strategies to promote petroleum development will mimic those made recently for coal

And a recognition that companies who do develop a potentially commercial asset need a robust tenure framework that will protect that asset whilst infrastructure develops


Some thoughts on exploration in greenfield areas

Four year exploration periods are inadequate to progress exploration through to potential development when a strict compliance regime is in place and a mandatory relinquishment – there is no opportunity to adapt exploration programs as new information becomes available

The policy failure of Potential Commercial Areas needs to be addressed with some urgency, or there is little incentive to explore in remote regions where assets will be stranded and unable to be retained

Any future gas development will likely require some concessions from government similar to those in the Galilee Basin Development Strategy for coal


Some thoughts on exploration in greenfield areas

Increased compliance and regulatory requirements have meant that land access can take 9 months or more to negotiate, effectively negating an entire field season

Since 2009 there has been a constantly changing regulatory and policy regime around coal seam gas in particular but also other resources

Moving goal posts with respect to EAs, environmentally sensitive areas, restricted areas and so on

This creates uncertainty in the market, and increases the difficulty to raise capital for already high risk, high cost exploration

We need policy certainty, and sufficient flexibility within that policy to encourage exploration


Thank you for listening

sue slater - rlms - where are we now? a review of galilee basin petroleum exploration since the 2008...

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