Review of Operations
Australia
Bass Basin, offshore Tasmania
AWE holds a large acreage position in the offshore Bass Basin, with dominant joint venture interests in the key production and exploration areas, including a 42.5% interest in the BassGas project.
The BassGas project consists of an offshore, unmanned wellhead platform connected by pipeline to the gas processing facility onshore at Lang Lang. The Yolla platform is located approximately 147 kilometres offshore in a water depth of 80 metres. The project commenced gas sales in 2006, and has delivered consistent results since its commissioning. AWE increased its equity in the BassGas project from 30% to 42.5% during the year, through the merger with Arc Energy Limited.
In 2009, the BassGas project delivered a gross 17.6 PJ of sales gas, 726,000 barrels of associated condensate and 50,000 tonnes of LPG. Returns in this project are enhanced due to the high liquids component of the gas, with approximately 62% of sales revenue in the past year being derived from the associated liquids. The joint venture plans an extended shutdown in late 2009, which will enable the early stage works for the next phase of development on the project. This shutdown will reduce the annual sales from the project.
Design work has continued on the next phase of development for the BassGas project, incorporating some additional drilling on the Yolla field and the potential installation of compression on the Yolla platform. This design work is due to be completed by the end of 2009.
In the adjacent exploration permits, the joint venture is set to undertake the next phase of drilling in late 2009. Within T/18P, AWE will drill the Trefoil-2 and Rockhopper-1 wells. These wells are targeting substantial gas resources, which, if successful, will more than double the known
gas reserves in the region.
Trefoil-2 is an appraisal well on the Trefoil field, which was discovered and flowed potentially commercial volumes of gas in 2004. Rockhopper-1 will test the adjacent feature to the north. Success in this campaign will provide potential commercial options for the development of the next phase of gas projects in the offshore Bass Basin.
Subsequent to the end of the year, AWE acquired a further 5% interest in T/18 P, bringing our equity to 47.5%.
Otway Basin, offshore Victoria
 AWE has held an interest in the offshore Otway Basin since 2003, following the farmin to the exploration permit VIC/P 44. Successful discoveries have been developed over the past six years in this region, with AWE sharing in this success. AWE holds a 25% interest in this permit.
The Casino project, located approximately 30 kilometres offshore from Port Campbell, consists of two development wells which are connected to an undersea pipeline linked to the onshore Iona gas plant. The project was successfully commissioned in 2006 and has provided substantial volumes of gas to the east coast gas networks since its inception.
Casino gas production fell slightly during the year following the cessation of the “above-contract” sales. Despite the modest decline, sales were in line with the long-term contracted rates at approximately 33 PJ per annum.
Exploration in the Otway Basin encountered some success with the Netherby-1 discovery being made, whilst the Pecten East-1 well was a disappointment. Netherby-1 was subsequently completed as a development well while the Henry-2 development well was also successfully drilled and completed.
The Henry development, located 12 kilometres to the north of the Casino field, suffered from some setbacks during the year, despite the success of the drilling campaign. A holdup was encountered on the laying of the offshore pipeline, which has resulted in an estimated 12 month delay in the project. The operator has informed AWE that the installation contract will be awarded soon, with a target project completion by mid 2010.
Additional gas reserves were booked in the Otway Basin during the year, following the successful drilling campaign. AWE’s share of the Netherby 2P reserves amounted to an additional 35 PJ of gas, whilst the successful Henry development drilling added a further increment to the AWE reserve inventory.
Perth Basin, offshore Western Australia
The Cliff Head oil project comprises an offshore platform and an onshore processing plant, which are both located to the south of Dongara in Western Australia.
The Cliff Head project was commissioned in 2006 and has produced approximately 8 million barrels of crude oil up to the end of June 2009. In the past 12 months, the project has produced approximately 1.9 million barrels of oil, an average of approximately 5,250 bopd. AWE increased its interest in Cliff Head from 27.5% to 57.5% through the merger with Arc Energy Limited.
The recent performance of the field has been hampered by the failure of some of the downhole production pumps, which have proven more difficult to replace than expected. Plans for workover operations to replace these pumps have recently been initiated. The Cliff Head offshore platform will also undergo modest upgrade work prior to this pump replacement program.
Perth Basin, onshore Western Australia
 AWE’s interests in the onshore Perth Basin principally lie within the northern part of the basin, approximately 300 kilometres north of Perth. These onshore assets were all acquired through the merger with Arc Energy Limited. They comprise operated and non-operated joint venture interests of between 33% and 100% in 11 oil and gas fields with remaining net reserves of approximately 2.4 million BOE.
Following the merger, AWE now has interests in all the producing fields in the Perth Basin, including the significant infrastructure supporting these operations. This position provides an economic advantage for the Company as it allows for early commercialisation of any oil and gas found within the acreage.
Following the merger, AWE has undertaken a 4-well onshore drilling program. This campaign is nearing completion, with modest success to date. A further assessment of the remaining prospects will be undertaken following the completion of the program, with a specific aim to evaluate some of the new opportunities in the basin.
One such opportunity has been pursued during the past 12 months, with the recompletion and fracture stimulation of the Corybas-1 well which was drilled as an exploration well in 2005. The initial production was insufficient to justify connection to production facilities despite the extensive gas column in relatively tight reservoirs.
Following the fracture stimulation, a subsequent well test measured rates over a 48 hour period with a final rate of 3.9 mmcfgd on a 20/64 inch choke.
With the initial success of this activity, AWE as operator has recommended the installation of a flowline to the Dongara facilities, which will enable a long-term flow test of the well. Success in this flow test may result in further wells being drilled in the area.
New Zealand
Taranaki Basin, offshore North Island
 The Taranaki Basin production and exploration operations of AWE have been a huge success over the past three years. The successful appraisal and development of the initial Tui discovery and the strong production history from the project has provided a commercial windfall for AWE and the Tui joint venture.
To the end of June 2009, the Tui project had produced approximately 23.3 million barrels of oil, with no production downtime, except the six days of scheduled maintenance in late 2008. The project has provided revenue to AWE of approximately A$1 billion in this period, and a strong financial return to New Zealand through taxation and royalties from the project.
In the year to June 2009, the Tui project reported oil production of 9.1 million barrels, marginally ahead of expectations. The strong result was impacted by increased water production, as expected, and some modest issues relating to the weather conditions, which are to be expected in the harsh environment of the offshore Taranaki Basin.
Following this success, the next phase of exploration and appraisal activity in the Taranaki Basin is now approaching. On the current drilling schedule, the Kan Tan IV semi-submersible drilling rig will drill four wells in the Taranaki Basin, starting in late 2009. The initial well in the campaign will be Hoki-1, which is located approximately 90 kilometres north west of the Tui project facilities. Hoki is a high reward prospect, with potential reserves of up to 300 million barrels of oil in the success case. AWE will operate the Hoki-1 well and holds a 50% interest in the permit.
The second phase of activity in the Taranaki Basin will involve exploration on the flanks of the Tui oil field. Two wells are planned in this round of drilling at Tui, which is aimed at delineating the upside at Tui, particularly on the eastern edge of the known oil reserves. Whilst more modest in size, any success in this phase will provide additional reserves, at low incremental cost, and will be directly tied into the existing Tui infrastructure.
Beyond the above program, AWE anticipates further drilling activity will be undertaken, utilising the Kan Tan IV rig while it is in New Zealand. AWE continues to mature oil and gas prospects for drilling, with the Tuatara prospect being high-graded for drilling. This activity is likely to be in early 2010, at the conclusion of the program.
Asia
East Java Basin, offshore Indonesia
 AWE’s investments in Indonesia have continued over the past year, with the portfolio of PSCs expanding from one to three. All these PSCs are located in the prolific East Java Basin, where approximately 200 million barrels of oil and condensate and 1.4 trillion cubic feet of gas have been discovered to date in the acreage immediately to the east of the AWE contract area.
The original investment in the area, the Bulu PSC (AWE 42.5%) has been recently augmented by the East Muriah PSC (AWE 50.0%) and the Terumbu PSC (AWE 100%). These contiguous blocks comprise a gross area of over 9,500 square kilometres of prospective exploration acreage.
Seismic surveys have recently been acquired across this portfolio, and further drilling is planned, following the modest success of the 2008 drilling program. At least one well is planned in the Bulu PSC at the end of the year, with further drilling expected in 2010.
Nam Con Son Basin, offshore Vietnam
In early 2009, AWE announced the farmin to a 23.33% equity share of block 06/94 in the Nam Con Son Basin in Vietnam. In June 2009, the Tuong Vi-1 well was drilled but failed to encounter significant hydrocarbons despite the presence of good quality sands in the objective section.
Subsequent to the end of the year, AWE has elected to withdraw from the Block.
Shabwa Basin, onshore Yemen
AWE holds interests in two exploration permits in Yemen, which were acquired as part of the Arc Energy merger. Block 7 was ratified in early 2008 and a 3D seismic survey was acquired in the south western corner of the permit, nearby to the recent oil discoveries in an adjacent block. The Spatha-1 exploration well is planned in Block 7 in late 2009.
Merger with Arc Energy Limited
The merger with Arc Energy Limited was implemented in August 2008, following months of intensive work by both companies. The transaction has increased AWE’s interests in the BassGas and Cliff Head projects, where AWE is already a major participant and has expanded the exploration and development options for the Company.
Back to Top |
