Waitsia Gas Project

Permit: L1/L2 Waitsia Gas Project (AWE 50%, Operator)

Location: Northern Perth Basin, onshore Western Australia

Joint Venture: 

AWE Limited (via subsidiaries, Operator)           50%
Origin Energy (via Lattice Energy) 50%

For information about AWE’s operations and community activity in the Perth Basin, visit AWE’s Mid West Community website.

Overview:

North Perth L1L2

The northern Perth Basin has been one of Western Australia’s major onshore gas producing regions for almost 50 years. Discovered in September 2014 while drilling the Senecio-3 well, the Waitsia field is regarded as the largest onshore conventional gas discovery in Australia for the last 40 years and has the capability to supply approximately 10% of Western Australia's domestic market needs.

Stage 1A in Production
Stage 2 on Track
Further Exploration Potential
Part of the Community

Further information:  

 

Stage 1A in Production  

A number of major project milestones were achieved at Waitsia during FY17, beginning with Stage 1A achieving first gas on time and under budget in August 2016. Stage 1A produces gas from two wells, Senecio-3 and Waitsia-1, which is processed at the Xyris Production Facility before being transported south via the Parmelia Pipeline. Effectively an extended production test, Waitsia Stage 1A will supply 9.6 TJ/d of gas to Alinta for a period of 2.5 years.

Well performance has consistently exceeded expectations, emphasising the excellent quality and connectivity of the conventional reservoirs in the Kingia and High Cliff Sandstones. The produced gas is predominantly dry with low levels of inerts present.

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Stage 2 on Track

Building on the success of Stage 1A, AWE is making excellent progress on development plans for Stage 2 of the Waitsia Gas Project. The second stage, a conventional development that does not require Hydraulic Fracture Stimulation (fracking), is being designed to produce 100 TJ/d of gas for at least 10 years.

An experienced Operator in the Perth Basin, AWE is focused on completing three key work areas before the Waitsia joint venture can consider a Final Investment Decision (FID):

  • Subsurface;
  • Facilities Design; and
  • Gas Marketing.

FY17 was a year of great geotechnical success at Waitsia, starting with the certification of its 2P Reserves and ending with the drilling of the final two appraisal wells before Stage 2 FID – Waitsia-3 and Waitsia-4.

Independent certification of Waitsia 2P Reserves in September 2016 was another important milestone in meeting the expectations of potential customers, following closely after first gas from Stage 1A in August. At the time of reserves certification, AWE noted that there was potentially more reserves upside which could be recognised once drilling and evaluation of the final two appraisal wells was complete.

The primary goals of the 2017 appraisal program were to assess the gas potential in the southern and eastern extensions of the Waitsia Field and to confirm additional 2P Reserves.

The Waitsia-3 appraisal well, located in the southern extension of the gas field, was drilled over May-June 2017. The results were some of the best observed in the field to date, significantly exceeding pre-drill expectations, with strong gas shows over a 150 metre gross interval including the Kingia and High Cliff Sandstones. The Kingia reservoir at this location, with 20 metres of net pay, was approximately double the thickness observed in other wells in the field and of higher quality than originally anticipated. Gas was observed to the base of the High Cliff Sandstone, 10 metres below the Gas Water Contact previously interpreted over the Waitsia Field, which may indicate substantial further reserves upside.

Waitsia-4 was drilled over July-August 2017 with initial results similar to Waitsia-3 and considerably better than pre-drill estimates. Elevated gas shows were encountered in multiple zones in the Kingia and High Cliff Sandstones and good gas shows were also encountered in the Irwin River Coal Measures, a secondary target. The gross Kingia reservoir interval of 42 metres contains 21 metres of net gas pay which is similar to Waitsia-3 and confirms the laterally extensive nature of this excellent reservoir.

Both wells were cased and suspended for future testing and production. Preparations are underway to flow test Waitsia-2, Waitsia-3 and Waitsia-4 in the fourth quarter of 2017, prior to a FID. The success of Waitsia-3 resulted in AWE increasing its share of 2P Reserves for the Waitsia field by 25% to 228 PJ of sales gas as at 30 June 2017. The increase reflects the reclassification of a portion of 2C Contingent Resources to 2P Reserves. An additional Reserves upgrade is possible in 2017 once the evaluation of data from the appraisal wells and flow tests is complete and the field has been remapped.

In parallel with the subsurface activity, AWE’s engineering and project delivery teams have been making substantial progress on Stage 2 facilities design. Pre-FEED (Front End Engineering and Design) was completed in March 2017, followed in June by the decision to enter FEED with the commencement of a facilities design competition.

The design brief includes a production facility capable of processing 100 TJ of gas per day, carbon dioxide extraction, collection hubs and flow lines.

A shortlist of four bidders has been selected to provide Engineering Procurement and Construction (EPC) and Build Own Operate (BOO) contracting alternatives which will allow the joint venture to assess and compare best delivery alternatives, thereby establishing a high degree of capital cost certainty. The design competition will be followed by a commercial phase with tenders due in November 2017, prior to FID.

When developed, Waitsia will provide around 10% of Western Australia’s gas demand for at least 10 years. Construction is currently planned to commence in the third quarter of 2018, with first gas sales in 2020.

The Western Australia gas market continues to tighten as gas from the North West Shelf is forecast to reduce substantially from 2020. AWE has aligned the Waitsia development with this window of opportunity and interest from potential customers has been high – AWE ran a tender process at the end of 2016 which was substantially oversubscribed. Waitsia offers potential customers increased competition, diversity of supply, and improved security of supply by offering a lower risk onshore supply chain.  

With the market and price range for Waitsia gas established, the first gas sales term sheet for the supply of 15 TJ/d (5.5 PJ/y) was agreed with AGL in February 2017. AWE is aiming to contract substantial gas volumes in 2017 and negotiations with potential customers are progressing. AWE estimates that approximately 50 TJ/d of additional gas sales are required to underwrite Waitsia Stage 2 development.

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Further Exploration Potential  

AWE has the largest onshore exploration acreage position in the northern Perth Basin, giving it a significant competitive advantage in terms of further exploration and development opportunities. The company has identified substantial exploration potential in the regions surrounding the Waitsia field. AWE and its joint venture partner are considering drilling the Beharra Springs Deep well, adjacent to the Beharra gas plant, to target a promising Waitsia-like prospect.

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Part of the Community

As the Operator of the Waitsia gas project, AWE is committed to being an active and responsible member of the Mid West community and seeks to partner with local businesses wherever possible.

The company has a successful track record of managing safe drilling operations in the Perth Basin and continues to apply high safety and environmental standards to the Waitsia development project.

Waitsia Stage 1A delivered a range of jobs and business opportunities for the local community in the lead up to first gas. Following a FID for Waitsia Stage 2, it is expected that significantly more opportunities and economic benefit will be created.

AWE and its predecessors have successfully worked in the Mid West region since the 1960s, developing numerous relationships with local farmers, service providers and community members over the years. The company remains conscious that its social licence and goodwill is earned through trust, openness and transparency.

During FY17, AWE participated in a number of community engagement events. Local stakeholder views were heard and various issues debated at the Shire of Irwin Oil & Gas expo and subsequent community roundtable meetings. AWE also participated in the Mingenew Mid West Expo, the largest agricultural field day in the Mid West region, to ensure local farmers and suppliers had access to AWE representatives.

The Waitsia gas field, when developed, is forecast to produce approximately 10% of Western Australia’s daily domestic gas consumption and will deliver substantial royalties to the Western Australia government over the project’s lifecycle.

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For information about AWE’s operations and community activity in the Perth Basin, visit AWE’s Mid West Community website.

 

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