PERTH could have another natural gas supplier, this time almost in its outer suburbs, following a drilling program planned for early next year.
PERTH could have another natural gas supplier, this time almost in its outer suburbs, following a drilling program planned for early next year.
Empire Oil, with at least one joint venture partner, has a highly prospective target only 50km north of the city, near Gin Gin which, if commercial, could produce low cost gas for local markets.
Advanced seismic work gives a high probability of finding a major gas structure. It is only 2km from the existing, under-used pipeline which carried WA’s first natural gas to Perth 30 years ago.
It now serves several small gas accumulations further north, but was capable of carrying 110 million cubic feet a day.
This is only about a fifth of current gas consumption in Perth and further south, but any additional gas would be much sought after because pipeline costs would be nominal, compared with those from the Pilbara region, 1400km to the north.
The Perth Basin has always proved to be frustrating for explorers and producers, providing modest yields of natural gas, and less of oil, but with much potential.
Empire Oil managing director Craig Marshall is enthusiastic about the Gin Gin target and the vast holdings the company has along the South West coast. It has 1.6 million hectares of tenements from north of Perth, to the Southern Ocean.
A joint venturer in the Gin Gin prospect is the British company CalEnergy Gas, which is also a significant shareholding in Empire Oil.
They are negotiating with a third company to offer a 40 per cent interest in the tenement, in return for most of the drilling costs for a well planned within the next few months.
At the other end of the proximity scale, Empire Oil is trucking crude oil 1200km from the historic Rough Range area in a long term test program that could confirm the area as a new oilfield.
Just over a week ago it made its first delivery to BP’s refinery south of Perth, from Rough Range, near Exmouth.
In a production test expected to last a year, the company’s Rough Range 1B well will produce little more than 500 barrels a day (it is probably capable of yielding much more).
Empire Oil contracted to sell this to the refinery for $US25 a barrel, well below today’s peaks, but still sufficient to provide a gross return of more than $A7 million in a year.
Even after road freight and operating costs, the oil will bring in sufficient cash to fund further exploration on Rough Range, where Empire Oil has identified six more promising targets.
Two of these will be drilled early next year and Marshall is hoping that the small structures in the range will yield combined production of several thousand barrels a day – representing a particularly attractive cash flow for a company which began exploring with $4 million, raised when it listed in January, 1998.
If imminent exploration achieves this, road tankers running 14-hour trips to the south will not be sufficient and there are several local options for loading the oil onto sea tankers.
There are only a few oilmen alive now who participated in the last exciting discovery made a short distance away almost 47 years ago.
Empire Oil is an example of the small, audacious explorers that have survived the recent slump in resources, acquiring the neglected tenements, offering 20 million 20c shares in its 1998 float and raising several million dollars in placements since.
