Excitement has reached fever pitch around oil being discovered off the coast of north-west Australia as junior partner Carnarvon Petroleum prepares to release further results from its promising Dorado-1 well.
Carnarvon, which owns 20 per cent of Dorado, was forced to place its shares in a trading halt on Monday after a 10.2 per cent jump in the stock price on Friday.
At 48.5¢, the shares have more than trebled in price in just over three weeks amid a growing conviction that the well in the little known Bedout basin north of Port Hedland signals the discovery of a whole new oil province for the country.
Carnarvon’s announcement last month of a likely commercial oil find at Dorado-1 has been followed by further positive news from deeper drilling in the same well. Those results point to a gas and condensate discovery in the “Baxter Member” structure, deeper down than the “Caley Member” which contained the oil reservoir.
The explorer said last week it had also seen “elevated gas readings” in the deeper “Crespin” and “Milne” formations that signalled the presence of oil or gas, warranting further testing to firm up the results. The well had reached some 4.6 kilometres deep and was still going deeper.
The drilling program is being led by unlisted, Perth-based Quadrant Energy, whose head of subsurface, Fred Wehr, has described the results from Dorado as “staggering”.
“We are talking about something that is really a game changer, certainly for Quadrant, definitely for Carnarvon, but potentially for the industry as well,” he told the Petroleum Club of WA, according to The West.
Graeme Bethune, founder of Adelaide-based consultancy EnergyQuest, said the news from the region “sounds very encouraging”.
“Australia only produces about 28 per cent of its needs of oil and liquids so whether it’s in the Bedout Basin or the Great Australian Bight or both, it’s very important in terms of national energy security,” Dr Bethune said.
According to EnergyQuest figures Australia consumes about 350 million barrels a year of oil and transport fuels but its oil and condensates production is about 100 million barrels a year.
The federal government has ramped up attention on the country’s inadequate fuel security amid accusations by some experts that Australia is “free-riding” on other countries’ investments in strategic oil reserves by failing to hold the recommended volume of stockpiles.
The Dorado-1 discovery, which lies in 75 metres of water, lies about 40km south of the Phoenix South field found by Quadrant in 2014. Quadrant is currently also drilling an appraisal well at Phoenix South.
There are no commercial developments of oil or gas in the Bedout sub-Basin, with the closest infrastructure over 200 kms to the west in the Carnarvon Basin, noted Wood Mackenzie upstream analyst David Low.
“We therefore believe that an oil discovery at Dorado-1 – which we forecast as one of our top-10 Asia-Pacific wells to watch at the start of the year – is a good news for the joint venture,” Mr Low said.
He added that commercialising the oil through a floating production ship would be “far easier and faster than if the well had discovered gas, as was initially expected”.
“Given the basin is under-explored, and there are two existing Quadrant discoveries in the area, the real prize could be to utilise Dorado as a hub to tie back these and other potential finds,” Mr Low added.
The developments came as the oil and gas industry association APPEA said that successful exploration in the Great Australian Bight off the coast of South Australia could create more than 2000 jobs and more than $7 billion in average annual tax revenues for government over the next 40 years.
Norway’s Equinor, formerly called Statoil, is planning to drill the Stromlo well about 372 kilometres off the SA coast in 2019. The firm is pressing ahead with its controversial program despite Chevron pulling out last year.