AS we suggested in our September 2016 issue, the Roc-2 well off the north-west coast of Western Australia has become a significant well for the immediate future of the Australian oil and gas industry.

Located just 165 km north of the large Pilbara industrial town of Port Hedland in around 100 metres of water, Roc-2 became the first well to be successfully flow tested in the Bedout Sub-basin and has opened up the opportunity for an exciting new gas and condensate development.

Early concept development plans are already under way for the field.

Roc-2 drilling participant Carnarvon Petroleum Limited said that the nearby Pilbara mining industry would be an obvious target for any gas brought to land from a field that early indications suggest has the potential to meet up to 10 per cent of Western Australia’s domestic gas needs.

Roc field

A follow-up to the successful Roc-1 well, which was announced as a discovery in January this year, Roc-2 created national media buzz and sent Carnarvon’s share price sky rocketing when a well test successfully flowed gas and condensate to surface over the course of a sustained test programme.

Adrian Cook

Adrian Cook

The well flow at rates up to 51.2 million scf per day of gas and 2,943 barrels of condensate per day, or approximately 11,500 barrels of oil equivalent per day. The rates were achieved through an approximate 1 1/2” choke and were equipment constrained flow rates, with testing operations undertaken at controlled flow rates to enable the monitoring of the field including reservoir pressures, gas and condensate ratios and the presence of other substances such as CO2, H2S, water and sand.

Carnarvon said that encouragingly, there were insignificant levels of these other substances in the gas and condensate recorded during the flow test.

Carnarvon’s Managing Director, Adrian Cook, said Roc-2 was just the latest success for it and partner Quadrant Energy in opening up a new Australian oil province.

“Our drilling results to date in the Bedout Sub-basin have been extraordinary. Carnarvon and its partner and operator, Quadrant Energy have made substantial progress in this new oil and gas province since exploration began in earnest in 2014,” Mr Cook said.

“The Roc-2 well has provided us with a significant amount of valuable new information, and the flow test result very clearly and unequivocally demonstrates the capability of these hydrocarbons to flow from quality reservoir within the basin. We are very happy with the Roc-2 well flow test results which are at rates that are significant in our industry.

“There is great potential within this basin for significant hydrocarbon volumes to exist as I have referred to on numerous occasions.

These results provide Carnarvon and its partner with enormous blue sky potential and a platform within the Phoenix South and Roc area in which to test and develop this potential,” Mr Cook said.

Quadrant Energy CEO, Brett Darley, said that since farming into the area in 2012, the Quadrant Energy-led joint venture has achieved a 100% success rate in three exploration wells – Phoenix South-1, Roc-1 and now Roc-2.

“These results show significant potential in this largely unexplored area situated in relatively shallow water. Quadrant Energy is the Operator and holds between 70- 80% interest over four (4) permits totalling more than 21,000 square kilometres,” Mr Darley said.

roc-2-drilling-2“The Roc-2 result provides Quadrant Energy the opportunity to evaluate a range of development options given the close proximity to major resource projects.

Quadrant Energy is continuing to obtain high quality data to thoroughly evaluate these options in a measured approach,” he said.

Carnarvon has already reported a number of preliminary development concept including a well head platform, an FSO for liquids and a sales gas pipeline to shore near Port Hedland.

There is also a lot of work being placed into understanding the location of tie-back volumes for refining development plans.

Carnarvon recently told shareholders that the Roc field benefits significantly from the shallow water depth at location and an early indicative capital expenditure range has already been estimated at between $1 billion and $2 billion depending on factors such as resource size, water depths and distance to shore.

Quadrant and Carnarvon will still need to undertake a significant amount of study work and further appraisal drilling, but they are already moving ahead quickly in their follow-up well planning, with the target an opportunity to take advantage of a perceived WA domestic gas window from 2020.

Carnarvon has told its shareholders that it believes there are a number of factors that support improving WA domestic gas pricing from 2020, including:

  • LNG supply demand balance expected to be in undersupply from 2021-2023, meaning NWS LNG producers will have strong international markets for their LNG (versus domestic gas supply);
  • Gorgon Phase 1 domestic obligations and Wheatstone domestic obligations are insufficient to replace NWSJV and domestic field (John Brookes & Reindeer) decline; and
  • Forecast US economy recovery increases LNG netback in AUD terms, incentivizing Australian LNG producers to supply additional NWS LNG into international markets.

The Roc-2 well is located within the WA-437-P exploration permit in the North West Shelf. The equity interest holders are Quadrant Energy (Operator) 80% and Carnarvon Petroleum 20%.