By Sarah Byrne

COMMERICALISING the small offshore Sea Lion prospect might pose its challenges, but the greatest risk is discovering a gas charge rather than oil, 3D Oil managing director Noel Newell has told Oil & Gas Australia.

Located in Vic/P57 in the Gippsland basin, the Sea Lion prospect is located on the Rosedale fault system, which according to Mr Newell has a 70 per cent historical success rate.

Uncovered during a gazettal review in 2003, the first exploration well on the project is set to be drilled in June this year by Carnarvon Hibiscus, a wholly owned entity of Malaysian company Hibiscus Petroleum, together with 3D Oil.

“Sea Lion is arguably one of the last undrilled top Latrobe closures in the Gippsland basin,” he said.

Referring to a seismic study completed over the prospect, Mr Newell said the depth structure was always present within the structure and closed with all the depth conversion methods the company has used.

“This gives confidence in what is one of the most challenging depth conversion areas in Australia,” he said.

Mr Newell said if Sea Lion is an oil discovery, he expects the company will work with its partners to provide a tie in solution to the neighbouring proposed West Seahorse development.

Speaking with Oil & Gas Australia, Hibiscus Petroleum chief development officer Stephen Dechant said Hibiscus was likely to advance the West Seahorse development while finalising a development plan for Sea Lion, should it be successful.

“[A tieback] will significantly enhance the economics of the development by potentially doubling the reserves available to the development,” he said.

“If tied back to West Seahorse, Sea Lion would then be developed and integrated into the West Seahorse facilities in mid-2018, following the receipt of a Sea Lion production license and field development plan approval.”

That said, development of West Seahorse has been temporarily put on hold due to lower oil prices, Mr Dechant said.

Nonetheless, it would remain economic as a standalone development providing oil prices rebounded to the mid-US$70 per barrel range.

“The lower oil prices have affected the West Seahorse development, but with success at Sea Lion, a West Seahorse/Sea Lion development could be advanced even in the current low price environment,” Mr Dechant said.

Referring to the challenges in the Sea Lion prospect, Mr Newell said the most obvious challenges were oil price volatility and access to debt.”

Mr Dechant said according to an independent geological assessment of the Sea Lion prospect, there was a 40% chance of success, which he considers good for an exploration prospect.

In a statement, 3D Oil said the West Telesto jack-up rig is expected to move to Sea Lion upon completion of Origin Energy’s Yolla drilling program.

“3D Oil continues to provide a key role in the joint venture by leading the subsurface activities at Sea Lion and other potential exploration sites within the VIC/P57 license,” Mr Dechant said.

For Mr Newell, the present low oil price environment meant that it was now a great time for 3D Oil to be counter cyclical, saying the company was actively seeking near term production opportunities.

The company recently completed the acquisition of the 3D Flanagan seismic survey in its offshore Tasmanian permit T/49P with its partner Beach Energy.

“We are nervously optimistic that we are going to uncover potentially large gas prospects directly on trend with the Thylacine and Geographe gas fields,” he said.

Mr Newell said 3D Oil found that the region is an isolated and very rich petroleum system, which is separate to the rest of the Otway basin.

“The fact that the Thylacine field is the largest in the Otway basin, the most liquid rich and the furthest south is interesting enough but with the added fact that it has a different carbon isotope signature to other Otway gas is not only fascinating but very exciting,” Mr Newell said.

3D Oil holds a 24.9% stake in the Vic/P57 permit and is being carreid up to US$7.5 million under the terms of its deal with Hibiscus Petroleum.