IN WESTERN AUSTRALIA - Department of Mines and Petroleum

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22 PWA April Edition - Resources Branch Activities Reza Malek, Manager Resources Branch, Petroleum and Royalties Division The Resources Branch provides a broad spectrum of services to the industry and undertakes an important regulatory role to facilitate the upstream petroleum industry development. This review hopes to provide a better understanding of the Resources Branch roles and activities. There is a significant decision making process involved in approving field development plans, production licences, declarations of location, wells, seismic surveys and retention leases. The Resources Branch is effectively the custodian of the natural resources involved in a petroleum field’s development and must ensure that the proposed development strategy is optimal to maximise hydrocarbon recovery and expedite the project in the best interests of the citizens of WA. Thus an experience-based assessment of such proposals is a prerequisite to a good outcome. During the past few years the Branch has taken ambitious and creative steps forward and has accomplished a number innovative projects such as the Atlas of Petroleum Fields and prospectivity enhancement packages, as well as being the driving force behind the Division’s Petroleum in WA journal. New projects such as the Barrow and Dampier aquifer depletion studies and Gorgon CO 2 sequestration studies have been so important that they have made milestones in Australia’s regulatory scene and demonstrated the tangible role the Branch has for the responsible production of WA petroleum resources for the long term benefit of all Western Australians. Approval Processes The need for technical assessment for numerous seismic surveys, well approvals and development plans continued throughout 2003, reflecting the continued interest in the development of the Resources Branch’s Recent Activities Commonwealth and State’s petroleum resources. They included the assessment of: three production licence renewal applications, and three field development plans, 15 location applications, 12 retention lease applications or renewals and 69 well approvals including 15 development well applications, 16 appraisal well applications and 38 exploration well applications. In addition, WA hosted a meeting between the Commonwealth and State/Territory Designated Authorities to agree on uniform protocols for the granting of Production Licences and approval of Field Development Plans within Commonwealth Waters. Acreage Releases During 2003, the Resources Branch coordinated the release of a number of blocks for petroleum exploration both onshore and offshore. Perhaps the most significant was the release of four Canning Basin blocks that included a prospectivity package identifying leads and prospects in the released blocks as well as the petroleum systems within the area. Bids for these areas closed on the 11 March 2004. As part of the overall promotion of Western Australian acreage, the Resources Branch was involved in a number of conferences and presentations throughout 2003. These included the APPEA conference held in Melbourne, the North American Prospect Expo (NAPE), The Good Oil Conference and DoIR’s Petroleum Open Day. The Branch also produced the Western Australian Petroleum Opportunities farm-out booklet and heavily contributed to two editions of the Petroleum in Western Australia journal in 2003. Production monitoring and metering Petroleum is Western Australia’s golden egg, as the most important revenue source for the State from resources is generated from royalties associated with petroleum production. These royalties, for 2001 and 2002, amounted to $494.5 and $438.5 million respectively. Although there is a decline in the WA petroleum royalties associated with decline in hydrocarbon production, petroleum is still the most valuable commodity produced in WA, surpassing iron ore in 1994 and gold in 1996. A critical first step in royalty collection for petroleum is determining the production from each active field within the State. According to the requirement of the Schedule of the Specific Requirements for Offshore Exploration and Production 1997, the Division must audit petroleum producers in Commonwealth Offshore and State Water areas. This process involves a review of their data sheets, procedures and equipment specifications to determine whether their measurement systems in place conform to the above schedule. During 2003 the Resources Branch continued to update its hydrocarbon accounting systems manual and it is hoped that the final product will be use by the middle of 2004. Officers from Resources Branch conducted a number of site visits during the year to audit the measurement systems in place at production facilities. Research The Resources Branch was also actively involved in research aimed at enhancing the petroleum prospectivity of the State. This research included an overview of the petroleum systems in the central Canning Basin, potential areas for coal bed methane exploration and production, and geological and engineering analyses of the Wonnich, Barrow Island and Egret fields.
Barrow and Dampier Sub-basin Aquifer Depletion Studies Australia is potentially incurring loss of oil as petroleum production continues. Aquifer pressure decline is occurring not only in Western Australia but also in the Gippsland Basin of Victoria and the portion of the Bonaparte Basin in the Territory of Ashmore and Cartier (administered by the Northern Territory Government). The Barrow and Dampier Sub-basins lie in the Carnarvon Basin off the northwest coast of WA. First oil from the Barrow Sub-basin came on-stream in 1986 and production from the fields in this area has been continuous since 1986. The value of petroleum royalties from the Barrow Sub-basin was $56 million in 2002/03. First oil from the Dampier Sub-basin came onstream from the Talisman oilfield in July 1989. The value of petroleum royalties from the Dampier Subbasin was $262 million in 2002/03. These subbasins lie both in WA State waters and the Commonwealth Adjacent Area. Originally, it was believed that the reservoirs in the Barrow and Dampier Sub-basins had infinite aquifer pressure support with no regional draw-down effect. Recent observations from newly discovered fields in the Barrow and Dampier Sub-basins, however, indicated that there has been a significant pressure draw down in some parts of these sub-basins. Also, petrophysical logs from some of these discoveries indicated a few metres of residual oil below the oil water contact. As a result of pressure draw down and subsequent gas cap expansion, oil accumulations in these reservoirs may have been forced down into the aquifer and, where this migration extended below spill point, it is possible that some oil may have been lost. This, in turn, means that millions of dollars worth of royalties could have been lost. The conclusions that can be drawn from the above observations would have serious implications for the conservation of as yet undiscovered and/or undeveloped hydrocarbon resources in the region as well as known and developed fields. It is crucial for the regulatory bodies to fully understand the implications of draw down and subsequent possible loss of oil and its impact on State and Commonwealth revenues. To assist in this investigation, the Petroleum Division of DoIR engaged the services of OPES International and CSIRO between 2000 and 2003. The main objective was to determine the extent at which hydrocarbons are potentially being lost in the region and possible future losses and the affect on royalty income to the State and Commonwealth. Based on the results of the Barrow Sub-basin study by the year 2030, the total oil loss can be as high as 83 GL. At current oil prices (approximately A$50 per barrel), a loss in royalty due to oil loss amounts to $5 per barrel and therefore the WA community could lose as much as $2.6 billion by 2030 if corrective measures are not taken against aquifer depletion in the Barrow Sub-basin. Similarly, based on the results of the Dampier Sub-basin study by the year 2030, the total oil loss can be as high as 42 GL. Once again, this could mean a potential loss of up to $1.33 billion to the WA community. These studies revived the interest in industry to implement their investigations. Major WA operators such as Woodside Energy Limited, Santos and Apache Energy have already recognized aquifer depletion and its possible impact. There is increased interest within the WA petroleum industry to take part in a joint Government/Industry task force to deal with the issue in a constructive manner. WA Department of Industry and Resources has already taken a number of initiatives to share the results of these studies in the Barrow and Dampier Sub-basins with the petroleum industry and Commonwealth. Feasibility Study of Gorgon CO 2 Sequestration at Barrow Island The Gorgon gasfield is situated 130 km off the northwest coast of Western Australia in 200 metres of water and was discovered in 1981. The Gorgon field has certified proven hydrocarbon gas reserves of 272.69 Gm 3 (9.63 Tcf). Carbon dioxide comprises about 14 mole % of the raw gas resource. The Gorgon Venture asked the WA Government to consider whether it could be acceptable, in principle, for a gas processing plant to be located on Barrow Island. According to Chevron Texaco, landing and processing gas from Gorgon on Barrow Island is the most economically viable option for the project. The field development concept consists of sub-sea wells arranged in several production centres over the field, tied back to gas processing facilities on Barrow Island via a 70 km pipeline. Later on, a gas connection will be installed from Barrow Island to the mainland connecting Gorgon gas to the existing domestic pipeline. DoIR and ChevronTexaco Australia agreed to regularly review the technical work being performed. To assist in the assessment, DoIR engaged the services of Curtin University. The Phase 1 review was completed in June 2003 and provided technical assurance on the feasibility of CO 2 storage beneath Barrow Island. This provided one of the criteria for the WA State Government’s decision to grant in-principle access to Barrow Island for the project. The in-principle approval for access to Barrow Island was granted on September 8, 2003 after rigorous reviews and careful consideration. The Phase 1 review provided a comparative risk analysis, which compared most of the injection and storage parameters of the Utsira Formation - Sleipner West (a site where the injection and PWA April Edition - Resources Branch Activities 23 storage process is considered a success by the Norwegian Government) with the proposed injection and storage parameters of the Dupuy Formation - Barrow Island. The key findings of the DoIR review concluded that injection of Gorgon reservoir CO 2 into the Dupuy Formation at Barrow Island was technically feasible, and the acknowledged risks were to be expected and manageable. However it was also concluded that long term monitoring of CO 2 migration needs to be addressed. The Phase 1 general recommendations were related to improving the subsurface definition of the earth model, further assessment of seal and fault integrity, injectivity, near-well bore reactions and CO 2 surveillance and monitoring technologies. Key DoIR recommendations included the need for additional geological data and a long-term monitoring strategy for reservoir management and contingency planning. More specifically the study recommended that at least one pilot well must be drilled at injection site to acquire the necessary core and geological information, acquire further seismic surveys in northern Barrow Island, perform further mapping of the seal, application of CO 2 , simulators for future Dupuy aquifer studies, identify the optimum long term monitoring methodology and drill an inclined injection well with 3 km reach into the offshore areas. Development of this world-class resource is of national importance and will benefit Australia with employment opportunities and infrastructure development. It is important to note, that Gorgon may also provide the foundation development on which the Greater Gorgon area fields can be advanced. DoIR
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Page 37 and 38: y introducing appropriate organisms
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Page 41 and 42: Table 1. Reserves as at 31 December
Page 43 and 44: Gingin 0 48,545 3,169 Gipsy 315,750
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Page 55 and 56: * ChevronTexaco Australia Pty Ltd T
Page 57 and 58: Norwest Energy NL Roc Oil (WA) Pty
Page 59: EXECUTIVE Director General Jim Lime

IN WESTERN AUSTRALIA - Department of Mines and Petroleum

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