Carnarvon Petroleum (ASX:CVN) has identified two potentially large oil prospects at its wholly-owned Cerberus Blocks in the Carnarvon Basin offshore Western Australia.
Meaningful oil volumes with multiple follow on prospects are also present at the EP-490, EP-491 and TP/27 exploration blocks.
Notably, work carried out by the company has resulted in the discovery of the same early Triassic systems that are present at the Phoenix oil discovery.
The Cerberus Blocks are located in an iconic hydrocarbon region and have the potential to host a number of similar sized oil fields as in the neighbouring blocks.
Nearby fields include the Wandoo Oilfield that hosts 250 million barrels of oil in place; the Stag Oilfield with an estimated 125 million barrels of oil in place; the Barrow Island oil field that has produced over 300 million barrels of oil since its discovery in 1964; and the Harriet oil and gas fields that have produced over 75 million barrels of oil and almost 400 billion cubic feet of gas.
The blocks offer low cost drilling in shallow water with shallow depth reservoir targets, providing Carnarvon with significant value for a modest investment.
“Last May, we secured the Cerberus blocks based on a number of geological concepts, including those we saw in Phoenix and thereafter proved successful in the Phoenix South-1 oil discovery announced in August last year,” managing director Adrian Cook said.
“I am particularly pleased with the technical work that has gone into the Cerberus project in the year since award.
“This project represents a very attractive value proposition for a modest investment, wherein large oil prospects identified on quality 3D seismic data, situated in a prolific hydrocarbon region, can be tested for a relatively low cost.
“As our technical work draws to a close we have commenced the next phase of work in these blocks, that in the short term, will comprise obtaining the necessary approvals to undertake drilling and other exploration activities.”
Proven hydrocarbon province
Carnarvon’s intentions are to expand its exploration portfolio in the North West Shelf beyond the successful Phoenix blocks, where the Phoenix South-1 oil discovery last year proved a new play type.
The Cerberus blocks are within the Carnarvon basin, Australia’s premier hydrocarbon province, and resides within the North West Shelf.
Carnarvon was originally attracted to the Cerberus blocks given the areas proven source rocks, effective reservoir and seal combinations and on-trend discoveries providing the potential for significant discoveries in this acreage.
It has s extensive knowledge of the Carnarvon Basin, including knowledge of the early Triassic petroleum systems discovered in the Bedout Sub basin through the Phoenix South-1 oil discovery in 2014, and has utilised this knowledge to identify two outstanding new oil prospects within the Cerberus Blocks.
These prospects are expected to be the first of many in the Cerberus Blocks.
The Belfon (Upper Permian) and Honeybadger (Early Triassic) prospects are estimated to contain significant volumes of recoverable oil.
Detailed analysis is ongoing to refine these prospect volume estimates and further updates are planned to provide shareholders with this information in due course.
The Honeybadger prospect is defined as a middle slope turbidite channel complex, expected to be filled with high net-to-gross sands.
Importantly there is a stratigraphic and a structural element to this prospect, with a high chance of stacked pay.
The Belfon prospect is defined as a tilted fault block structure, with Permian Kennedy reservoir sealed by the regional overlying Locker shale.
Five Jurassic prospects exist at target depths of between 1,000 metres and 1,500 metres with a further set of Cretaceous shallow (circa 500 metres target depth) oil prospects which could be large in the context of North West Shelf oil prospects and are the focus of the current stage of geoscience studies.
Low drill cost
The two primary drilling targets, Honeybadger and Belfon, lie in 25 to 30 meters water depth, around 100 kilometres from the major port of Dampier, the centre of logistics support for oil and gas operations on the Northern Carnarvon Basin.
This water depth is ideal for the employment of cheaper jack-up drilling rigs.
The reservoir depths are between 1,000 to 3,000 metres subsea, with the time required to drill down to total depth to test these targets estimated to be between ten to fifteen days.
These factors result in the independently estimated total cost to drill each prospect from as low as US$10 million per well in the current environment.
Carnarvon acquired the Cerberus exploration blocks in May 2014 for a work program including reprocessing of 3D seismic, mapping and interpretation during the first three years.
Given the technical work that Carnarvon is expending in the area, the company expects to comfortably exceed the work program.
Importantly the first drilling obligations in the work program to the government (being two wells) occur within permit year 4, which is outside the minimum obligation for these types of exploration blocks, and so is contingent rather than a commitment.
Carnarvon therefore has until May 2017 to commit to drilling these wells.
Cerberus Blocks
Carnarvon was awarded the three Cerberus exploration blocks in May 2014, with a nominal work program covering the first three years.
Since permit award, the Carnarvon geoscience team has significantly de-risked the area through its technical work, including:
- Licensing and interpretation of the reprocessed 3D Monodon mega-merge survey to ensure the prospects being assessed are on the best possible 3D data;
- Detailed analysis of the only 16 Early Triassic and Upper Permian wells that previously drilled in and around the Cerberus blocks to improve data accuracy and understanding. The most recent of these wells was in the 1980’s much like the Phoenix-1 well was;
- Renewed petro-physical analysis of 30+ wells in the Carnarvon Basin for enhanced understanding of the Early and Upper Permian reservoirs in the blocks plus Jurassic and Cretaceous reservoirs; and
- Drill core review, fluid inclusion studies and biostratigraphy and source rock analysis to fully understand the Early Triassic source rocks and migration potential into prospects.
Some of the geoscience work has addressed the recent implications that the Early Triassic Phoenix South-1 oil discovery has on the Cerberus blocks.
It has become apparent through integrating the results at Phoenix South-1 and then reviewing the whole of the Early Triassic on the North West Shelf of Australia that the same petroleum system extends into the Cerberus blocks within this newly recognised Early Triassic petroleum system.
There are now several Early Triassic and Upper Permian prospects with additional multiple Jurassic and Cretaceous prospects identified at shallow target depths which could be drilled using jack-up rigs.
Analysis
Carnarvon Petroleum has identified significant oil potential of the Cerberus Blocks, which are located close to major oil fields such as Wandoo, Stag, Barrow Island and Harriet.
That Honeybadger and Belfon prospects are located in shallow water with reservoir depths between 1,000 to 3,000 metres is notable, as these offer potential for relatively low cost drilling with substantial rewards.
These also do not require further technical work.
In addition, while the company is targeting oil, should the prospects be successful for gas, the proximity to nearby infrastructure will come into play.
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