Carnarvon Petroleum Limited (ASX:CVN) is preparing for a final investment decision (FDI) for its Phoenix oil and gas project offshore Western Australia once appraisal of the Dorado discovery is complete.
The three wells at Dorado will undergo drill testing and technical studies this year to prepare for an investment decision in 2020.
The company believes the appraisal is warranted given the substantial resources and accompanying subsurface uncertainties encountered.
Carnarvon also has several near-development and exploration projects which are being advanced, including the 100%-owned Buffalo project in the western Timor Sea.
Environmental plans to drill three wells at Buffalo have been submitted and discussions regarding a production sharing contract with the Timor-Leste government are ongoing.
Carnarvon managing director Adrian Cook said the company and its joint venture partner had moved swiftly in the last quarter to start preparations for appraisal of the Dorado discovery.
He said: “The 2019 Dorado appraisal program will put the joint venture in a strong position to consider the final investment decision in 2020.”
Cook also welcomed operator Santos Limited (ASX:STO) into the joint venture, noting the oil and gas major’s expertise would be invaluable as Dorado moves through the appraisal, development and production phases.
Santos become majority owner and operator of the Phoenix project after it acquired previous joint venture partner Quadrant Energy.
Carnarvon's aims for 2019
The first Dorado well encountered substantial hydrocarbons with light oil, gas and condensate identified in a number of reservoirs.
A significant amount of data was collected from well logging and fluids sampling and comprehensive post-well evaluation of the data, including fluid analysis, reservoir studies, image log interpretation and core analysis, is underway.
The Dorado-2 appraisal well will target hydrocarbon columns in a down-dip location to confirm the extent of hydrocarbon accumulations and further calibrate reservoir and fluid properties.
A Noble Tom Prosser jack-up rig has been secured and is expected to begin drilling in April.
Drill stem tests for the Dorado-3 well are also being planned, which will be critical to understand reservoir performance and obtain representative fluid samples for the design of production facilities.
Carnarvon is expanding Dorado’s exploration potential and has de-risked the nearby Roc South, Apus and Pavo prospects.
Cook said: “We are also focused on increasing the resource volumes which have already been discovered.
“This involves continuing work to further define the follow-up potential with the greater Dorado area – the stand-out prospects already identified are Roc South, Apus and Pavo.”
Roc South is 13 kilometres from the crest of the Dorado structure and has a high probability of success with an estimated 74 million barrels of oil equivalent.
The prospect has a similar trap to Dorado as it is up-dip of the Roc discoveries and relies on the Dorado canyon for sealing and setting.
Apus and Pavo are estimated to contain 612 and 82 million barrels of recoverable oil, respectively.
Carnarvon's project portfolio
In discussions to progress Carnarvon’s Buffalo project both the company and the Timor-Leste government have agreed to the fundamental terms of a production sharing contract (PSC).
Carnarvon now aims to complete the contract and have it ready for signing upon the ratification of the Maritime Boundary Treaty between the Australian and Timor-Leste governments.
Cook said the discussions had been very positive to date with both parties agreeing in principles to the material elements of the PSC.
He added: “Carnarvon recently commenced a farm-out process for the Buffalo project.
“Discussions with potential partners are seeking to determine whether appropriate parties can add value and financing to the project while Carnarvon looks to bring both the Dorado and Buffalo projects into production.”
Along with submission of environmental plans, the company has completed a field surveillance program in the Buffalo area.
This indicated that there were no impediments to locating the wells in the surface locations most ideal for targeting the identified attic of oil.
READ: Carnarvon Petroleum Dorado discovery “one of the largest oil resources ever found on the North West Shelf”
Exploration work at other projects will include acquiring additional 3D seismic at the Ivory prospect within the Labyrinth project, close to the Dorado, Roc and Phoenix South discoveries.
Carnarvon’s geological analysis has identified 1.5 billion barrels of recoverable prospective resource within the permit and an estimated 420 million barrels of mean recoverable oil from the Ivory prospect.
Technical work at the Maracas project southwest of Labyrinth is ongoing and once complete the company will initiate a farm-out process to find a partner to continue testing of identified targets.
Maracas is offshore near Dampier and near existing infrastructure, producing fields and discoveries.
The permit area has shallow water depths of 60 metres and can be drilled with a cost-effective jack-up drilling rig.
Both the Condor and Eagle projects, south of the Buffalo field, are undergoing field work and technical analysis.
Carnarvon was awarded the Eagle permit last year with minimal commitments and will look to find a partner as it develops the project.