Triangle Energy (Global) Ltd has capped off a strong quarter with steady oil production and inventory of approximately 63,160 barrels (crude oil inventory value of A$4.18 million - at cost) delivered to BP Kwinana. The company also lifted 117,900 barrels of oil to BP Singapore.
TEG’s key focus is Cliff Head offshore Western Australia, which was the first commercial oil discovery developed in the offshore Perth Basin.
Cliff Head Oil Field is 10 kilometres off the coast at a water depth of 15-20 metres. The Production Licence WA-31-L covers 72 square kilometres and the oil field covers 6 square kilometres.
The development cost of the field was A$327 million with first oil production commencing in May 2006. Production is from five ESP production wells and produced water is reinjected into three injection wells.
Produced crude oil is trucked to BP in Kwinana, 42 kilometres south of Perth.
The Cliff Head facilities are the only offshore infrastructure in the Perth Basin and are, therefore, important for any development in the surrounding area.
An unmanned platform with a 14 kilometre pipeline carries the crude oil to a dedicated stabilisation processing plant at Arrowsmith, with a production capacity of 15,000 bopd.
The field has the capacity to produce approximately 1,000 bopd from five production wells (3 horizontal and 2 deviated). The production from the field is supported by a water flood with three water injection wells (1 horizontal and 2 deviated). An additional unused well slot is available on the platform for future drilling activities.
Also of note is that TEG is the major shareholder of State Gas Limited with a current interest of 23.96%. The investment is equivalent to A$15.32 million in value at $0.32 per State Gas share (as at January 28, 2022).
State Gas is currently working on the Serocold-1 and Nyanda-8 wells with three production test wells continuing to provide encouraging results.
After 20 days of testing at Nyanda-8, the well has averaged 16 bwpd with a steady flare at 36% drawdown. After 14 days on production test at Serocold-1, the well has averaged 55 bwpd and with an intermittent flare of gas at only 25% drawdown.
It is also working on the Rougemont-1 and -2 wells, which were the first wells in ATP 2062 as well as a Low Emission Hydrogen and Carbon Sequestration Project.
Quarterly highlights
TEG has cash of A$8.33 million, up from the previous quarter of A$5.44 million.
Over the quarter, TEG completed a review of the Prospects and Leads portfolio within L7(R1), undertook detailed planning for its Bookara Seismic Survey as well as continuing detailed well planning for Cliff Head Mark 2.
During the December quarter, the Cliff Head Joint Venture (CHJV) continued to produce and deliver crude oil to BP Kwinana and by quarter’s end had delivered 58,839 barrels of crude oil.
At cost, the value of this inventory is A$4.18 million with an expected realisable value of approximately A$7.25 million at US$80.00 price and an exchange rate of US$0.72.
The Brent oil price was at least US$85 per barrel at January 28, 2022.
BP Singapore offtake coming to an end
In mid-October, the CHJV announced it had entered into a Binding Offtake Agreement with BP Singapore Pte Limited, in relation to the sale and purchase of its crude oil produced at TEG’s Cliff Head Oil Field.
Under the terms of the Offtake Agreement, BP Singapore will purchase 100% of the crude produced from the Cliff Head Oil Field, comingled with crude and condensate of other producers (Designated Seller Groups), on FOB Kwinana terms.
TEG is acting as the Operating Agent on behalf of all of the Designated Seller Groups in relation to each of their offtake agreements and has entered into an agreement with each of the Designated Seller Groups to govern the provision of these services.
A couple of week later, under the terms of the Offtake Agreement, the CHJV was pleased to announce that it had completed a lifting of 107,000 barrels of Cliff Head Crude from the BP Kwinana Terminal.
BP purchased the crude FOB BP Kwinana Terminal as part of a comingled product with other producers.
The price received was a fixed differential to the average dated Brent price for the month of October 2021 and the funds of US$8,099,460.00 from the first lifting under the Offtake Agreement were received in November 2021.
The Cliff Head Joint Venture also received approximately A$1.1 million for a further 10,900 bbls of Cliff Head crude which was delivered and sold in April 2021, under the amendment to the previous Crude Oil Supply Agreement with BP Australia.
The accumulation of the five months’ inventory since the previous lifting meant that the company benefited from the increase in oil price by approximately US$1.0 million compared to monthly lifting.
Both the term of the Storage Agreement and the term of the Offtake Agreement signed with BP Singapore will cease in April this year.
Given the impact on both the CHJV and other producers currently using the storage facilities at BP Kwinana, the continued enormous potential of the Perth Basin and the value and strategic necessity this provides to both the State and Federal governments, the CHJV has continued to hold meetings with department representatives for the Federal Minister for Energy and Emissions Reduction and the State Minister for Mines and Petroleum; Energy; Industrial Relations.
BP was intending to cease fuel production at Kwinana and convert the refinery into a fuel import terminal.
However, the CHJV has expressed concerns, shared by the Western Australian and Federal governments, and believes ongoing local refining capability is vital for the nation’s energy security.
Flexible feed
TEG is looking at alternatives to address the issue, which include but are not limited to a continued focus on exploration in and of the other assets in which it holds interests and operates and Triangle's investigation into the potential to establish a modern, modular renewable fuel refinery by leveraging its existing infrastructure in the Perth Basin.
TEG is thoroughly investigating alternate storage and offtake strategies both domestically and internationally to ensure that the CHJV and other affected local producers can continue production and ensure local energy security beyond the expiry of the Storage Agreement and Offtake Agreement.
Read: Triangle Energy begins FEED study for proposed 5,000 barrel/day Renewable Fuel Refinery
The facility will also be a potential future consumer of hydrogen and have important benefits for WA’s fuel security after the planned closure of the Kwinana refinery later this decade.
The Renewable Fuel Refinery Project (RFR Project) was initiated in Q2 CY2021 to respond to decarbonisation targets and increased demand for local future fuel supply and will provide both essential blended renewable fuel refining capacity in WA and be a net consumer of hydrogen, with up to 1,500kg used per day in the processing of fuel.
This will provide a key local demand to further enhance the production of hydrogen in Western Australia and assist in the overall transition to greener fuels.
Further reading
- Triangle Energy continues to work with Pilot Energy on purchase of WA-481-P offshore exploration permit
- Triangle Energy’s Cliff Head Joint Venture estimates A$10.8 million saving in decommissioning cost
- Triangle Energy reinstates Cliff Head reserves and contingent resources
- Triangle Energy bolsters corporate skillset with appointment of non-executive director