VIMP Report 80 - Hydrocarbon prospectivity of areas V03-3 and V03-4, Offshore Gippsland Basin: 2003 Acreage Release

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Executive Summary The Gippsland Basin is situated in southeastern Australia about 200 km east of the city of Melbourne. The basin covers an area of 46,000 km² with about two thirds of the basin extending offshore. It is one of Australia's most prolific hydrocarbon provinces with initial proven reserves estimated at 4 billion barrels of oil (Bbbl) and 10 trillion cubic feet (Tcf) of gas. 20 oil and gas fields are in currently production and in 2001/2 supplied 20% (156,000 BOPD) of Australia’s crude oil requirements and 20% (220 Bcf) of Australia’s gas production including most of the State of Victoria’s gas needs.

The basin is covered by over 80,000 km of 2D seismic data and more than 30, generally small, field–size, 3D seismic surveys. The offshore part of the basin is approximately 30,000 km² in area in which around 130 exploration wells have been drilled since 1964. 57 of these wells have encountered hydrocarbons resulting in an overall success rate of 44% from an average exploration well density of approximately one well per 200 km². Thus, although a mature basin by comparison with other Australian basins, by world standards, the Gippsland Basin is still relatively under-explored.

The basin has the unique advantage of being positioned close to both existing infrastructure and markets. An expanding network of pipelines transports hydrocarbons from the producing fields to Esso/BHPBilliton’s onshore petroleum processing facilities at Longford. From here, new pipelines have been commissioned to deliver Gippsland gas to New South Wales, Tasmania, and soon to South Australia.

As a consequence of the increasing gas demand in the SE Australia region and recent changes to the economic and regulatory environment, Victoria is currently undergoing a resurgence in exploration and production activity. New gas developments are underway at Patricia-Baleen and Bream A in the Gippsland Basin and at Minerva in the Otway Basin. The latest exploration gazettal rounds have also resulted in considerable interest from both large and small petroleum industry players. In the Gippsland Basin itself, a number of new acreage awards have been made outside the production licences traditionally held by the Esso/BHPBilliton joint venture. In addition Esso/BHPBilliton have recently stepped up their own exploration activity with the acquisition of a 4060 km² 3D seismic survey at a cost of approximately A$60 million. This survey, the largest proprietary 3D survey ever acquired in Australia, covers the major northern producing oil and gas fields of the Gippsland Basin and will provide Esso/BHPBilliton with an integrated, regional, structural and stratigraphic framework on which to base their future exploration and production activity. Another large 3D survey, the Tuskfish survey totalling around 1000 km², was completed by Esso/BHPBilliton in March 2003.

Most hydrocarbon discoveries in the Gippsland Basin are reservoired within clastic formations of the Late Cretaceous to Early Tertiary Latrobe Group. Crude oils are generally very light and paraffinic, and range between 40º and 60º API. The remaining Yet-to-Find resources in the basin (at P50 level) have been assessed by the USGS at 600 million barrels (MMbbl) of liquids and 5 Tcf of gas, much of which is likely to occur in deeper stratigraphic units. Nearly all the hydrocarbons discovered since 1978 have been found within Intra Latrobe Group traps, yet less than 17% of all exploration wells have penetrated the deeper Golden Beach Subgroup. Even fewer wells have specifically targetted this interval although discoveries have been made at Kipper, Archer and Angler. There is clearly potential for additional discoveries within the Latrobe Group arising from the application of 3D seismic which has immediate ramifications for the 2003 release of Gippsland acreage described in this report and its companion report VIMP 79 (Bernecker et al., 2003).

The two offshore areas, V03-3 and V03-4 covered in the present report comprise 42 graticular blocks extending over 2595 km² in the more oil prone southeast part of the basin. The blocks are 120-150 km offshore and are only partially covered by 3D seismic. Both blocks straddle the present day shelf edge where water depths range from 160 m to 2400 m. The blocks were earlier licensed to operators who identified several prospects and leads but which, for various reasons, such as water depth and/or the prevailing oil price environment, were never drilled. Both areas offer opportunities for hydrocarbon entrapment in a variety of play types.

Area V03-3 is located in the southeastern part of the Central Deep and lies immediately south of the Blackback-Terakihi oil field and 15 km east of the giant Kingfish field. The block contains the Angler discovery, estimated to hold up to 100 Bcf of gas and 4 MMbbl of condensate. Although over 50% of the block lies in water depths greater than 1000 m, the area is considered to be highly prospective. Objectives in this gazettal block include Halibut and Golden Beach Subgroup plays as well as top-Latrobe erosional remnant plays, similar to Blackback-Terakihi. Depth conversion and seismic imaging in this area of steep bathymetry, canyons and channelling within the carbonates of the Seaspray Group are critical factors for exploration success.

Intra Latrobe and Golden Beach fault traps have had a 100% success rate in this area as evidenced by the Angler and Archer-Anemone discoveries. A number of untested leads have been mapped in the north of V03-3, in fault blocks adjacent to the Angler discovery and beneath the TD of the other wells. The sealing units present at Angler, are expected to be well developed and reservoir quality at burial depths of around 3000-3500 m is likely to be favourable for both oil and gas production. These factors, together with the proximity of the area to the Kingfish kitchen, make these deeper leads very attractive and relatively low risk targets.

The southernmost Area V03-4 straddles the Southern Terrace and the Southern Platform and encompasses the Pisces Sub-basin, a perched Cretaceous half graben. A number of top-Latrobe leads have been identified, however, the largest feature is a large basement/Strzelecki closure in the northeast corner of the block. The main target of this play would be transgressive sandstones and erosional sediments from the granitic basement (Emperor and Golden Beach subgroups) or fluviodeltaic sandstones sealed by either marine or lower coastal plain mudstones (Golden Beach and Halibut subgroups). Again reservoir parameters are likely to be favourable and the principal risks are in depth conversion and distance from a mature kitchen area.

Both gazetted areas are lightly explored, comprising a total of five wells, of which one, Billfish-1, was an invalid test. Of the four valid tests no significant were encountered within the Latrobe Group at Pisces-1 whereas moveable hydrocarbons were encountered in the Golden Beach Subgroup at Angler-1. Neither Athene-1 nor Selene-1 penetrated the equivalent interval and thus the Golden Beach Subgroup is a prime target for exploration. 3D seismic is required to truly evaluate the potential of these areas. Recognising this, it is significant to note that Esso/BHPBilliton have extended their proprietary Tuskfish 3D Survey into the northern part of Area V03-3.

Both areas clearly provide excellent exploration opportunities and are described more fully in this report.

Bibliographic reference Thomas, J.H., Bernecker, T., and Driscoll, J., 2003. Hydrocarbon Prospectivity of Areas V03-3 and V03-4, Offshore Gippsland Basin, Victoria, Australia: 2003 Acreage Release. Victorian Initiative for Minerals and Petroleum Report 80. Department of Primary Industries.