SAPEX managing director Andrew Andrejewskis told the Excellence in Upstream Energy Conference in Sydney this afternoon that the region holds unrealised potential for conventional petroleum discoveries as well as coal seam methane projects. In addition, there are the possibilities of commercial opencut coal mining and coal-to-liquids processing.
But oil will be the company’s primary focus and CSM will be a secondary focus.
SAPEX has seven exploration leases covering the entire basin, an area of 65,000 square kilometres, equivalent in size to the whole of the Cooper Basin.
Andrejewskis says the Arckaringa’s Permian sediments are analogous to the Cooper’s.
“The Arckaringa has good source rocks in an oil generation window, good seals, good reservoirs with 18%-plus porosity, and a variety of structural and stratigraphic traps,” he told the conference.
The region was held by the Santos-Delhi consortium in the 1960s, and a seismic survey undertaken by that joint venture has identified 34 leads and prospects on a 1400km broad grid, according to SAPEX.
Several dry holes were drilled and explorers lost interest in the basin, but Andrejewskis believes the early explorers misunderstood the basin’s geology and failed to drill near oil migration paths.
Most of the identified prospects also have multiple target horizons and most targets are relatively shallow, being less than 1500m deep, he said.
The Arckaringa can still be considered a virgin basin, and most of it is still not covered by seismic.
“New seismic can be expected to yield many more prospects,” Andrejewskis said.
The basin also has huge potential for coal seam methane, according to SAPEX.
“The basin’s coals are sub-bituminous, Permian-aged deposits, similar to the Walloon coal measures in Queensland, which produce coal seam gas,” Andrejewskis said.
“Markets in the region include Olympic Dam and other major mineral projects.”
SAPEX’s proposed exploration program is still fluid and will be refined over the next few months as further work is carried out leading up to preparation of a prospectus. But Andrejewskis says the first two years will be very active.
“The first year is likely to involve seismic survey work to delineate targets before drilling at least two conventional oil exploration wells. The program will also include the drilling of four to six coal seam methane wells in the Arckaringa coal fields as well as test drilling in PEL120 near Adelaide.
“Success in the oil exploration program will obviously dictate the dynamics and focus of Year 2, while good results in the coal deposits will lead straight to a pilot gas production program. We may decide to bring in farminees on both fronts to accelerate or expand the programs.”
Based in Adelaide, SAPEX was formed in 2000 as a private entity and has now changed its status to that of an unlisted public company, having raised $A1.7 million in seed capital in the last few weeks. It plans to raise a further $15 million via an initial public offering in October/November and to become a publicly listed company by the end of the year.
Andrejewskis, a geologist and former director general of PIRSA (Department of Primary Industries and Resources, South Australia) and more recently director of petroleum development in the Northern Territory, joined the company in January.
Roger Wilson, an experienced company director and former partner of law firm Piper Alderman, is chairman of the high-powered SAPEX board and serves in a non-executive capacity.
He is joined by three other non-executive directors.
Paul Young is a former executive director of Morgan Grenfell Australia’s corporate advisory division, and founder and current executive director of financial and corporate advisor Baron Partners.
David King is an experienced geophysicist who is currently also on the boards of Eastern Star Gas, Gas2Grid and Baron Partners.
Patrick Elliot is chairman and managing director of Magnesium International. He was formerly with Consolidated Goldfields Australia, Morgan Grenfell Australia and Natcorp Investments.
