The other project partners are Origin Energy, with a 50% interest, and Beach Petroleum, as operator with 30%.

Cowrie-1 is expected to take about 11 days to reach its target depth of 1408 metres, said Essential, which has a 20% interest in the project.

It said the Cowrie prospect, about 5km west of the Killanoola discovery, has the potential to hold more than four million barrels of recoverable oil.

Drilled in late 1997, Killanoola initially flowed oil to surface unaided at about 300 barrels a day. It was then put on pump at a rate of 100 barrels a day, before the recovery fell to 25 barrels a day whereupon Origin abandoned the effort as uneconomic.

Cowrie lies on the northwest flank of the Penola Trough, northwest and updip of the Katnook, Haselgrove and Ladbroke Grove gas fields.

“PEL 27 is ideally positioned to trap hydrocarbons migrating out of the trough, as demonstrated by the recovery of oil in Sawpit 1 and the flow of oil to the surface at Killanoola DW 1,” Essential managing director John Remfry said.

Both wells were drilled in PEL 27 and are on trend with Cowrie, he added.

Only a handful of wells have encountered oil onshore or offshore Otway since exploration began in the basin in 1866 at Salt Creek in the coastal Coorong region, and only two of them have flowed oil to surface.

But the joint venture rates the chances for success at Cowrie as good.