Austral’s move into PNG was driven by chief executive Dave Bennett, who worked there during the late 1980s and early 1990s as exploration manager of New Zealand Oil & Gas.
“I had a lot of experience in the part of PNG that Austral is now in, and was aware of some good possibilities in open acreage,” Bennett told EnergyReview.net.
“In some ways it is easier to get things done there than in New Zealand or Australia. As anywhere, relationships are important.
“The prospectivity is better than either onshore New Zealand or Australia. But of course drill costs are higher and service support is more uncertain due to remoteness.
“Any success in PNG would nicely complement our recent discoveries in New Zealand and add breadth to our operations.”
Austral’s original PNG acreage, PPL 192, was acquired in January 1997 and the current PPL 235 block, covering part of the ex-PPL 192 acreage and an adjacent area, was awarded in August 2003.
Austral now holds a 35% stake in and operates PPL 235, which is in the Foreland area of the onshore Papuan Basin.
It also holds a 7.5% stake in the Foreland blocks PRLs 4 & 5, which contain the Elevala, Ketu and Stanley gas-condensate discoveries.
But it is the PPL 235 block – which British unlisted public company Rift Oil plc farmed into early this year – that presently holds most interest for Austral.
Bennett’s wife and former Austral executive, Jenni Lean, resigned from Austral to become chief executive of Rift Oil. The company is earning a 65% interest in the permit by contributing the first US$6 million of expenditure on the Douglas-1 exploration well that is due to spud late this year or early in 2006.
Bennett says the Douglas Prospect – mapped as covering 60 square kilometres in a lightly explored area of the foreland – is highly prospective. Earlier wells have already demonstrated oil and gas generation from the area. Kamu-1 has also been identified as a significant drillable target.
Austral acquired an 80km 2D seismic program over Douglas and the Kamu prospect during 1999-2000 when the company was called Indo-Pacific Energy. This was combined with the existing data base to map the prospects to drillable status.
Bennett says very prominent direct hydrocarbon indicators (DHIs) and strong amplitude variation with offset (AVO) anomalies in the Douglas structure pointed Austral to the prospect.
He declined to comment on possible reserves for Douglas, though other NZ explorationists say it is possible that such a prospect could contain up to 200 million barrels of oil, given its areal closure.
Austral and Rift have also purchased a land rig for use in PNG, which will give them the capability to drill follow-on wells. Several other operators in PNG are also interested in using the rig.
“If we have success at Douglas-1, we will look at drilling Kamu-1 and Douglas appraisal-development wells,” Bennett said.
“We may also use the rig to re-enter the Stanley-1 gas discovery in our PRL 4 and test that well.”
Bennett says Douglas-1 site preparation is now well advanced, with shipping bookings made to move the rig and equipment from the United States to PNG for an anticipated spud date in late January 2006.
In PRLs 4 & 5, a 2001 review established several other large targets in the areas apart from the known fields as established by the Elevala-1, Ketu-1 and Stanley-1 gas-condensate discovery wells.
That joint venture is considering a condensate stripping and gas re-injection project to develop the Elevala field, which would take advantage of infrastructure including logging roads and navigable rivers, to export condensate to market.
Bennett says he has never seen development of oil or gas in this area as being tied to the proposed PNG-Queensland pipeline.
“Douglas is a big structure and in the event of oil or gas discovery, the Strickland-Fly Rivers provide the means to get oil or condensate to market,” he said.
Austral is listed on the New Zealand Exchange (NZX), the Toronto Stock Exchange venture exchange (TSX-V), and the American Stock Exchange (AMEX).
