Valhalla-1 is about 150km southeast of Derby, Western Australia and 47km north of the Noonkanbah community. Valhalla-1 is just north of the Noonkanbah determined land, in the same area as the recently completed 495km Paradise 2D seismic survey, which extended onto Noonkanbah lands.
Noonkanbah is known best for the dispute that began in the 1982, when Amax drilled the Fitzroy River-1 well near the “goanna dreaming” site of Pea Hill.
But Arc managing director Eric Streitberg told the company annual directors' dinner on Friday night that the company had gone to great pains to win the support of the Aboriginal community and it would ensure the Noonkanbah people shared in the benefits of any local discoveries.
“Arc and the Noonkanbah people have signed a landmark heritage agreement that will ensure any activity by Arc is carried out in a socially and environmentally responsible manner,” he said.
“We are particularly pleased to be drilling in an area where our friends from Noonkanbah will have the chance to also benefit if we are successful.”
Valhalla-1 is the second major play type to be tested in Arc's regional drilling program.
The well will test multiple fault independent structural closures that could contain oil or gas or both, the company said.
“The primary reservoir objectives are sandstones in the Grant Group and Anderson and Laurel Formations similar to the sections in which gas and potentially oil were found in the recent Valentine and Stokes Bay wells. There are also significant upside volumes at each of these levels if fault-dependent closures are effective.”
According to Arc, the Valhalla trap is a series of rollovers on normal faults parallel to basin bounding faults superimposed on a large plunging fold, the Tullock Nose.
“Valhalla-1 will intersect objective Grant sandstones as shallow as 670 metres, the Anderson sandstones near 1745 metres and the Laurel reservoirs below 2685 metres,” Arc said.
“The proposed total depth of 3500 metres is based on the deepest penetration of potential reservoirs still in closure.”
Potential reservoir volumes are substantial, according to Arc.
If oil is present, the Grant-Carolyn formation is likely to hold about 20 million barrels with upside of up to 57 million barrels, while the Grant-Winifred could hold 16MMbbl to 43MMbbl.
The Laurel formation, more likely to be gas-prone, could hold between 42 and 105 billion cubic feet of gas.
This is the second location in Arc's Canning Basin program. (The previous wells Valentine and Stokes Bay were drilled from the same site).
Valentine failed to find commercial quantities of hydrocarbons. Stokes Bay is still being tested.
But Arc said Valentine had confirmed a significant hydrocarbon system in the Fitzroy Trough of the greater Canning Basin, as well as reservoir quality sands and high-quality shale seals.
In addition, Stokes Bay had confirmed the validity of the reef play that Arc believes will sooner or later deliver major finds in the Canning's Fitzroy Trough region.
Streitberg said these wells had been “extremely encouraging” and Stokes Bay’s confirmation of the region’s Devonian reef play had busted a Canning Basin myth.
“The myth has been that the Canning’s Devonian reefs are tight,” he told the directors’ dinner. “Stokes Bay has showed that the reefs are not tight.”
Streitberg said the basin has world-class outcrop analogues of Devonian reefs that produce billions of barrels around the world.
“The Valhalla well will give us the chance to bust another myth or two if we are successful,” he said.
“Having 100 percent equity in the project as we have for the next couple of wells also gives us substantially more flexibility and leverage than we had at Valentine-Stokes Bay.”