"We are currently rigging up on the Yulleroo-2 well location which is close to the highway near Broome,” managing director Eric Streitberg said.
“This well is 2.5 kilometres to the east of, and significantly up-dip of the Yulleroo-1 gas discovery made in 1967.”
The well site’s proximity to the highway is a key point, according to Streitberg.
“We have always been acutely aware of the magnitude of the exploration task in the Canning Basin, and have made a strategic decision to focus on particular areas and plays in a logical sequence to ensure we don’t overextend ourselves in any one program,” he said.
“In our first year of activity we have worked to build on prior exploration success along the Fitzroy Graben margin. This has also kept our activities reasonably close to highways and other support infrastructure, providing an experience base and foothold for future years as we build our activities into more remote locations across the Great Sandy Desert.”
Streitberg says Arc is on track with its Canning seismic program, having recently acquired 1000km of 2D data. But the company is about two wells behind where it wanted to be due to a late start to the drilling program and testing at Stokes Bay-1, a well he described as “very interesting”.
“Stokes Bay was the first well in the basin to demonstrate high quality permeability and porosity in the Devonian reef section,” he said.
“This has been the ‘Holy Grail’ of reef exploration in the basin and has opened up a whole new exploration play.”
Stokes Bay-1 has two well-defined zones of interest, according to Streitberg.
The Anderson Formation sandstones have a probable 5m net oil reservoir, which has the potential to be a significant oil reserve even though it appears to be a relatively poor quality reservoir.
The second zone of interest is the Nullara Formation reefal interval, an excellent reservoir in which pressure data indicates potential for a significant hydrocarbon column.
“We plan to test this reservoir again in the dry season when the weather allows us to return to the site,” Streitberg said.
“It is possible that the best way of evaluating the Nullara is by redrilling this interval under-balanced using a coiled tubing unit. This would get around the problems of the massive [drilling fluid] losses in such a porous and permeable interval and give us a definitive result.”
Valentine-1, the well drilled immediately before Stokes Bay-1, was a high-risk, high-reward play that proved to be too tight, despite some encouraging shows.
But like Stokes Bay-1, the third well in the campaign – Valhalla-1 – had promising results that merit further investigation.
Arc intersected three zones with good shows that the company will be testing as soon as possible.
“These would have been tested while we were drilling the well, but deteriorating hole conditions, and worsening site access from heavy rain, forced us to suspend the well,” Streitberg said.
Oil shows, mud gas and electric logs indicate there is a roughly 5m oil column at a depth of 1770m in the Anderson sandstones.
In the Upper Laurel Formation clastic section, high mud gas and cut and fluorescence over the interval 2130m to 2180m suggest the presence of gas-charged sandstones, and there is similar evidence associated with the Lower Laurel Formation clastics over a gross interval of about 200m below 2700m well depth.
“These are very encouraging indications and we are very keen to test the section as soon as we can get access to the site again,” Streitberg said.
“In the event of successful tests we could have a significant gas and oil discovery.”
In addition, the Valhalla location is surrounded by several large similar structures that have been delineated by seismic data acquired last year.
“We are very optimistic that commercially viable gas production will be achieved in this area from Valhalla and the other look-alike prospects,” Streitberg said.
