The Perth-based company said while the Drakea-1 and Drakea-2 sidetrack wells had identified a new hydrocarbon play, the reservoirs were of low permeability and at this location were unlikely to be capable of commercial production.

“The challenge for us will be to identify the areas where permeability has been developed and preserved so that commercial production can be achieved,” Arc managing director Eric Streitberg said.

He said the company would review the significance and potential of the new hydrocarbon play during Arc’s Canning Basin drilling program, due to start next month.

Arc and partner Origin Energy decided to sidetrack the Drakea-1 well after it was found to have intersected a 3-5m oil column in the High Cliff Sandstone.

Having now reached a total depth of 2880m, Drakea-2 was designed to penetrate the High Cliff Sandstone in a more crestal location, where the partners believe a larger hydrocarbon column could be encountered.

Shows and wireline logs conducted while drilling indicate that Drakea-2 intersected hydrocarbons in the High Cliff and Kingia Sandstones over gross intervals of 8m and 14m, respectively.

“The nature of the hydrocarbons (gas or oil) and whether the shows represent a single or multiple hydrocarbon columns cannot be determined definitively from the available data,” Arc said.

The well is now being suspended at the intermediate casing shoe for a possible re-entry once the information gathered from Drakea-1 and -2 has been fully interpreted.

The Century 18 drilling rig will now be moved to the Apium location to drill the Apium 2 sidetrack well into the Apium gas accumulation in L2.