Another Perth-based company, minerals explorer Gawler Resources, is now moving to buy a stake in the project.
In a statement, Gawler said the directional well was now drilling ahead in a nine-inch hole at 7530 feet (2295m). The proposed total depth for High Island-1 is about 10,088ft.
“Strong gas shows were obtained in the target 6400ft sand, between 6834ft and 7044ft measured depth,” Gawler said.
“The economic significance of the gas shows will not be known until wireline logs, to be run at total depth and any tests which may be carried out, have been evaluated.”
The High Island oil and gas development project is in 165ft of water and surrounded by producing fields and associated oil and gas production infrastructure.
Gawler said oil and gas was discovered and wireline tested in several reservoirs in six wells drilled between 1984 and 1989 but the discoveries were not produced due to low product prices and reservoir continuity risk. All wells were located on 2D seismic.
But the acquisition of 3D seismic data in 1995 and its re-processing on 2004 allowed the known reservoirs to be individually defined, significantly reducing reservoir continuity risk, it said.
Reserve potential based on the 3D and existing drilling data is 3.2 million barrels of oil and 38 billion cubic feet of natural gas, potentially recoverable from three new wells.
Drilling of the first well is expected to finish before the end of this month, with the second and third wells in late 2007.
Subject to commercial success in the first well, tripod and pipeline construction is scheduled to start following the drilling of the first well, with first production likely in February 2008.
Gawler said it has made an offer to Aurora Oil and Gas to acquire a 30% working interest in the High Island project.
The deal, which is subject to shareholder approval, would result in Gawler acquiring the interest in High Island and potential future opportunities in the shallow water of the Texas Gulf coast identified by Aurora.
In return, Aurora would become a major shareholder of Gawler with board representation.
There are no other Australian companies participating in the High Island project.
