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Exploration in the Timor Sea is continuing with ConocoPhillips seeking environmental approval for the drilling of up to three appraisal wells on its Barossa gas field in the second or third quarter of 2013.
The campaign, funded by South Korea’s SK Group, seeks to determine whether potentially commercial hydrocarbon resources exist within the field, which was discovered in 2006.
SK had in June agreed to pay up to US$520 million for a stake in Barossa and the nearby Caldita gas fields that are located about 300 kilometres north of Darwin.
The first phase consists of US$260 million to fund the appraisal drilling, giving SK a 37.5% stake in NT/P69 and NT/P61. The South Korean company will then have the option to increase its interest to 49.5% by making a further payment of US$60 million to Conoco and Santos (ASX: STO); funding up to US$90 million for engineering and design work for a liquefied natural gas project; and Final Investment Decision and first LNG cargo payments of up to US$110 million.
A successful appraisal could lead to the development of an independent floating LNG project or a tie back to Conoco’s existing Darwin LNG facility. The latter option could either underpin an expansion of the facility or backfill Bayu Undan when it comes plateau or a combination of both.
Move a positive for the Timor Sea
The upcoming exploration is a plus for other explorers such as MEO Australia, which holds the adjacent NT/P68, as it indicates the confidence that major companies such as SK have in the prospectivity of the Timor Sea.
Italian major Eni is earning a 50% stake in NT/P68 by drilling two wells to appraise the Heron field.
Discoveries in the Timor Sea may also be considered together with a future development of the adjacent Shell-operated Evans Shoal gas field.
Separately, Eni has drill/drop decision to earn a 50% stake in the Blackwood area of the permit on the 1 year anniversary of the completion of the Bathurst 3D survey over the area that is independent of Heron.
Blackwood was discovered by the Blackwood-1 exploration well in 2008, which intersected a 49 metre gross gas column.
Blackwood-1 flowed gas with 25-30% CO2, similar to the composition at Evans Shoal.
Heron and Blackwood have estimated total resources of about 6 to 6.5 trillion cubic feet of gas, similar to the 6.6Tcf at Evans Shoal.
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