Carnarvon Petroleum Limited (ASX:CVN) has received a robust independent report that confirms a major resource at Dorado on the North West Shelf offshore WA containing oil, condensate, free and associated gas.
A report by international energy expert ERC Equipoise Pty Ltd (ERCE) reviews the Dorado discovery following the Dorado-2 appraisal well.
The report outlined a gross 2C estimate of 162 million barrels of oil and condensate and 748 billion standard cubic feet of free and associated gas for 344 million barrels of oil equivalent.
ERCE’s estimates following the Dorado-2 appraisal well.
Carnarvon’s previous volume estimate following the Dorado-1 result was 283 million barrels of oil equivalent (gross, 2C basis).
The company’s managing director Adrian Cook said: “We engaged ERCE to provide us with a robust assessment of the recoverable volumes from the Dorado structure and we are comfortable that the results of ERCE’s review support the company’s views on the development potential for this project.
“As ERCE notes, a deterministic methodology may underestimate the low case and over-estimate the high case outcomes relative to a probabilistic method.
“Carnarvon would typically assess its volumes on this project at this time using the probabilistic methodology.
“However, the more conservative approach by ERCE for the low side case only strengthens Carnarvon’s comfort in the commercial rigidity of this project.”
Dorado is located in WA-437-P in which Carnarvon holds a 20% interest.
Carnarvon’s 20% share of the estimates.
ERCE’s work was carried out using the June 2018 SPE/WPC/AAPG/SPEE Petroleum Resources Management System (PRMS) as the standard for classification and reporting.
This work included a review of the seismic data, reservoir engineering data, recovery factors, interpretation of porosity, hydrocarbon saturation and net reservoir thickness from the wireline logging program, analysis of potential hydrocarbon columns from the pressure data and a review of the fluid properties derived from the oil, gas and condensate samples.
ERCE has identified the remaining key contingencies required to be addressed prior to the recoverable volumes at Dorado being classified as reserves.
These include the drilling of the planned Dorado-3 appraisal well, selection of the field development concept and determination of commerciality.
“A significant asset”
Cook added: “The independently evaluated best case estimate of 162 million barrels (gross, 2C basis) for the Dorado liquids resource confirms we have discovered a very large field and a significant asset on the North West Shelf.
“The oil and gas-condensate found in the different reservoirs in Dorado are very similar in nature.
“Work to date indicates that the development facilities, production and the value of the saleable product for oil and condensate are likely to be similar.”
The 1C liquids volume estimates provide the joint venture with a high degree of confidence to advance the field development concept evaluation work.
The Dorado 3 second appraisal well is scheduled later this year to further assess reservoir connectivity and carry out flow testing before starting Front End Engineering Design (FEED).
A number of development concepts are being studied to develop the field.
This includes production of the oil and condensate and re-injection of the gas to enhance liquid recoveries before the gas is then subsequently produced.
The gas volume of 748 billion cubic feet is also a large resource, particularly when combined with the nearby Roc resource of 332 billion cubic feet.
Gas development options
Carnarvon sees a broad range of options for development of the gas given that over one trillion cubic feet has been confirmed on a gross 2C basis.
Gas assets of this scale are appealing in their ability to generate stable long-term cash flows.
The company has also received further results from the Roc South-1 exploration well.
Although the well intersected the deeper Crespin and Milne reservoirs, there was no evidence of producible hydrocarbons, as interpreted from logs.
The well was not drilled as deep as earlier planned due to the lack of hydrocarbon indicators.
Cook said: “Of the eight wells that we have drilled in this new basin, this is the first well to not discover producible hydrocarbons.
“We will need to analyse the reason for this result, however, a strong positive take away is the quality of the reservoir sands found at depths of almost 5,000 metres.
“As we continue to build our understanding of the area, we will incorporate all of our well results, together with the new Keraudren 3D seismic survey, to refine our prospectivity for future exploration drilling.
“We remain firmly of the view that we are working in a highly promising new basin with very high-quality prospects to be pursed in the future.”
Dorado-3 well is next
After completing operations to secure the well, the rig will soon move to the Dorado-3 appraisal well location where it is planned to extract several cores and conduct flow tests from the Dorado reservoirs that have proved successful in the Dorado-1 and 2 wells.
The MD added: “Given our understanding of the Dorado-1 and 2 reservoirs, and the successful flow test at Roc-2, we are looking forward to the Dorado-3 results providing us with strong support for our development plans.”