Anzon defers gas production from BMG fields

June 29, 2007
The JV of Anzon Australia and Beach Petroleum has decided to give priority to expansion of its oil development program from the Basker and Manta fields.

Rick Wilkinson
OGJ Correspondent

MELBOURNE, June 29 -- The joint venture of Anzon Australia Ltd., Sydney, and Beach Petroleum Ltd., Adelaide, has decided to give priority to expansion of its oil development program from the Basker and Manta fields and will defer its associated gas development for another 12 months. The Basker-Manta-Gummy (BMG) oil and gas field development lies in the Bass Strait off Victoria.

The decision to defer the final investment decision (FID) for the gas phase means a gas sales agreement signed in March with Alinta Ltd. will be terminated.

Fields operator Anzon said oil production is a major source of revenue and profitability for the project and has been made the first priority for further development activity.

The Basker-6 development well is scheduled to be spud in first-quarter 2008, and the JV is negotiating to secure a rig for additional oil development work during next year.

The company said gas is not off the agenda altogether, as the drilling program will include gas appraisal work and target new oil prospects in the permit surrounding the existing discoveries.

The JV also is considering the feasibility of bringing in a larger floating production, storage, and offloading vessel to replace the existing Crystal Ocean FPSO and Basker Spirit shuttle tanker as part of the overall expanded development plan. This move would lead to optimal oil development ahead of the revised gas development program.

Anzon said it expects to commit to gas development by this time next year, and any future gas off-take arrangements will complement the optimized oil development.

The JV began thinking about a gas phase in late 2006 when gas flows from Basker and Manta fields were found to be much larger than originally predicted.

Instead of the 1,000 cf of gas/bbl of oil, the volumes are as much as 2,500 cf of gas/bbl. The gas reinjection equipment could not handle the higher volumes without slowing oil production.

The 2006 drilling results have lifted expectations, and the probable reserves at the fields have more than doubled to 40 million bbl. Gas and condensate reserves have quadrupled.

Instead of the original 6-year field life, the JV believes it has at least 17 years of production in front of it, hence the need for the larger FPSO.

The gas sales agreement with Alinta was to supply 225 petajoules over 15 years beginning in 2009, but it was conditional on the FID being made by the end of June 2007.

Alinta assesses options
Alinta is disappointed with the decision and is considering its options. It was planning to utilize the gas to supply its proposed 200 Mw Tamar Valley power station in northern Tasmania and now is assessing how best to meet the needs of the Tasmanian energy market.

One option is to defer the power station project until a new gas supply can be negotiated, either with Anzon-Beach or another producer.

A second possibility is to continue constructing the 180 Mw backup plant while investigating ways to proceed with the main 200 Mw combined cycle project.

An interesting but unconfirmed gas source might even be found within Tasmania itself.

Empire Energy Corp. International subsidiary, Great South Land Minerals Ltd., has begun drilling the first of 14 prospects delineated in a recent 2D seismic survey in the Tasmanian basin.

The company holds 25,000 sq km of contiguous permits—virtually all of the acreage in the basin. Previous drilling has found oil and gas shows, but nothing commercial.

GSLM expects to shoot a new 3D survey over some of the best prospects beginning in November.