BP lets rig contract for Ironbark wildcat off Western Australia

BP Developments Australia Pty. Ltd., acting operator of a joint venture in Western Australian offshore exploration permit WA-359-P, has signed a contract for a rig to drill the Ironbark-1 wildcat well.

Diamond Offshore Drilling Inc.’s Ocean Apex semisubmersible drilling rig will begin the program during next year’s second half. Ironbark-1 is expected to drill to a depth of 5,500 m.

After many delays, mostly to do with permit leaseholder Cue Energy Ltd. offsetting the forthcoming exploration program costs through farm-in deals, the rig contract sets a path to fulfillment of the drilling program. BP has now initiated environmental planning activities for a site survey of the well location and the drilling activities.

Ironbark, in the offshore Carnarvon basin, has the potential to hold up to 15 tcf of recoverable gas resource and is seen as a world-scale prospect in a proved gas-prone basin.

Ironbark is a Mungaroo formation prospect with a mapped area of up to 400 sq km. It lies less than 50 km from the North West Shelf joint venture’s North Rankin platform. It is also close to Chevron Corp.’s Wheatstone infrastructure and Woodside Petroleum Ltd.’s Pluto infrastructure, thus providing multiple development options if gas is found.

The permit partners BP PLC, Cue, Beach Energy Ltd., and New Zealand Oil & Gas Ltd. (NZOG) reported a coordination agreement in October 2018 that provides for BP to act as operator on behalf of Cue in planning the Ironbark wildcat prior to title transfers and creation of a formal joint venture.

As required under this agreement, Cue has contributed $8.087 million from its existing cash reserves into an escrow account to secure the proportion of its costs that are not carried by other parties. With funding from the other parties on completion of the agreement, full funding for the well is agreed.

Execution of the rig contract and Cue’s funding of the escrow account satisfy two outstanding conditions of completion of the coordination agreement, the BP Option agreement and farm-in agreements with Beach and NZOG.

Regulatory approval of an extension to the WA-359-P permit to allow time to drill is also required and Cue is currently preparing an extension application for submission to the Australian National Offshore Petroleum Titles Administrator.

When all conditions are satisfied, and regulatory approvals are received, the coordination agreement provides for BP to become official operator. The participating interests in the well will then be BP 42.5%, Cue 21.5%, Beach 21%, and NZOG 15%.