Nexus loses chance at exploring Yngling oil prospect
Nexus Energy Ltd., Melbourne, has lost its chance to evaluate the large Yngling oil prospect in Western Australian permit WA-368-P just off Perth.
MELBOURNE, Mar. 29 -- Nexus Energy Ltd., Melbourne, has lost its chance to evaluate the large Yngling oil prospect in Western Australian permit WA-368-P just off Perth.
The Australian government has enforced its “use it or lose it” provision to strip Nexus of the block, reportedly due to the company’s failure to drill an exploration well within the required timeframe.
The Yngling structure, which lies about 25 km north of Rottnest Island, is thought to contain as much as 90 million bbl of oil.
The government intervention comes despite Nexus lodging a renewal application after the initial 6-year exploration licence expired in September 2010. The company was continuing efforts to secure a suitable drilling rig.
The refusal to renew comes hard on the heels of a Western Australian parliamentary economics and industry committee inquiry into domestic gas prices that found that the current process behind the application for and renewal of retention leases lacked rigor. It allowed the stockpiling of gas reserves, including fields that are suitable for the development of domestic supplies.
The inquiry found that the retention lease regime was lax and enabled producers to warehouse or hoard reserves when they could be economically developed for the local market.
The inquiry recommended that all retention leases with no development plans in place within the next 5 years be subject to a reevaluation of commercial viability by the joint authority. It added that the supply of domestic gas is included as a priority in the process of renewing or issuing a retention lease.