Technology, Needs Fuel Program

Gippsland Draws New Attention

By KATHY SHIRLEY
EXPLORER Correspondent

Weeks’ Vision

Opportunity Was
Out the Window

The history of Bass Strait oil and gas activity is a fascinating chapter in the global petroleum industry evolution -- and, ultimately, a rewarding chapter for AAPG.

Oil had been recorded along Australia’s southern coastline since 1869, but it wasn’t until 1960 that the offshore region was even considered.

Around that time former BHP executive Eric Rudd contracted Lewis Weeks, a leading American oil field geologist who, before retiring as president of Standard Oil of New Jersey (Exxon), had found oil seemingly everywhere -- it was said he studied data for all of the world’s known basins -- and was about to enjoy retirement in his Westport, Conn., home.

Rudd wanted Weeks to help him convince BHP officials that an oil search in oil-dry Australia should be launched.

Weeks agreed, did some studying, then met with the BHP officials and told them he knew where oil could be found that was accessible to 90 percent of Australia’s market.

Weeks was then offered -- and accepted -- a 2.5 percent royalty deal. And then he was asked, where’s the oil?

“Come to your window,” he replied. “It lies out there in the Bass Strait, and most particularly off the Gippsland Coast.”

Incidentally, the Bass Strait was one of the world’s roughest water areas -- the region had been passed over since after 40 years of trying the adjacent coastline was dotted with nothing but 140 dry holes.

BHP decided to take a risk, however, and following encouraging results from an initial aerial survey, commissioned Australia’s first offshore seismic survey that indicated several possible oil traps in the Gippsland Basin. Prior to drilling, however, BHP went looking for a partner and in 1964 convinced Esso Standard Oil (Australia) Ltd. to join the venture as a 50-50 partner.

A drillship brought in from the Gulf of Mexico spudded the first well in 1964 in water 42 meters deep, and after months of battling notorious bad weather the drill bit reached 1,318 meters and hit gas.

Striking pay dirt on the first ever try was almost unheard of and prompted additional exploration.

A year later the joint venture partners made a second major gas discovery at the Marlin Field and tapped the real prize -- oil.

The giant Kingfish Field discovery soon followed, and since that time a host of fields were uncovered in quick succession, including Halibut, Dolphin, Perch, Flounder, Tuna, Snapper, Mackerel and Bream as well as oil at Barracouta and West Kingfish.

At its peak in the mid-1980s the Bass Strait was producing over half a million barrels of oil a day.

At one point the Bass Strait discoveries supplied 70 percent of Australia’s petroleum needs.

Prior to these finds Australia was almost totally reliant on imports of petroleum products.

And, according to Esso Australia, the oil and gas produced from the Bass Strait, combined with the cost of oil that otherwise would have had to be imported plus the tens of billions of revenue dollars paid by the joint venture to the government, equal an enormous impact on Australia’s development.

As for AAPG, Weeks, a generous philanthropist, was able to provide the money for the headquarters addition in Tulsa that bears his name: the Weeks Tower. His son, geologist L. Austin Weeks, continues as a contributor to the AAPG Foundation.

-- KATHY SHIRLEY

An ambitious new drilling program in Australia's offshore Gippsland Basin is set to kick off in February based on new state-of-the-art 3-D seismic data.

New technology, however, is not the only driver in this province, located in the Bass Strait off southeast Australia.

A growing natural gas market in Australia and nearby Tasmania also is fueling renewed efforts to find and produce both oil and natural gas.

Esso Australia and BHP Billiton (50-50 joint venture partners) late last year announced plans for what is expected to be the basin's largest combined exploration and production drilling program since the 1980s.

They are in discussions to contract a rig capable of drilling wells from either existing platforms or in new locations.

Pending the success of the initial wells, the program is expected to extend into 2005, according to the companies.

The program is based on 3-D seismic data acquired in 2002 as part of the largest proprietary 3-D seismic survey ever undertaken in Australia. The survey, which covered over 3,900 square kilometers, was designed to identify new exploration prospects, provide data to better plan for the depletion of producing fields and to assist in bringing small, undeveloped discoveries into production.

The program will target both oil and gas opportunities, and all the planned wells will be located within existing production license areas.

"We believe there are new oil and gas resources still to be found in the Gippsland Basin," said Doug Schwebel, Esso Australia exploration director. "From an exploration viewpoint, the program is all about finding new potential in a mature basin."

Steve Bell, president of exploration and development for BHP Billiton Petroleum, added, "In particular, the joint venture will be looking to leverage its ability to commercialize smaller resources due to their proximity to existing infrastructure. This also will help extend the productive life span of the existing platforms and pipelines."

Yesterday, Today and Tomorrow

Australia's first offshore well was spud in 1964 in the Bass Strait , discovering the Barracouta gas field.

But that wildcat found more than just a gas field: It set the stage for a development that has seen the discovery of multiple large fields and important reserves for Australia. Since the country's first production commenced from the Gippsland Basin 34 years ago, more than 3.5 billion barrels of oil and five trillion cubic feet of gas have been produced.

The Barracouta Field was followed two years later by the Kingfish discovery, Australia's first offshore oil field that remains its largest oil find.

The Kingfish and subsequent world-class discoveries led to massive infrastructure costing more than $12.5 billion. Today there are 21 offshore platforms and installations in Bass Strait with a network of 600 kilometers of pipelines. The most recent addition was the Blackback subsea facility, which at a depth of almost 400 meters is one of Australia's deepest oil developments.

Esso Australia and BHP Billiton are currently producing approximately 160,000 barrels of oil and 570 million cubic feet of gas per day, although the joint venture has the capacity to produce gas at a peak daily rate of more than 1,000 million cubic feet of gas daily.

It is obvious both firms remain upbeat about the region's remaining potential. In the past five years, overall capital expenditures associated with the joint venture's Gippsland Basin operations, including onshore facilities, have exceeded A$400 million annually, making it one of Australia's largest ongoing oil and gas investment programs.

The Gippsland Basin fields supply around 20 percent of Australia's crude oil requirements and nearly all of Victoria's natural gas.

"We can also supply up to 50 percent of New South Wales' gas requirements through the Eastern Gas Pipeline," Nick Heath, director of gas marketing for Esso Australia, said at a recent oil and gas conference.

In 2002 the new Tasmanian gas pipeline was opened and Bass Strait gas also began flowing south into Tasmania for the first time.

With nearby markets established it is no wonder Esso Australia and BHP Billiton are working hard to buoy reserves and production from the Bass Strait region.

"Despite the massive production to date, we believe that Bass Strait remains highly prospective," Heath said, "and there are still significant discovered reserves, at least five trillion cubic feet of gas, much of which has been developed and more which is still to be exploited."

Seismic's Impact

It was that remaining potential that prompted the joint venture to under take a massive 3-D seismic program to search for additional reserves.

In 1999 the firms conducted two small 3-D surveys, one at Barracouta and one at Kipper Field.

"Our target was specifically the Golden Beach formation, which lies up to 1,000 meters beneath the LaTrobe formation, which is the primary host of Bass Straits' current oil and gas production," Heath said. "We used this data to identify East Pilchard, which we drilled in August of 2001. It was to a total depth of 3,138 meters and discovered gas in several intervals, with a total of more than 100 meters of gas-bearing sand."

This success and the quality of the data obtained from those two small 3-D surveys provided the joint venture with insight into the potential of 3-D seismic technology in the Gippsland Basin -- and convinced the firms that additional data would be valuable.

"We had never before deliberately explored the deep part of the section, nor had we deliberately explored for gas in the basin," Heath said. "With this in mind we completed the largest ever 3-D seismic survey in Bass Strait."

The project (October 2001-July 2002) covered about 3,900 square kilometers in the area surrounding the northern fields in the Bass Strait.

The genesis of the huge 3-D seismic program came from ExxonMobil's massive regional approach at Sakhalin off the eastern coast of Russia, which was designed to develop an integrated structural and stratigraphic picture of the basin.

Seismic imaging in the Gippsland Basin can be challenging. Diverse geologic features tend to complicate the images.

"Take, for example, the major coal seams within the Upper LaTrobe section, which distort the image below," he said. "However, using the new regional 3-D seismic approach and the wealth of experience that we have built up over four decades in the Gippsland Basin, we are now using advanced algorithms to take out the seismic 'noise,' or 'shadowing,' generated by the coal to identify direct hydrocarbon indicators below."