Dr LIM - 1995-08-16
The recent discovery of a considerable quantity of natural gas from the Undan 1 well in the Timor Sea has provoked a great deal of interest in the Northern Territory. What impact has the discovery had on exploration in the region?
ANSWER
Mr Speaker, I welcome the opportunity to advise members of the House of the success achieved in this particular area. The recent success of the Undan 1 well in the Timor Gap Zone of Cooperation confirms the run of success in exploration offshore of the Northern Territory. While the actual extent and size of Undan 1 remains uncertain, my department is confident that the discovery is significant and confirms the existence of a very large natural gas and condensate field. Significantly, the Undan 1 well is 10 km from the Bayu 1 discovery, which was confirmed in March last year. It is believed that both wells have tapped into the same structure. The Bayu 1 well flowed 90 million cubic feet of natural gas per day and 5250 barrels of condensate, both of which are excellent results. Industry analysts believe that the Bayu/Undan field is very large by Australian standards and possibly similar in size to the North-West Shelf. While I cannot provide further detail on the discovery at this time, I am pleased that the preliminary reports confirm the continued success of exploration activity within the Darwin syncline geological area.
The Darwin syncline geological area covers the Ashmore and Cartier Islands adjacent area, which is administered by the Northern Territory, the Western Australia adjacent area and the Timor Gap. It is now considered by industry to be Australia's hottest exploration area. To date, there have been 5 major discoveries from 18 exploration wells drilled. The discoveries have occurred in the Elang, Laminaria, Kakatua, Elang West and Bayu/Undan fields. The success rate of 28% compares very favourably with the industry standard of one in 10 successful wells, a success rate of 10%.
Two other developments in the region point to the unprecedented high level of interest in our region. An industry publication reported recently that a record bid has been placed over the awarding of a new exploration permit area within the Western Australia jurisdiction but in the vicinity of the Undan and Bayu discoveries. Mr Speaker, for the benefit of members, I table a copy of that publication. It is called PEX. I am reliably informed that one company has proposed an exploration program of no less than 11 wells to be drilled within the initial 3-year program. This needs to be viewed in the context that one well has an estimated cost of $10m to $12m. The industry average for drilling programs is for 3 wells to be drilled over a 5-year period. The proposed program represents an unprecedented outlay by the explorer and high expectations of a commercial return on its investment. I understand that 8 companies have placed bids for this particular exploration permit and that bidding between the rivals is fierce.
In another development in the Northern Territory's jurisdiction, interest in 2 other permit areas has already sparked speculative seismic and aeromagnetic survey work in the private sector. It would appear that the survey companies are so confident that they have undertaken the work on spec. Given the continued exploration run in the region, my department is
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confident of further major discoveries. To date, the drilling operations have been undertaken from Darwin. That boosts local service and supply industries and creates additional employment opportunities for Territorians. I am sure that members will join me in recognising the successes to date, the enormous potential that exists in our offshore fields, and the benefits that we hope will accrue to the Territory as a result of the increased level of activity and interest.
Page 702
ANSWER
Mr Speaker, I welcome the opportunity to advise members of the House of the success achieved in this particular area. The recent success of the Undan 1 well in the Timor Gap Zone of Cooperation confirms the run of success in exploration offshore of the Northern Territory. While the actual extent and size of Undan 1 remains uncertain, my department is confident that the discovery is significant and confirms the existence of a very large natural gas and condensate field. Significantly, the Undan 1 well is 10 km from the Bayu 1 discovery, which was confirmed in March last year. It is believed that both wells have tapped into the same structure. The Bayu 1 well flowed 90 million cubic feet of natural gas per day and 5250 barrels of condensate, both of which are excellent results. Industry analysts believe that the Bayu/Undan field is very large by Australian standards and possibly similar in size to the North-West Shelf. While I cannot provide further detail on the discovery at this time, I am pleased that the preliminary reports confirm the continued success of exploration activity within the Darwin syncline geological area.
The Darwin syncline geological area covers the Ashmore and Cartier Islands adjacent area, which is administered by the Northern Territory, the Western Australia adjacent area and the Timor Gap. It is now considered by industry to be Australia's hottest exploration area. To date, there have been 5 major discoveries from 18 exploration wells drilled. The discoveries have occurred in the Elang, Laminaria, Kakatua, Elang West and Bayu/Undan fields. The success rate of 28% compares very favourably with the industry standard of one in 10 successful wells, a success rate of 10%.
Two other developments in the region point to the unprecedented high level of interest in our region. An industry publication reported recently that a record bid has been placed over the awarding of a new exploration permit area within the Western Australia jurisdiction but in the vicinity of the Undan and Bayu discoveries. Mr Speaker, for the benefit of members, I table a copy of that publication. It is called PEX. I am reliably informed that one company has proposed an exploration program of no less than 11 wells to be drilled within the initial 3-year program. This needs to be viewed in the context that one well has an estimated cost of $10m to $12m. The industry average for drilling programs is for 3 wells to be drilled over a 5-year period. The proposed program represents an unprecedented outlay by the explorer and high expectations of a commercial return on its investment. I understand that 8 companies have placed bids for this particular exploration permit and that bidding between the rivals is fierce.
In another development in the Northern Territory's jurisdiction, interest in 2 other permit areas has already sparked speculative seismic and aeromagnetic survey work in the private sector. It would appear that the survey companies are so confident that they have undertaken the work on spec. Given the continued exploration run in the region, my department is
Page 701
confident of further major discoveries. To date, the drilling operations have been undertaken from Darwin. That boosts local service and supply industries and creates additional employment opportunities for Territorians. I am sure that members will join me in recognising the successes to date, the enormous potential that exists in our offshore fields, and the benefits that we hope will accrue to the Territory as a result of the increased level of activity and interest.
Page 702
Last updated: 09 Aug 2016