Heron South-1 Progress Report No. 9
Melbourne, Oct 12, 2012 AEST (ABN Newswire) - MEO Australia Limited (
ASX:MEO) (OTCQX:MEOAY) provides the following update in relation to Heron South-1 being drilled in NT/P68, operated by Eni Australia Ltd. At 07:00 Darwin time on Friday 12th October, 216mm (8 1/2") hole had been drilled from 4,186m to 4,328mMDRT (metres Measured Depth below Rotary Table) and is interpreted to be in the Elang-Plover objective. Gas shows and elevated resistivity readings from the LWD (Logging While Drilling) tools continue to be observed. There have been no reportable incidents.
The forward plan is to drill ahead to an appropriate core point and cut a core in the Elang-Plover section before drilling to the gas water contact. A comprehensive formation evaluation program will be conducted at Total Depth (TD). If warranted, a production test will be run to determine reservoir productivity.
Heron South-1 Progress Report No. 9
Key Points:
- Drilled 216mm (8 1/2") hole from 4,186m to 4,328mMDRT
- No reportable incidents and well operations proceeding according to plan
Progress Summary
Progress since last report:
- Drilled 216mm (8 1/2") hole from 4,186m to 4,328mMDRT
Present Operation (at 07:00 Darwin time, 11th October 2012):
- Drilling ahead in 216mm (8 1/2") hole at 4,328mMDRT
Outlook:
- Drill 216mm (8 1/2") to the core point in the Elang-Plover objective and cut core
- Drill 216mm (8 1/2") to the gas water contact
- Evaluate well at TD with full wireline logging suite and production test well if warranted
The key objectives of the well are to determine the productivity of the Elang-Plover reservoir and the gas composition.
An overview of the NT/P68 permit including location map and simplified Heron structural cross section are attached for reference.
Heron South-1 Drilling Underway
Eni farmed in to the NT/P68 Exploration permit in 2011 (refer ASX release dated 18th May 2011) and is earning an initial 50% interest in the Heron area by funding two wells on the Heron structure. The first of these wells - Heron South-1 - spudded on 24th of August 2012 using the ENSCO-109 jack-up drilling rig and is expected to take up to 60 days to complete. Eni has 60 days following the conclusion of Heron South-1 drilling to elect whether to fund a second Heron well to fully earn its 50% interest in the Heron area of the permit or withdraw from the Heron area in which case the participating interest reverts to MEO.
Heron South-1 will target the Heron South fault block to determine the extent of the gas column, the productivity of the Elang and Plover reservoirs and analyse the gas composition. MEO estimates the Greater Heron structure could contain mean prospective recoverable raw gas (ie inclusive of CO2) resources 5 of Tcf, potentially sufficient to underpin an LNG development.
Blackwood Area
Eni also has an option to earn a 50% interest in the Blackwood area by acquiring a minimum 500 km2 3D seismic survey in the Blackwood area and drilling a well on the Blackwood structure.
Eni completed acquiring the 766 km2 Bathurst 3D seismic survey over Blackwood East on the 5th of January 2012. Eni has 365 days from the completion of the survey to elect whether to drill Blackwood-2 to fully earn its 50% interest in the Blackwood area of the permit or withdraw in which case the participating interest reverts to MEO.
Eni is a major participant in the region and in November 2011 acquired a 40% interest in the adjacent Evans Shoal Field for US$250m cash and a deferred consideration of US$100m.
Development Plans
Under a provision of the Farmin agreement, Eni has a further option to acquire an additional 25% interest in both areas of the permit by funding MEO's share of the work programme (including additional appraisal wells) required to reach a Final Investment Decision (FID) for either a Heron and/or a Blackwood development. MEO will receive a one off bonus payment of US$75 million for the first discovery to reach FID.
Following appraisal of the Heron and/or Blackwood gas discoveries the Joint Venture will evaluate all potential development options including consideration of incorporating a gas processing hub at Tassie Shoal, approximately 75 km from the Heron South-1 location.
Tassie Shoal Projects Overview
MEO has secured environmental approvals for a proposed 3.0 MTA LNG plant and two 1.75 MTA Methanol plants to be located at Tassie Shoal.
Pre-FEED development plans have been prepared and costed for the proposed developments. The LNG project has the potential to reduce LNG development costs by in excess of US$2bn compared to FLNG or land based development while the methanol process utilises the CO2 in the feed gas stream avoiding expensive geo-sequestration costs and difficulties in alternative development scenarios.
The projects have been granted Major Project Facilitation Status by the Federal Government Department of Infrastructure and Transport.
Resource Description
Heron-2 was drilled by MEO into the Heron North structure in 2007/08. Although the well encountered and tested gas, operational difficulties caused drilling to cease prematurely without determining the gas water contact (GWC). It is believed that collapse of the well bore during flow test caused only an isolated upper stringer to contribute to the flow. Gas quality recovered during the DST was inconsistent with more liquids rich gas observed in the mud returns while drilling the lower section of the hole. The variation in gas quality is postulated by MEO as being due to the later generation of liquids rich, low CO2 gas from the Flamingo formation in the adjacent Malita Graben as the area subsided and heated after the Cretaceous era.
Greater Heron Structure (Prospective Resource)
MEO's assessment of the prospective resources in the Greater Heron structure remains unchanged from the assessment released on 14th October 2010 tabulated below. This assessment assumes the Greater Heron structure is filled to the structural spill point mapped by MEO (4,325mSS).
------------------------------------------------------------------Raw Gas Ultimate Recovery (Tcf) Low Best Estimate HighMEO Prospective Resource Assessment(1) 3.66 4.96 6.64------------------------------------------------------------------
(1) The MEO volumes reported in this table have NOT been reduced for non-hydrocarbon gas (CO2, N2) content. Assumed range is 13.6% to 28%. MEO has limited the non-hydrocarbon gas (CO2, N2) content to that observed in the primary reservoir at Evans Shoal-2.
For the full release including diagrams and tables, please visit:
http://media.abnnewswire.net/media/en/docs/ASX-MEO-380357.pdf
Contact
MEO Australia Limited
T: +61-3-8625-6000
F: +61-3-9614-0660
E: admin@meoaustralia.com.au
WWW: www.meoaustralia.com.au
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