A light commercial oil resource would be very valuable in Austria, which imports 92% of its crude oil requirements. Pic: Getty Images
Energy
Special Report: ASX-listed European energy producer ADX Energy has confirmed plans to complete an extensive production test program at the Welchau-1 discovery in its ADX-AT-II oil and gas exploration licence in Upper Austria, starting on October 15.
The aim of the program is to confirm the hydrocarbon characteristics, determine well productivity, the potential connected volumes, and ultimately an estimate of recoverable resource volumes from future potential development wells.
The program will test the two major reservoirs, the deeper Steinalm and then the shallower Reifling, to determine:
Once the test program is complete, ADX Energy (ASX:ADX) intends to revise the Welchau prospective resource estimates, which ranges from a low case of 12 million barrels of oil equivalent (MMBOE) to a high case of 217 MMBOE.
Best estimate is 46MMBOE, with a mean of 85MMBOE, with ADX saying it’s too early to give a definitive resource range.
But early indications are the nature of the product is oil rather than gas it plans to extract could be commercially advantageous and much easier to generate early
ADX predicts the Welchau-1 discovery contains a hydrocarbon liquid (or light oil) and associated gas which could be very valuable in commercial quantities given shallow drill depth and onshore setting which is close to infrastructure in Austria.
“Austria has a state-of-the-art refinery located near Vienna where ADX currently sells its oil production from the Anshof field and the Vienna Basin Fields,” ADX said.
“A significant light oil discovery is likely to provide an important economic contribution to the Austrian state given that Austria imports approximately 92% of its crude oil requirements (approx. 130,000 bpd) and the refined product demand (approx. 170,000 bpd) exceeds refinery production capacity by approximately 20%.
“A light oil such as that recovered from sampling at Welchau-1 is likely to be highly valued in Europe where condensates are scarce due to the high proportion of imported dry gas either by pipeline or LNG.”
Not to mention, the development cycle for oil is much shorter than gas and any commercial discovery can be developed incrementally, minimising funding requirements as well as enhancing economics and payback time frames.
The Welchau-1 well, part of a broader exploration area in which ADX boasts a 75% economic interest, is targeting reservoirs encountered in the nearby downdip Molln-1 discovery that tested condensate rich gas at between 3-4 million standard cubic feet per day.
Welchau-1 previously ran to a depth of 1733m on March 28 this year, before it was paused due to Austrian restrictions keeping drilling to the winter months.
This article was developed in collaboration with ADX Energy, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
