• Progress continues to be made on variations of work programs at PEP 11
  • Advent investigating availability of a mobile offshore drilling unit
  • Company in talks with contractors and operators who contracted rigs for work in the first half of 2024

 

With gas supply in southern Australia declining faster than projected demand, BPH investee Advent Energy and its partner are taking steps to enable drilling of a high potential gas exploration well in PEP 11 offshore New South Wales.

PEP 11 has undergone a tumultuous time in recent years.

In December 2019, Advent and Bounty Oil and Gas (ASX:BUY) submitted an application for a secondary work program variation and a 24-month suspension of its Year 4 work program and a corresponding extension to the permit term.

While waiting on the decision, the joint venture continued to carry out activities such as a preliminary environmental screening assessment of the proposed well and awarding contracts for long-lead pieces of equipment.

Things came to a screeching halt in March 2022 when the National Offshore Petroleum Titles Administrator (NOPTA) refused the joint venture’s application, which would essentially result in the cancellation of the licence, leading to the JV seeking a review of the decision.

However, following the Liberal party’s loss in the 2022 Federal election, it quickly emerged that the decision to refuse the application was at the very least influenced by former Prime Minister Scott Morrison, who had picked up additional ministerial portfolios on the sly.

The resulting proceedings led to the Federal Court finding in February this year that “a fair-minded observer would have reasonably apprehended that the former Prime Minister of Australia the Hon Scott Morrison MP, as a member of the Joint Authority, did not bring a fair mind to determine Asset Energy’s application”.

As such, the JV was found to be fully in compliance with the contraction terms of PEP 11 and that the licence remained in force.

 

BPH Energy ASX BPH
Location of the proposed Seablue-1 well. Pic: Supplied (BPH).

 

Attention now on drilling gas well

Now the JV is once again progressing applications for the variation and suspension of work program conditions and related extension of PEP 11.

This is aimed at securing the time needed by the JV to put together all the pieces required to drill the proposed Seablue-1 gas exploration well on the Baleen prospect, which has a P50 prospective resource of 475 billion cubic feet of gas.

Given that Q4 2023 gas demand has been forecast at about 482 petajoules (about 456.8Bcf) and supply, which continues to decline at 496PJ, a success at Seablue-1 has the potential to help meet at least part of the expected shortfall in the coming years.

More broadly, PEP 11 could host up to 5 trillion cubic feet of gas in various prospects.

Advent, which holds 85% of PEP 11, has also committed previously to ensuring that all gas produced from the project in the Sydney Basin offshore NSW is available for Australian domestic supply.

BPH Energy (ASX:BPH) – a 38% stakeholder in Advent – notes that the Advent is continuing to investigate the availability of a mobile offshore drilling unit to drill the proposed well.

It is in communication with drilling contractors and other operators who have recently contracted rigs for work in the Australian offshore beginning in the first half of 2024.

 

Gas continuing to be important

While Australia continues to move towards net zero emissions, it still needs gas in substantial quantities to help keep the lights on and power industries.

It will also serve to support renewable energy by providing baseload and dispatchable power at times when the sun isn’t shining or the wind isn’t blowing.

The Australian Energy Market Operator also highlighted in its Gas Statement of Opportunities the continued risks of short-term gas supply shortfalls and long-term gas supply gaps arising from reducing production from southern Australia.

It added that peak day shortfalls continue to be forecast under very high demand conditions in the southern states from winter 2023.

Adding further interest, the reservoirs encountered by Seablue-1 will also be assessed for their suitability for future use in carbon sequestration – the injection of captured carbon dioxide into deep reservoirs.

 

 

This article was developed in collaboration with BPH 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.

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