Strike’s gas success in Perth Basin stands Talon in good stead
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Strike Energy’s continued success at West Erregulla in the intensely gas-rich Perth Basin sets fellow Perth Basin gas hunter Talon Petroleum up well for the start of drilling at its Walyering prospect later this year.
Strike last week delivered better-than-expected results from the drilling of the West Erregulla 4 well with its thickest intersection of the Kingia Sandstone in the Perth Basin to date at 155m.
The intersected Kingia Sandstone at West Erregulla-4 has high gas saturation throughout and is made up of several large units of clean sand with thick blocky porosity development and bands of very high-quality reservoir.
It is interpreted to have net pay of about 28m with porosity averaging about 11 per cent and topping up at 19 per cent across this section, comparable to the porosity observed at the instrumental West Erregulla-2 discovery well.
Strike expects these excellent reservoir characteristics and measured gas at high pressures to translate into high gas flow rates when the well is production tested.
This continued success augers well for Talon Petroleum (ASX:TPD) and its Walyering prospect.
Talon may be dealing with a different reservoir to West Erregulla, but the company has all the right ingredients to position it for success.
Strike just so happens to be Talon’s partner in the Walyering play and it was Strike’s leveraging of its knowledge to de-risk Walyering that led Talon to take up a 45 per cent stake in the project.
Talon and Strike will commence drilling the Walyering-5 appraisal well later this year having secured the same rig, Ensign’s Rig 970, used by Strike in its West Erregulla campaign.
“Strike’s recent success at WE-4, not to mention WE-3, is one of the key reasons why we elected to farm-in to EP447 and drill Walyering,” Talon managing director David Casey said.
“At the end of the day you can’t beat experience and runs on the board, and our productive relationship with Strike has enabled us to leapfrog many of the longer-term Perth Basin players in what is about to be a very competitive and lucrative market.”
But Casey stressed Talon “hasn’t rested on Strike’s laurels so to speak”.
“We have independently incorporated learnings from our technical relationship with Strike to identify our own additional and in some instances, larger opportunities. For example, our recently acquired Condor prospect provides an exciting follow-up opportunity post Walyering with a best-case prospective resource of around 400Bcf,” he explained.
“Ultimately this is about outcomes and we feel our relationship with Strike has not only differentiated us in the Perth Basin, but has just as importantly enabled Talon to build its portfolio beyond that relationship and position the company at the forefront of the technology race that will enable us to independently take the next step to producer.”
Talon has already determined that the Walyering-5 well has good quality gas, containing less than 1 per cent carbon dioxide, thereby requiring minimal processing and lowering the cost of production.
Additionally, the high condensate ratio has the potential to further enhance the economics of Walyering.
These factors combined with the permit’s proximity to both existing pipeline infrastructure and potential commercial gas users could see rapid commercialisation of any discovery, Talon says.
Strike managing director Stuart Nicholls said once Strike had made the final investment decision on the initial development at West Erregulla, it would “turn back to reload its hopper with new resources to develop and commercialise in time for the domestic gas market shortfalls predicted mid-decade”.
“One of the key events for the second half of CY21 is the drilling of the Walyering-5 appraisal well,” he said. “Walyering represents a high confidence wet gas target with around a 100 petajoules-equivalent of low CO2, condensate rich gas.
“Walyering benefits from the historical discovery of the field in 1971, which flowed at 14 terajoules per day where full exploitation of the field has remained elusive due to poor seismic control in navigating well sites for optimal reservoir penetration.”
Nicholls said Strike’s 3D seismic shot in December 2019 and subsequent processing and interpretation had cast new light on the Cattamarra Jurassic play, where the disparate well results (commercial to non-commercial) were easily explained and the areas of the highest prospectivity were amplified.
“Strike is excited to test this new understanding and on success, Walyering will re-rate the 1,852sqkm of acreage Strike owns across the play in the central Perth Basin,” he said.
Strike’s success with the drilling of its West Erregulla-2 well was what propelled the gas-fertile Perth Basin back into the spotlight as a potential solution to the tightening gas supply situation.
While WA is very well supplied in the short term, the Woodside Petroleum (ASX:WPL)-led North West Shelf will prioritise the liquefied natural gas export market post 2023/24 as fields decline.
And more recently Santos (ASX:STO) announced that production at its Reindeer field offshore WA would cease earlier than expected, which is a major concern given that it supplies about 17 per cent of the state’s domestic gas supply.
Talon’s strategy for the Perth Basin, which has only been in play for less than 12 months, has now yielded entries into Walyering and Condor, as well as the securing of a right of first refusal over the Ocean Hill gas discovery.
All these projects have gassy, conventional targets supplemented by strong projected yields of condensate.
This article was developed in collaboration with Talon Petroleum, 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.