Philip Hopkins
A VICTORIAN gas company which has been active in Gippsland for decades is about to seek approval for a project near Seaspray that it claims could provide 10 per cent of the state’s gas needs from early 2027.
Lakes Blue Energy, previously Lakes Oil, maintains if its conventional well is approved – it does not require fracking – it could lead to the Wombat Field eventually producing 50 terajoules of gas daily, ultimately providing about 10 per cent of the state’s gas by 2027 when gas shortfalls are expected. This would not only prove Gippsland has a lot more gas than traditionally believed, but would also reinforce Gippsland’s gas sector as production from Esso’s wells in Bass Strait continues to slow.
It comes as the state government has also loosened its gas policy, approving a new gas extraction project at Port Campbell and will support more offshore gas storage in Bass Strait.
Lakes Blue Energy chief operating officer, Tim O’Brien, told the Gippsland Times if approval was granted, drilling would begin at its Wombat-5 gas well in mid-2025.
“What we have been trying to do for the past 12 years is some conventional appraisal work at Wombat, in the Strzelecki Formation in the top weathered zone,” he said, going on to explain the background to the company’s activities.
The Strzelecki Formation consists of non-marine sedimentary rocks from the Earth’s Lower Cretaceous geological period. The Strzelecki Group outcrops extensively in the South Gippsland highlands and along coastal sections between San Remo and Inverloch.
“Back in the early Cretaceous a lot was eroded off. Groundwater was going through and clearing out some of the clay in the formation,” Mr O’Brien said.
“That’s the top 100 metres or so of the formation, then you get into the tighter, more un-weathered stuff where that would require fracking at some stage in the future, if it is ever permitted again.
“We’re confident we can get over 250 billion cubic feet of gas out of the top weathered section without requiring any fracture stimulation.”
Mr O’Brien explained one billion cubic feet was about one petajoule; a billion cubic feet was a volumetric measurement, whereas a petajoule was a calorific, energy content measure.
“Depending on the quality of your gas, a petajoule is actually slightly less than a billion cubic feet, but if you just use ‘one-for-one’; that makes it easier. If you are not overstating, you’ll always get more energy,” he said.
Daily production of about 50 million cubic feet per day over the year is close to 20 petajoules, about 10 per cent of Victoria’s annual use of 200-210 petajoules a year.
Mr O’Brien said that Gaffney Cline and Associates, a global consultancy in the energy sector which provided techno-commercial advice, estimated in 2008 a contingent resource of 293 billion cubic feet in the Wombat Field – “a recoverable resource”.
This figure was revised up to 329 billion cubic feet in 2010 after the successful drilling of Wombat-4. However, this became a problem as the state government took a semantic attitude, stating there were “no proven reserves”; in Victoria.
“To have a proven reserve, you need to have effectively a contract in place, a development plan; you need to be ready to sell the gas effectively. We have contingent resources, which means we have defined a volume of gas, but haven’t proven it to the commercial stage yet but the gas is there,” Mr O’Brien said.
“Wombat-5 is designed to prove we can get a commercial gas rate out of this formation.”
Mr O’Brien said the Wombat-1, 2 and 3 wells were not optimised enough for the “magic number”, but were completed and suspended gas wells which would likely be incorporated into any field development plan. Wombat-4 was cased and suspended, flowing gas from the deepest interval from a drill stem test during the drill operations, which Gaffney Cline assessed as having lots of prospective resources.
“The gas was recoverable”, Mr O’Brien said, but the “no proven reserves”; argument kicked in.
“This does not acknowledge we have lots of prospective resources and contingent resources. There is gas there. The public does not understand that due to the mixed messages being put out there by the government,” he said.
The Wombat-4 well was effectively approved to be drilled at the end of 2013.
“I had done revisions with the department. I had the earthworks contractor ready to go, I had a rig ready to come to the state,” he said.
Then in April 2014, the then-Liberal-National government decided to have a year-long consultation process, but subsequently lost government. The arrival of the Andrews state government led to subsequent moratoriums on onshore exploration, coal seam gas and fracking, and more studies.
“Twelve years later, I’m still waiting to be drilling,” Mr O’Brien said.
The company had now done more studies, such as environmental, stakeholder and planning.
“I hope to submit that in early October; that gives them three months to assess. Hopefully we will get approved early next year – there will be some revisions and – we can get the site built,” Mr O’Brien said.
“A rig is going to be in the state doing work in Otway Basin in April-May.
“The biggest cost of the rig is getting it here from Queensland, South Australia or Perth. It costs a couple of million to move the rig. It will be a $5.5 million well, so if you have to pay $4 million for a rig, it kills the economics – our bank balance. Hopefully we will get the approvals in a timely manner so we don’t miss the opportunity whilst the rig is in the state.”
Mr O’Brien said their gas was very clean, much cleaner than offshore gas, which was higher in CO2, mercury and hydrogen sulphide (rotten egg gas).
“Strzelecki is below the source of the impurities; a little bit of water and condensate is removed,” he said.
“We don’t need to go through Longford, we can process ourselves and put it straight into the pipeline.”
Mr O’Brien said Wombat-5 was designed as a conventional well which did not need to be fracked – a horizontal well through the top of the formation.
“Wombat-4 will sit there for the time being. We plan to have 10 and 12 wells, depends on how Wombat-5 goes. The aim would be to drill, bring wells online to get up to 50 terajoules a day. As the well starts to decline, we can bring on more wells to maintain supply,” he said.
“Once that supply starts depleting, we have field to the north, the Trifon Field, which we would then start to develop to hopefully maintain the 50 terajoules per day, hopefully for the next 20-plus years to help alleviate the gas crisis which is going to severely impact the state.”
