A looming gas shortage in the eastern Australian state of New South Wales is set to spur a new exploration push in the frontier offshore Sydney Basin, where so far only one unsuccessful well has been drilled.
The partners in the Sydney Basin permit PEP11 are preparing to undertake a 200 km 2D seismic survey in the area as part of their second-year work program commitments, they said Friday. Under the permit terms an exploration well would be drilled in year four.
The PEP11 permit is held 85% by operator Asset Energy and 15% by Bounty Oil & Gas. Asset Energy is a wholly owned subsidiary of unlisted Advent Energy, which is in turn held by MEC Resources, among other major shareholders.
"Bounty and MEC Resources are closely monitoring the gas market dynamics in eastern Australia, and strongly believe the PEP11 project is ideally placed to potentially provide gas into the east coast gas network," the companies said in a statement.
Moves to restart exploration in the basin, which lies offshore NSW capital Sydney, Australia's largest city, come following warnings that developed gas reserves in the east coast market can only meet forecast demand until 2019.
A report released by the Australian Energy Market Operator on Thursday highlighted the need for rapid development of new reserves in order to guarantee supplies in the medium term.
The NSW market is currently dependent on imports from its neighboring states of Victoria and South Australia for more than 95% of its gas needs, which totaled 137.8 petjoules in 2015, according to the AEMO.
The state's only existing production comes from a 5 PJ/year coalseam gas project at Camden, near Sydney, operated by local utility AGL.
Camden has been earmarked for closure in 2023 and AGL recently abandoned plans to develop new coalseam gas resources at Gloucester.
Meanwhile, a major project being undertaken by Santos at Narrabri in the north of NSW has been delayed and scaled back while the state government finalized a new regulatory regime for coalseam gas developments.
Advent Energy drilled the wildcat New Seaclem-1 well in the Sydney Basin in late 2010, but failed to discover gas.
"While hydrocarbons were not encountered in this well, Advent has demonstrated with geochemical studies that there is considerable gas generation and migration potential within PEP11," MEC Resources said at the time.
"On preliminary investigation, results from the New Seaclem-1 well have not negatively impacted on the probabilities of encountering hydrocarbons at other mapped prospects and leads," the company added.
The first exploration work took place in PEP11 as far back as 1981 when a 2D seismic survey was undertaken.
The permit's Fish and Baleen prospects have been estimated to each have the potential for gas discoveries of multi-trillion cubic feet, according to MEC.
