AUSTRALIA: BIG OIL DISCOVERY
U.S.-based Apache Corp. said an exploration well off Western Australia's coast had found as much as 300 million barrels of crude, in what would be one of Australia's largest oil discoveries in decades.
The result from the Phoenix South-1 well in the Canning Basin could reopen a frontier for oil exploration that some international energy companies abandoned decades ago after wells turned up dry.
"The oil and reservoir quality we have seen point to a commercial discovery," said Thomas E. Voytovich, a senior executive at Apache's international arm. "If these results are borne out by further appraisal drilling, Phoenix South may represent a new oil province for Australia."
"It will take two to three months to work out the actual recoverable volumes from the discovery," said Simon Andrew, an energy analyst at Perth-based broker Hartleys.
Australia needs new sources of oil to replace fast diminishing reserves from existing fields. Australia's oil production last year fell 17% to 416,000 barrels a day—its lowest level since 1972, according to BP PLC.
For natural gas, in contrast, several discoveries by Chevron Corp., Royal Dutch Shell PLC and others have paved the way for tens of billions of dollars in investments in export infrastructure to feed Asian demand for cleaner-burning fuels.
Early estimates that Phoenix South-1—drilled 112 miles north of Port Hedland in 436 feet of water—found up to 300 million barrels of oil compare favorably to recent discoveries in Australia. Woodside Petroleum Ltd.'s 1999 Enfield discovery, which led to a wave of new drilling in the nearby Exmouth Basin, started production in 2006 with 127 million barrels in reserves. Chevron's Barrow Island field to the northwest has produced an estimated 322 million barrels of oil since it went online in the 1960s, according to the Western Australian government.
Apache said testing confirmed at least four distinct oil columns in the seabed rocks, ranging in thickness from 85 feet to 151 feet, with six light oil samples recovered from three intervals so far.
Apache operates the WA-435-P block where the discovery was made and owns a 40% stake in the license and the adjacent WA-437-P block.
Other investors include Carnarvon Petroleum Ltd., a unit of Japan's JX Holdings Inc., and closely held Finder Exploration Pty Ltd. Carnarvon's stock tripled on Monday.
Apache said the area around Phoenix South includes several large structures, including the Roc prospect on WA-437-P, that also could contain substantial amounts of oil. The company plans to drill more wells next year.
Apache's shares fell 18 cents to close at $98.50 Monday on the New York Stock Exchange.
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