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Old 12-16-2009, 07:03 AM
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Default OBL initiates CSM study area in the Canning

OIL BASINS LIMITED (ASX:OBL)
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OBL initiates CSM study area in the Canning
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COMMENCES PRELIMINARY ASSESSMENT OF THE COAL SEAM METHANE POTENTIAL WITHIN ITS CANNING BASIN INTERESTS



As previously advised, in late 2007, Oil Basins Limited (ASX code OBL) and its Joint Venture Partner (JVP) Backreef Oil Limited (BOL), were awarded 50/50 the Application Area L07-1, subsequently re-designated Permit 5/07-8 EP by the Western Australia (WA) Department of Mines and Petroleum (DMP). The formal award of this large 5,062 square km block will be finalised once negotiations with the relevant Native Title traditional owners and Operator BOL have been successfully concluded and other relevant stakeholders approvals are complete.


As permitted under the WA Petroleum and Geothermal Energy Resources Act (1967), upon this Permit being formally assigned to BOL / OBL, the JVPs in addition to holding the conventional petroleum exploration rights, BOL / OBL will also be deemed to hold 50/50 of the previously unconsidered and potentially now attractive, coal seam methane (CSM) rights and unconventional gas rights (potential may also exist for a shallow shale gas project) within this block.


Whilst no significant work will be undertaken or contemplated until all of these formal approvals are fully finalised, OBL on behalf of the JV, has today initiated an independent “desktop” geological assessment of the coal measures likely to be contained within the Permit 5/07-8 EP, as part of preliminary work to assess the CSM potential of the permit.


This CSM assessment is understood to be a first for this particular CSM Study Area within the Fitzroy Trough, Canning Basin, and represents a potential significant first move advantage.
Earlier exploration / development of Canning Basin focused specifically upon gas resources has been mitigated in the past by high risk exploration / appraisal and the lack of domestic infrastructure and pipelines to southern bulk user markets.


Since the provisional award of this Permit two years ago, a number of previously unconsidered highly significant events relating to CSM productivity and the recent announcement of a future LNG export infrastructure have subsequently occurred, which when considered together, may now strategically impact upon the attractiveness of investigating the merits of a future CSM development in the Canning.


*The considerable recent advances in CSM technologies and ‘know-how’ in Queensland, New South Wales and South Australia and in particular their application to a range of insitu previously un-mined abundant high ash content coal measures, is highly developed providing an economically viable, low exploration-risk, low-cost mostly methane feedstock suitable for LNG processing especially in Central and Southern Queensland (where four JV consortia are presently separately planning significant LNG projects centred around the establishment of LNG manufacturing and export terminal facilities at Gladstone, Queensland – the world’s first such CSM to LNG Projects); and *The location of a new Kimberley LNG Hub Precinct nearby at James Price Point (Figure 2) OBL’s preliminary investigations has indicated that during the late 1960’s a private mineral exploration company, Thiess Bros extensively delineated the coal measures of the Permian Laveringa Sub-group within the regional area bounded by the present day Permit. In addition, extensive conventional 2D seismic and a number of vintage deeper exploration wells were undertaken by petroleum exploration companies (primarily between circa 1954 to circa 1990).


The regional geology within this large Permit is particularly well understood and importantly compressional events are likely to have occurred during the geological record subsequent to the Permian age. Coal was intersected in all penetrations across the large 5,062 square km block, with potential for individual coal seams up to 2.5m thick in the Laveringa (potential for multiple thin seams exists of gross 15m thickness interbedded with clay and black shales were observed by Thiess).


The coals are at depths considered prospective for CSM and may become a focus of early exploration and appraisal (should the independent CSM studies commissioned by OBL so conclude) in addition to the assessment of the JVPs prognosed sandstone Fan Style Plays – ie conventional oil and gas prospects postulated to occur along the southern flank of the well known Devonian age reefal platform situated along the northern boundary of the Permit (refer to the OBL 2009 Annual Report).


Independent Expert Report
To assist this preliminary assessment, OBL has engaged Dierdre Westblade, Principal, Westby Consulting Pty Ltd, to conduct an Independent Expert Geologist Report to assess the delineated coal measures within Permit 5/07-8 EP, Canning Basin, Western Australia.


This assessment is expected to be complete during March 2010.


Westby Consulting Pty Ltd is a leading Perth based authority on coal mineral geology and regional coal exploration within Western Australia and has conducted a number of independent and geological assessments of the majority of WA’s coal basins for coal exploration and development companies.


Whilst specific CSM productivity parameters such as gas absorption, permeability, coal rank and gas content are unlikely to have been measured / monitored in the vintage exploration work, it is anticipated that sufficient historical data will exist to enable the Independent Expert to delineate the overall extent of the in-ground coal measures resource situated within the permit as a preliminary and necessary assessment of the risk-reward of the overall new project. In addition it is noted that nearby mineral explorers including Rey Resources Ltd and Cullen Resources Ltd are successfully exploring for coal and any published coal quality data will be used in this CSM Study Area assessment.


Should either a CSM project and / or an unconventional shallow shale gas project appear both feasible and attractive, further work and a revised exploration work program will be considered in due course to the DMP and all relevant stakeholders (ahead of field work).
The CSM Study Area is particularly well situated in relatively flat terrain, close to the provincial WA township of Derby and well accessed by all weather highways.


Throughout and during this process, interested parties (upstream, midstream and downstream) with the necessary pre-requisite CSM to LNG credentials are invited to make formal approaches to the JVPs to assist in a rapid assessment of the CSM Study Area, once exploration rights have been ratified by the DMP and stakeholders.


Neil Doyle, SPE, SME
Director
Mobile 0414 912 901
International Cell 614 14 912 901


 

Disclaimer: The author of this post, may or may not be a shareholder of any of the companies mentioned in this column. No company mentioned has sponsored or paid for this content. Comments on this forum should never be taken as investment advice.

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