An area west of the city, extending about 70 kilometres out to sea, has been identified as having the potential to hold two trillion cubic feet of gas resources and up to two billion barrels of oil.

It would mean the rich Otway Basin fields would no longer be regarded as gas-only.

A major resources conference yesterday was told of the promising potential in offshore fields between Portland and the South Australian sea border.

The Paydirt 2008 conference was also told there could be significant copper deposits around Hamilton, Horsham and Hopetoun.

It follows last week's announcement of a proposed $800 million gas-fired power station for Orford and predictions of an investment bonanza in the south-west.

Essential Petroleum Resources Ltd managing director John Remfry told the conference the exploration area, known as Discovery Bay High, had similar indications to the prolific area near Port Campbell, known as Pecton High.

"The central part of Discovery Bay High hosts a similar prospect and lead inventory to Pecton High, ranging from small accumulations onshore to very large continental margins offshore," he said.

Essential's permit portfolio has complete coverage of the Portland district exploratory area.

The Standard understands up to five companies plan to drill off Portland in the next six to eight months.

Essential Petroleum will start production testing this Saturday for oil and gas potential in the Pecton High field after discovering gas there in June.

"A sustainable oil flow from the East Wing will be a first step to changing the view of the Otway Basin being a 'gas only' area," Mr Remfry said. "If this is replicated further west in a follow-up discovery in Discovery Bay High, this would mark the emergency of a major new hydrocarbon province in Australia."