Bass Strait Oil yesterday morning began sinking a drilling bit into farmland at St Helens, aiming to reach a depth of 1815 metres in a fortnight. It is exploring a permit district first drilled in 1987 which showed promising oil reserves in a geographical area known as Windermere.

Since then seismic surveys have confirmed potential marketable quantities and prompted the company to embark on the drilling project, expected to cost about $3 million.

Company chief executive Steve Mackie arrived at the site yesterday, where a team of up to 20 workers will operate the rig around the clock for about two weeks of drilling and a week of testing. “If this well is successful there could be more drilling in the district,” he said.

“We want to work out where the oil is and the most economical way of getting it out. If successful, this area could yield about a million barrels, but our surveys show much more than that.

“If there are marketable reserves, a lot of work will be generated in setting up the production area.”

Oil would be pumped to a storage tank then trucked to refineries in Geelong or Melbourne.

The company told the stock exchange yesterday the well could become the first commercial onshore oil discovery in Victoria.

“This is an exciting time for BAS shareholders,” Mr Mackie said.

“A lot of work has gone into the reinterpretation of the Windermere structure. If this well is successful and our interpretation is proved correct, we believe there is a very good chance that other discoveries could be made in the same area.”

The company is also keen to re-evaluate another permit area further west-north-west of Portland in a joint venture with Beach Energy.