PLANS for new gas fields off the south-west coast are a step closer following a deal between two major exploration companies.
WHL Energy yesterday announced it had signed a binding farm-out agreement with AWE for an exploration permit over a 811-square-kilometre survey site in waters between Warrnambool and Port Campbell.
The multi-million-dollar deal will allow seismic testing of the permit area, known as Vic/P67, to start in November or December.
WHL has finalised tenders for the survey and begun negotiations with a preferred seismic contractor.
The site contains the undeveloped La Bella gas discovery and multiple exploration targets nearby.
AWE already holds significant gas pipeline and processing infrastructure in the Otway Basin and holds a 25 per cent interest in both the Casino and Henry gas projects located near the exploration area.
Under the terms of the agreement, AWE will pay 75 per cent of the total cost, capped at $US9 million (about $A9.9 million) to buy a high-tech 3D marine seismic survey over the La Bella field and surrounding targets.
The testing, which won federal government approval in March despite protests by environmentalists, aims to refine mapping of the area.
Once the new seismic data is reviewed, AWE has the right to surrender its interest or commit to drilling two exploration wells at either 30 per cent or 60 per cent working interest.
If the company elects the second option, it will assume ownership of the permit in the first six months of 2014.
AWE managing director Bruce Campbell said the decision was in line with the company’s strategy of identifying early-stage appraisal opportunities where the company could add value.
“The La Bella gas and condensate field is located close to existing infrastructure which significantly enhances its development potential,” Mr Campbell said.
“Gas prices in south-east Australia are expected to rise over coming years, making the economic case attractive.”
WHL executive director David Rowbottam described yesterday’s deal as an important milestone.
“It allows WHL to progress the La Bella project through the acquisition of the La Bella 3D seismic survey and towards eventual production,” Mr Rowbottam said.
He said WHL was a proven developer and producer with strong local knowledge and the agreement would enable the company to preserve its cash and fund other ongoing activities without the need to pay for the full seismic acquisition program.