BP is to acquire a majority stake in two exploration permits containing the potentially massive Ironbark gas prospect on Australia's North West Shelf from Cue Energy Resources.
The move will see BP acquire 80% interest in permits WA-409-P and WA-359P in the Carnarvon basin, offshore Western Australia, which the Ironbark prospect straddles.
According to Cue, Ironbark is a giant Mungaroo formation prospect covering up to 400sq km with a best technical estimate of 15 Tcf of prospective recoverable gas resource, based on an internal technical assessment.
The firm's exec chairman, Grant Worner, says: "If Cue’s assessment is proven to be correct, Ironbark would be three times the size of the Scarborough, Wheatstone, or Pluto fields."
Cue says Ironbark, drilling on which is slated for 1H 2018, is in "moderate" water depths, under 50km from the North Rankin platform and near to the Pluto and Wheatstone LNG infrastructure, says Cue, making its prospects for commercialization positive.
Under its deal with Cue, BP is to fund 100% of the work program required under the permit for the first three years of the license renewal. BP also has an option through to May 2017 to acquire 42.5% equity in WA-359-P, which, if exercised, would see BP fund 50% of the cost of drilling a well in that permit. Cue says BP will also assist it in securing a partner or partners on an exploration well in WA-359-P, scheduled for 1H 2018.
According to Cue, Wood Mackenzie estimates that the North West Shelf LNG plant and infrastructure, which Ironbark could feed into, will have spare capacity from 2021.
Cue Executive Chairman, Grant Worner, said: 'The Ironbark prospect has the potential to fundamentally alter the value of Cue. Cue welcomes BP’s technical expertise and knowledge of the Carnarvon Basin through their long participation in the North West Shelf Joint Venture and we look forward to working with them to attract an Operating Partner to drill the Ironbark-1 well."
Post completion, the participants in WA-409-P will be: BP Developments Australia 80% (operator); Cue Exploration 20%.
BP's move follows a decision earlier this week to drop its Great Australian Bight exploration plans, offshore south Australia. The project would not be able to compete for capital investment with other upstream opportunities in its global portfolio in the foreseeable future, the firm said.
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