Otway Basin

The Otway Basin is a rift basin located in onshore and offshore South Australia, Victoria and Tasmania. It extends for 500 kilometres and covers the area from the west of Melbourne to Cape Jaffa in South Australia, to the north of King Island in the south. Major producing projects in the basin are all situated offshore Victoria/Tasmania and include Beach Energy’s Otway Gas Project (Thylacine and Geographe fields) and the Halladale, Blackwatch and Speculant fields, as well as Cooper Energy's Casino, Henry and Netherby fields. Gas has also been produced from the Katnook, Ladbroke Grove and Haselgrove fields in the onshore Penola Trough in South Australia. The basin is relatively under-explored by international standards, with potential for further gas discoveries in the Penola Trough and the offshore areas of the basin.

Currently, the basin is serviced by three main processing facilities near Port Campbell in Victoria (Otway, Minerva and Iona gas plants). The Katnook gas processing plant is located near Penola in South Australia and is connected to various industries in the region and to Mt Gambier. All facilities are connected to the SEA gas pipeline which sends gas to both Melbourne and Adelaide.

Over 70 Bcf of gas and 0.4 MMbbl of condensate has been produced from the Pretty Hill Sandstone reservoirs in the onshore area of the Otway Basin, which has been supplied to local industry and the Ladbroke Grove power station, which was commissioned in 2000.

PEL 155, Penola Trough, Otway Basin

  • Vintage Energy Ltd - 50%
  • Otway Energy Pty Ltd - 50% (Operator)

Recent events

The Nangwarry-1 well was drilled in December 2019 and January 2020 and declared a carbon dioxide (“CO2”) discovery, with laboratory-based analyses on recent samples from Nangwarry-1 indicating CO2 content in excess of 90%.  Commercial amounts of CO2 were discovered in the Otway Basin through the drilling of the Caroline-1 petroleum exploration well in 1967, which was on production from 1968 until 2017.  Caroline-1 was a highly successful commercial operation, producing 810,842 tonnes of CO2 over its nearly 50 years on production.  CO2 is easily produced and transported by road tanker and has many industrial and commercial uses in the wine, soft drink, firefighting and medical industries.

Summary

Vintage acquired a working interest in PEL 155 in the Otway Basin by way of a staged farm-in agreement with Otway Energy Pty Ltd, a wholly owned subsidiary of Lakes Oil Ltd (“Lakes”). The joint venture has drilled the Nangwarry-1 well, a CO2 gas discovery, which is located approximately 40 kilometres north of Mount Gambier.

Under the terms of the agreement:

  • An initial 25% working interest in PEL 155 was received for an initial payment of $100,000; and
  • ​An additional 25% interest in PEL 155 was received as a result of the Joint Venture applying for and receiving a South Australian Government PACE gas grant.

The South Australian Government's PACE gas grants were an initiative designed to further accelerate investment in gas projects in South Australia through targeted competitive grants. The $4.95 million grant has been applied to the drilling of Nangwarry-1. Vintage and Lakes contributed to the cost of drilling Nangwarry-1 on 50:50 basis, with the grant proceeds shared on the same basis.

The Nangwarry CO2 field is a three-way dip, fault dependent trap in the Pretty Hill formation and is defined on 3D seismic.

Vintage Energy asset overview+

PEP 171, Penola Trough, Otway Basin

  • Vintage – 25% (operator) with an option to increase to 50%
  • Somerton Energy Pty Ltd – 75%

Recent events

On 16 March 2017, the Victorian Government amended the Petroleum Act 1998 by enacting “The Resources Legislation Amendment (Fracking Ban) Act 2017”.  This act banned hydraulic fracturing and imposed a moratorium on any petroleum exploration and production in the onshore areas of Victoria until 30 June 2020 (or for as long as the moratorium continued). The Victorian Government recently confirmed that the moratorium will be officially lifted from 1 July 2021.

Summary

Vintage executed a formal farm-in agreement with Somerton Pty Ltd (a subsidiary of Cooper Energy Limited) on 21 February 2019, which replaced the previously executed Heads of Agreement and, on execution of the Joint Operating Agreement, Vintage became the operator of PEP 171.

Vintage earned its initial interest of 25% by agreeing to pay for costs associated with the permit through to the end of the Victorian government onshore gas exploration and production moratorium period, as well as undertake a prospectivity review as permitted under the moratorium. Vintage has the right to acquire a further 25% interest by contributing 65% of the cost of a 100 km2 3D seismic survey up to an agreed cap.

PEP 171, comprising an area of 1,974 km2, was awarded in August 2013 for a period of 5 years.  Following the first term there is a right to one renewal with a 50% relinquishment.  Due to a series of suspension and extension applications, Year 1 has ended, with the timing for completion of the work programs in subsequent licence years yet to be determined by the regulator, due to the effect of the moratorium.

A revised work program, without the hydraulic fracturing which formed part of the Year 3 work program, will be agreed with the Government.  In the interim, the holding costs are minimal and the expected remaining committed work program will be to acquire 100 km2 of 3D seismic and drill one exploration well.

The prospectivity of the Penola Trough has been greatly enhanced by the new field discovery in the Sawpit Sandstone made by Beach Energy at Haselgrove‑3/ST-1. This well was drilled in a nearby licence in late 2017. Beach Energy reported (ASX, 11 January 2018) a gas column extending over a gross interval of 104 metres, of which 25.6 metres is net gas pay. The well was production tested and flowed at a tubing constrained rate of 25 MMscf/d through a 36/64” choke at a well head pressure of 2,700 psig. In addition, a gross gas column of 11.6 metres was intersected in the shallower Pretty Hill Sandstone, with estimated net pay of 8.5 metres. This well represents a significant new play discovery with an extensive gas column and has stimulated a renewed phase of exploration in the region.

Following the results of the 2017 Haselgrove-3/ST-1 gas discovery, attention has refocused on the results of the Glenaire-1/ ST- 1 well drilled in PEP 171. This well encountered good gas shows in the Laira Formation and Pretty Hill Sandstone during drilling in 2006. A thickness of 8.8 metres of net gas pay was interpreted in the Pretty Hill Sandstone and a test in the Laira Formation recovered 12 barrels of oil but the well was considered uncommercial. The plan is to correlate the existing seismic between Glenaire-1/ST-1 and Haselgrove-3 ST-1.

Nine leads are currently recognised in the permit and are primarily fault-bound, dip closures, however the seismic data quality is poor to average, particularly deeper in the section, requiring a 3D survey to identify the optimum drilling location.

Vintage Energy

Vintage Energy Ltd has been established to acquire, explore and develop energy assets principally within, but not limited to, Australia, to take advantage of a generally favourable energy pricing outlook.

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