BP Buys into Cue's NW Shelf Gas Prospects

BP has agreed to farm into Cue Energy’s 100%-owned North West Shelf exploration permits WA-409-P and WA-359-P in the gas-rich Carnarvon basin, offshore Western Australia. The news comes days after BP decided to to stop exploration work in the Great Australian Bight (GAB), off South Australia. 

The UK major will acquire 80% equity and be operator of WA-409-P and will fund 100% of the work programme required under the permit for the first three years of the licence renewal, Cue Energy said October 13. Thus costs in Cue's remaining 20% stake will be carried by BP.

BP also has an option through May 2017 to acquire 42.5% equity in WA-359-P. If BP exercises this option, 50% of the cost of drilling a well in WA-359-P will be funded.

Location of BP's new farm-in WA-409-P and farm-in option WA-359-P (Map credit: Cue Energy)

BP will assist Cue in securing a partner/partners with the credibility, funding and technical expertise to join them to drill an exploration well in WA-359-P, scheduled for the first half of 2018, Australia-listed Cue said.

Cue completed a comprehensive regional study using 15,000km² of 3D and 2D seismic data and 17 well ties to map the Triassic intra-Mungaroo sands (as encountered at the Gorgon gas field) and identified the Ironbark prospect, which straddles WA-359-P and WA-409-P in moderate water depths, as a drillable target.

Ironbark is a giant Mungaroo Formation prospect that is mapped with an area of up to 400km² with a best technical estimate of 15 trillion ft³ of prospective recoverable gas resource based on an internal technical assessment performed by Cue.

According to Cue, Wood Mackenzie estimates that the North West Shelf LNG plant and infrastructure will have spare capacity from 2021.The Ironbark prospect is less than 50km from the North Rankin platform (North West Shelf LNG) and in close proximity to Pluto and Wheatstone LNG infrastructure, which Cue believes, provides cost effective commercialisation options.

Shardul Sharma