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1
Exploration
Rob Willink
Executive General Manager, Exploration
June 2005
2
Page 2
While the initial focus of petroleum exploration in Australia has been on finding oil, explorers have overwhelmingly found gas……
Source: Geoscience Australia
Estimated recoverable hydrocarbon resources discoveredto 1 January 2003*
-
60,000
120,000
180,000
240,000
Crude Oil Natural Gas, Condensate & LPG
Peta
joul
es e
quiv
alen
t (P
JE)
0
10,000
20,000
30,000
40,000
Mill
ion
barr
els
of o
il eq
uiva
lent
(M
BOE)
Condensate & LPG
Natural Gas
Crude Oil
……with the resulting issue – how do you find or create markets for this gas?
3
Page 3
Australia’s gas inventory discourages further exploration without strategies to commercialise gas already discovered, yet more gascontinues to be discovered, particularly in remote areas
The average time to development for producing fields is around 13 years and growing, with around 125 TCF in the queue and over 60 TCF of gas undeveloped 20 years after discovery
* Gas discoveries > 200 bcf. Sources: Geoscience Australia, Wood Mackenzie, State Government websites
Australia's major gas reserves*
0
25
50
75
100
125
150
175
0 10 20 30 40years from discovery
Prov
ed a
nd P
roba
ble
Rese
rves
(TC
F)
Developed Resources - years from discovery to development
Undeveloped Resources - years from discovery to present
4
Page 4
Despite these conditions, in the mid 1990’s Origin deliberately adopted a gas focus for its of exploration activities, but …………..
• Exploration was targeted where gas would be easy to market, rather than necessarily easy to find
• Efforts were concentrated where Origin could see a competitive advantage
– Geological knowledge
– Operational advantages
• Focussed on areas where potential synergies with other parts of Origin Energy could be realised
– Exploit regional “spark spread” between gas and electricity prices
– Exploit / develop “pull through” of integrated projectsAs a consequence Origin took-up or consolidated acreage positions in the Otway, Bass, Perth, Surat and Bowen Basins, and in New Zealand
5
Page 5
Origin Energy Proved and Probable (2P) Reserves
0
500
1000
1500
2000
2500
Jun 00 Jun 01 Jun 02 Jun-03 Jun-04
Prov
ed a
nd P
roba
ble
Rese
rves
(PJ
e)
2P reserves
Origin’s strategy of looking for gas where it is easy to market, rather than easy to find, has resulted in significant growth in reserves and new contracts…….
Origin Energy Exploration and Production Gas Contracts (by buyer)
0
200
400
600
800
1000
1200
2000 2004
PJ o
f ga
s co
ntra
cted
Contracted to 3rd party
Contracted to Origin
….with significant capital expenditure committed to major projects to convert these reserves into production and earnings growth in the next few years
6
Page 6
Origin 2P Reserves (as at 1 July 04)2220 PJe
NZ liquids2%
Aust Gas (conventional)
37%
NZ gas5%
Aust Liquids (conventional)
9%
CSG47%
5,000
Brisbane
Sydney
MelbourneAdelaide
Hobart
Perth
Darwin
NT
WA
Qld
NSW
Tas
SA
Vic
103447
142305
123
Gas Pipeline
Gas Pipelineunder development
Basin outline
24
373
169
Nearly 90% of Origin’s Proved and Probable (2P) reserves are natural gas………..
……….. and 47% of those reserves are contained in CSG located in South East Queensland
7
Page 7
MouraMine
Scotia
TalingaArgyle
Oaky Creek CMM
Berwyndale Sth
Kogan NthTipton West
German Creek CMM
Around 2,800 PJ of reserves have been added by a number of companies
Anglo 100 PJ
Origin 1,000 PJ
Tipperary 600 PJ
Santos 150 PJ
CH4/BHP 200 PJ
Arrow/CSE 100 PJ
QGC JV 500 PJ
Minor Parties 150 PJ
TOTAL 2,800 PJ
Over 1000 PJ of CSG has now been contracted:
• AGL, QAL, Incitec with Origin
• Incitec, CS Energy with QGC
• Enertrade and QNI with CH4
• Energex, AGL (through Origin), Orica with Tipperary
• Energex with Anglo
In Queensland Origin is one of a number of companies adding reserves and signing contracts for CSG…..
…….while the resource potential is several times the current 2P reserves levels
8
Page 8
Origin’s strategy led it to focus on underexploredbasins close to markets, such as the the Otway Basin
• The Otway Basin in south western Victoria is adjacent to the largest gas market in eastern Australia
• Monopoly contracts between Gascor and the Gippsland producers first signed in the 1970’s were due to expire towards 2010
• Market deregulation in the late 1990’s / enhanced the potential of securing market entry for new gas discoveries
• However, long lead times associated with exploration meant early positioning was critical
9
Page 9
Otway Basin - Offshore1999-2006 Exploration History
1999 2000 2001 2002 2003 2004 2005 2006
Bid & award of T/34P (29.75%)
Bid & award of Vic/P43 (25%)
Successful ThylacineAppraisal (30%)
Bid & award of Vic/P37(V) (37.5%)
Adelaide
Port Campbell
SEA Gas PipelineCompleted (331/3%)
Acquired onshore permit PEP 153 (100%) & PEP 154 (90%)from Santos, including depleted fields with storage potential
Investigator 3D in T/30P & Vic/P43
Farmin to T/30P (80%)Farmon to Woodside (30%) Thylacine Gas
Discovery (30%)
Geographe Gas Discovery (30%)
Antares 3D in Vic/P37(V)
Halladale Gas Discovery
Black Watch Gas Discovery
Aragorn 3D in T/34P
Recognised exploration potential in Shipwreck Trough
Peterborough-1
Childers Cove-1
T/30P-Vic/P43 Unitisation (29.75%)
(%) indicates equity
Development feasibility studies
Field production to begin at 60pj pa
Thylacine/GeographeDevelopment Commitment
? Storage facility
? Power station
Aragorn-1
10
Page 10
Otway Basin - Offshore1999-2006 Exploration History
1999 2000 2001 2002 2003 2004 2005
Farmin to T/30P, farmon to Woodside
Award of Vic/P43
Acquisition of Investigator 3D
Thylacine & Geographe gas discoveries
Award of Vic/P37(V)
Award of T/34P
Acquisition of Antares 3D
To Adelaide
Completion of SEA Gas pipeline
Purchase of onshore permits & depleted fields with storage potential from Santos
Commitment to develop Thylacine & Geographe
Halladale & Black Watch gas discoveries
Planned acquisition of Aragorn 3D commences
Planned drilling of Aragorn-1
Planned drilling in T/30P
Planned drilling of Peterborough-1 & Childers Cove-1
Recognised exploration potential in Shipwreck Trough
Thylacine/Geographe production to commence
Development feasibility studies Halladale/Black Watch
Possible construction of storage facility & power station
Successful appraisal of Thylacine field. Unitised T/30P & Vic/P43
2006
11
Page 11
Otway Basin - Offshore1999-2006 Exploration History
1999 2000 2001 2002 2003 2004 2005 2006
Farmin to T/30P, farmon to Woodside
Award of Vic/P43
Acquisition of Investigator 3D
Thylacine & Geographe gas discoveries
Award of Vic/P37(V)
Award of T/34P
Acquisition of Antares 3D
Completion of SEA Gas pipeline
Purchase of onshore permits & depleted fields with storage potential from Santos
Commitment to develop Thylacine & Geographe
Halladale & Black Watch gas discoveries
Planned acquisition of Aragorn 3D commences
Planned drilling of Aragorn-1
Planned drilling in T/30P
Planned drilling of Peterborough-1 & Childers Cove-1
Recognised exploration potential in Shipwreck Trough
Thylacine/Geographe production to commence
Development feasibility studies Halladale/Black Watch
Possible construction of storage facility & power station
Successful appraisal of Thylacine field. Unitised T/30P & Vic/P43
12
Page 12
Exploration Activities2005-2006
13
Page 13
Bass Basin
Proposed Activity 2005/6Proposed Activity 2005/6 Trefoil 3DTrefoil 3D
• Exploration program targets liquids rich gas
• Appraisal of Trefoil discovery first priority
14
Page 14
Perth Basin - Onshore Corybas-2Corybas-2
Hakia-2Hakia-2
Jingemia-5,6,8,9Jingemia-5,6,8,9Beharra Springs-4Beharra Springs-4
Proposed Activity 2005/6Proposed Activity 2005/6
3xOil Exp3xOil Exp
• Exploration progressing with the benefit of newly acquired 3D seismic
• Exploration program targeting oil around Hovea trend and gas in the deeper section
• Appraisal of existing oil and gas discoveries continuing
15
Page 15
Surat BasinGas Exp WellGas Exp Well
Merriwee-1Merriwee-1
New Royal Nth-1New Royal Nth-1
Kyeen Ck-1Kyeen Ck-1
Myall Ck-5 U/BMyall Ck-5 U/B
Ogilvie Ck-1Ogilvie Ck-1
Gambier Pk-2Gambier Pk-2
Horseshoe-4Horseshoe-4
Proposed Activity 2005/6Proposed Activity 2005/6
• Key focus of Surat Basin program is follow-up to the Permian stratigraphic trap with large potential in the Myall Creek / Churchie area
• Further exploration for liquids rich gas (generally small) which if found, may be produced prefentially to satisfy existing contracts
• Some potential for small oil discoveries
16
Page 16
Cooper Basin
10 Wells proposed 2005/610 Wells proposed 2005/6
• Although 10 exploration wells have been nominally been proposed, pool sizes are very small and exploration is in decline
17
Page 17
Taranaki Basin
Proposed Activity 2005/6Proposed Activity 2005/6Tangoroa 2DTangoroa 2D
CEN 05-XXSeismic SurveyCEN 05-XXSeismic Survey
• The driver to search for gas is extremely strong as Maui field is in serious decline
• Geologically extremely challenging
• Initial efforts will concentrate on sparsely explored Western Platform
• Gas discoveries likely to be liquids rich, but exploration is high risk
18
Page 18
New Zealand
Proposed Activity 2005/6Proposed Activity 2005/6 Northland Basin GazettalNorthland Basin Gazettal
TaranakiDeepwater Study
TaranakiDeepwater Study
Canterbury ApplicationCanterbury Application
• New opportunities being evaluated outside the established productive areas, focussing on finding gas to satisfy long term energy requirements in New Zealand
19
Exploration
Rob Willink
Executive General Manager, Exploration
June 2005