The Australian government has approved Statoil’s request to become the sole titleholder of the two frontier permits, EPP 39 and EPP 40, offshore South Australia. Statoil now has 100% interest in the blocks.
This consummates a swap deal struck with BP, Statoil’s former joint-venture partner in the permits, in which Statoil transferred its 30% stake in nearby EPP 37 and EPP 38 to BP so that BP now has 100% of these. In turn, BP transferred its 70% interest in EPP 39 and EPP 40 to Statoil.
BP walked away from its planned $1.4-billion (Aus.) two-well program in October 2016, a move that at the time sat badly with the federal and South Australian governments, both of which had endorsed the exploration work.
Pal Haremo, Statoil’s vice-president of exploration in Australasia, said his company was pleased to have found a way forward to proceed with drilling in the promising frontier basin that is thought to have a large exploration upside.
Nevertheless, the company is still in the early phase of its planning. Jacques-Etienne Michel, Statoil head manager in Australia, said time would be taken to establish the feasibility of the program. He added that if Statoil determined that the drilling could not be done safely then it would not be attempted.
The work program requirements stipulate that Statoil drill a well by the end of October 2019 and the initial focus will be on EPP 39, the permit in which the former BP-Statoil combine planned to drill the Stromlo prospect (OGJ Online, Sept. 29, 2016). Statoil says it is too early to determine whether this prospect will remain the first target.
Michel said a new JV partner would be welcome, but the company was prepared to continue solo even though the investment will be large.
The revived possibility of a well will undoubtedly reignite the opposition of the environmental lobby, including Greenpeace and the Wilderness Society, worried about the risk and effect of an oil spill on the pristine South Australian coast as well as what they refer to as the toll of seismic activity on marine life.
Several other companies have permit interests in the Great Australian Bight, including Chevron Corp., Murphy Oil Corp., Santos Ltd., and Karoon Gas Australia Ltd.
However, BP is looking to exit EPP 37 and EPP 38 in which it now holds 100% following the Statoil swap deal and the Australian government is negotiating with the company on options for future investment with regard to this withdrawal.