The Northern Territory (“NT”) Government has advised that approximately 50% of the NT could be declared as reserved areas and is currently undertaking a consultation process with those petroleum companies affected by its proposal. Under the proposal, Sites of Conservation Significance (“SOCS”) are one of the catergories of land that will be declared ‘no go zones’ for petroleum exploration and production and be excised from pre-existing and future petroleum licence areas. A considerable portion of the prospective areas within Vintage Energy Ltd’s (“Vintage”, ASX: VEN) EP 126, in the Bonaparte Basin, is affected by the proposed reserved area as SOCS. A submission has been made to the NT Government and clearly outlines Vintage’s view that past, current and future approved land use within the majority of EP 126 are inconsistent with the declaration of a reserved area on the basis of a SOCS.
EP 126 is an area that is largely covered by pastoral leases and is the NT Government approved location for the world’s largest prawn farm planned for construction by Seafarms Ltd. The Cullen-1 well, which was drilled, cased and suspended by Beach Energy Ltd, is located within the area of the proposed prawn farm and thus presents an excellent opportunity to provide natural gas as an energy source for the aquaculture project. The Cullen-1 well is also located within the proposed reserved area which has been defined as a SOCS area.
Considering the current land use within EP 126, Vintage made a submission to the NT Government as part of its consultation process to have the prospective areas of the EP 126 permit excluded from the proposed reserved area. Vintage considers the extent of reserved area is inconisistent with past petroleum activities, current pastoral activities and future approved activities associated with development of the prawn farm. Vintage also considers that effective environmental management, as approved under existing petroleum regulations, has already been demonstrated by past activities in EP 126 and is sufficient to minimise any environmental impact in the area. The timeframe of the government process is currently unclear and, as such, Vintage does not have certainty through regulatory approvals in time for contracts to be awarded for goods and services related to the testing of Cullen-1 in the 2019 dry season. Vintage is hopeful that the delay will be minimised by having the project ready to commence at the beginning of the next dry season in Q4 FY20.
Vintage plans to test the already drilled Cullen-1 well to better understand the ability of the well to flow natural gas. Vintage believes that there is an excellent opportunity to find commercial quantities of natural gas in EP 126 which could provide favourable economic benefit to the Northern Territory, in terms of job creation and the delivery of much needed gas to local industry and the general market. The exploration and appraisal opportunity that Vintage intends to address is directly analogous to the Albion-Scipio Field, a large resource discovered in the Michigan Basin. Vintage will continue to update the market in relation to the consultation process and is hopeful that our submission in relation to the reserved area will be well received by the NT Government.
Vintage Managing Director, Neil Gibbins said “Although we are disappointed at the delay to the Northern Territory project created by these processes, we are hopeful that we can carry out the well test in the first half of 2020. Despite this delay, the remainder of this year will be a very active one for Vintage as we continue to deliver on the two-year work-program promised in our prospectus with at least two wells in the Galilee Basin, and one each in the onshore Otway and Cooper Basin. We look forward to keeping our shareholders up to date with the progress of these projects.”