AWE Undercores Oil, Gas Production at Tui, BassGas and Casino

Henry Field, Casino Field, Oway Basin
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BassGas Project, Yolla Field
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Tui Area Oil Field
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AWE's December quarter oil and gas production was 2.12 million BOE, down on the previous quarter. The inclusion of the Arc Energy assets for the first full quarter contributed to the results. However, an unscheduled production disruption at BassGas and scheduled maintenance at Tui and Casino saw lower output for the period. All facilities were operating at expected levels by the end of the quarter.

First half oil and gas production of 4.64 million BOE was only slightly behind the previous year's levels. For the 2008/2009 financial year, AWE's share of production is forecast to be 9.0 million BOE (previous quarter forecast 9.3 million BOE), generating sales revenues at current prices of approximately $600 million (previous quarter forecast $730 million at higher prices).

Tui oil production remained strong, with an average rate of 28,000 bopd for the quarter. AWE's share of net oil sales from the Tui fields was 0.97 million barrels and production of 1.03 million barrels. At the end of the quarter, AWE's share of project inventory was 189,000 barrels.

Group oil production was 1.42 million barrels during the quarter, down 11% following natural production decline and the scheduled maintenance at Tui.

Quarterly gas, condensate and LPG production was down substantially in the quarter as a result of the BassGas and Casino shutdowns.

Sales revenue of $140 million in the quarter was 44% lower than the previous quarter following a sharp reduction in the average realized oil prices and lower production levels.

AWE's share of exploration expenditure during the quarter was $17 million. AWE incurred $24 million development expenditure in the quarter principally on the development of the Henry gas field in the Otway basin. AWE ended the half year in a strong financial position, with no corporate debt and cash balances of $383 million.

Tui Oil Fields

Gross crude oil production at the Tui fields was 2.41 million barrels in the quarter at an average rate of approximately 28,000 bopd (excluding a period of planned shutdown). Associated water production averaged 94,000 bpd with the FPSO Umuroa again regularly exceeding its total fluid design capacity of 120,000 bpd.

Reservoir performance in the Tui fields continues to be strong in line with forecast, such that AWE remains confident of achieving its previously announced production target of 9.0 million barrels (gross) of oil for the 12 months to June 30, 2009.

A planned shutdown was undertaken in December 2008 of six days duration, slightly shorter than expected. The shutdown allowed for maintenance and inspection of the facility together with the installation of some additional equipment for oil and gas process optimisation on the FPSO.

At the end of the quarter, the Tui fields had produced 19.8 million barrels of oil since startup. The project passed the 20 million barrel threshold in early January, 2009.

BassGas Project

Gross gas production from the BassGas project was severely impacted by a sub-surface valve failure on the Yolla-4 production well. As a result, production was temporarily limited to approximately 25% of capacity for a period and was subsequently shut-in for repair.

Production had resumed to normal operations by the end of the quarter. Gross gas production for the quarter averaged only 30 TJ per day, substantially down on the previous quarter.

AWE's share of gas production was 41% lower at 1.2 PJ. AWE's share of liquids were 49,000 barrels of condensate and 2,700 tonnes of LPG in the period.

Initial screening studies for the next phase of development of the Yolla field have started. This project is expected to incorporate the installation of further development wells, added compression on the platform and an expansion of the platform accommodation. Upcoming drilling at Trefoil-2 and Rockhopper-1 in the adjoining T18P permit is currently planned to start in June, 2009.

Casino Gas Field

Routine gas production operations at Casino were affected by the annual maintenance shutdown of the customer's plant in November with average gas production reducing to a rate of 69 TJ per day for the quarter.

AWE's share of production for the quarter was 1.6 PJ of gas with approximately 1,100 barrels of associated condensate.

Henry Gas Field

The Henry-2 gas development well was drilled and tested gas at rates of up to 44 mmcfgd. The well has been completed as a gas producer.

Engineering and project procurement operations continued during the quarter. Pipeline fabrication and welding operations are also advanced.

Santos, the Henry project operator, has advised that the installation of the pipeline will be delayed, as the pipe laying vessel is now not available to install the pipeline in the first half of 2009. The contractor has offered to complete the contract scope of work in the next weather window, with mobilization in late 2009.

Cliff Head Oil Field

An average gross oil production rate of 5,900 bopd was achieved from the Cliff Head oil project during the quarter. The slightly lower oil production is due to natural field decline.

AWE's net share of production was 308,000 barrels for the quarter, up on the previous quarter due to a full quarter of production at higher equity following the merger with Arc Energy.

Onshore Perth Basin

Routine oil and gas operations continued in the onshore Perth Basin oil and gas fields during the quarter. AWE's net share of oil and gas from the onshore Perth Basin was 85,000 barrels of oil and 952 TJ of gas, an increase on the previous quarter due to a full quarter of
production following the merger with Arc Energy.

Development drilling is anticipated to start at the Hovea oil field in late March 2009. This will be the start of at least four development and exploration wells in the region during this upcoming drilling program.

Taranaki Basin

In the offshore Taranaki Basin in New Zealand, AWE has been focused on preparation for the next round of drilling to commence later in 2009.

The Company is well advanced on the execution of a contract for the utilisation of the Kan Tan IV drilling rig for this upcoming drilling campaign. The rig, expected to become available in the middle of 2009, could drill up to five wells in AWE's operated Taranaki basin acreage, including some appraisal activity in the Tui region and some broader Taranaki basin exploration targets. Final well locations are yet to be finalized.

An extensive seismic acquisition programme has been completed in the Western Taranaki Basin in AWE operated permits PEP 38483, 381202, 38481, 38524 and partially completed in 38451. A total of 2,952 kilometers of 2D data were acquired. The remaining components of the seismic program are expected to be undertaken in the first quarter of 2009.

Bass Basin

The BassGas joint venture has committed to the drilling of the Trefoil-2 and Rockhopper-1 wells. Trefoil-2 is an appraisal well on the Trefoil gas field, which has previously tested gas at rates of up to 16.3 mmcfgd with high rates of associated condensate. Rockhopper-1, 10 kilometers northeast of Trefoil, is an exploration well on the large Gentoo/Rockhopper structure. This drilling campaign is expected to start in June, 2009.

Onshore Perth Basin

A drilling program of up to four wells is expected to commence in the second quarter of 2009.

East Java Basin, Indonesia

3D seismic surveys totalling 650 square kilometers were completed in the Bulu PSC in the second half of 2008. Processing of these surveys is scheduled to be completed in early 2009 in preparation for a 2-well drilling program, currently planned for the third quarter 2009.

AWE signed the East Muriah PSC contract in November. AWE holds a 50% interest in East Muriah with Pearl Oil (50% and operator). The PSC is an extension of the play proven by the recent Lengo gas discovery in the Bulu PSC.


3D seismic acquired and processed in late 2008 is currently being interpreted. The seismic will be used to define drilling targets for a two well exploration drilling program in mid to late 2009.

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