Carnarvon Petroleum has advised that the Roc-2 well in WA-437-P, in the offshore Western Australian Bedout Sub-basin, is on schedule to commence drilling in late June or early July.
Operator Quadrant Energy has advised that the Ocean Monarch rig is expected on location at the Roc-2 site in the last week of June or the first week of July, Carnarvon advised.
“In the success case, the Roc-2 appraisal well will confirm our gas and condensate volume estimates and provide us with important information on the flow rates of these hydrocarbons from the reservoir,” Carnarvon Managing Director and CEO Adrian Cook commented.
“We also have plans to explore a secondary, deeper objective in the Roc-2 well, targeting a zone that contained encouraging hydrocarbon shows in the bottom-hole section of the Roc-1 well, following success in the primary target and accommodating well conditions.”
Cook stated that Roc-1 well laboratory results have an important bearing on the project, stating that he is “pleased to report that the results have begun to come in and have exceeded our expectations”.
“We recently received fast-track analysis of a number of sidewall cores across the Caley reservoir section of the Roc-1 well that show permeabilities are substantially better than the 10 millidarcy (mD) to 100 mD we reported in January 2016,” he stated.
“Certain sections of the reservoir recorded 500 mD, with Carnarvon interpreting a weighted average over sands one to four of around 130 mD. This is significantly better than the permeabilities required to achieve commercial flow rates from these reservoir rocks.”
Cook stated that a higher condensate-to-gas ratio (CGR) has also been seen and reported, with the CGR currently estimated to be approximately 60 bbl/MMcf, up from the initial range of 20–40 bbl/MMcf.
“Higher CGRs generally increase the value of a project due to the value of the liquids that can be produced and sold with the gas production,” he commented.
“Demonstrating a commercial flow rate and a commercial volume of gas and condensate in the Roc-2 well would represent an important milestone in the development potential for the Roc structure and surrounding resources, all of which could realise substantial value for our company.”
Martin Kovacs, 8 Jun 2016
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In 2017, Norway’s Government Pension Fund Global – also known as the Oil Fund – proposed a complete divestment of oil and gas shares from its massive portfolio. Last week, the Norwegian government partially approved that request, allowing the Fund to exclude 134 upstream companies from the wealth fund. Players like Anadarko Petroleum, Chesapeake Energy, CNOOC, Premier Oil, Soco International and Tullow Oil will now no longer receive any investment from the Fund. That might seem like an inconsequential move, but it isn’t. With over US$1 trillion in assets – the Fund is the largest sovereign wealth fund in the world – it is a major market-shifting move.
Estimates suggest that the government directive will require the Oil Fund to sell some US$7.5 billion in stocks over an undefined period. Shares in the affected companies plunged after the announcement. The reaction is understandable. The Oil Fund holds over 1.3% of all global stocks and shares, including 2.3% of all European stocks. It holds stakes as large as of 2.4% of Royal Dutch Shell and 2.3% of BP, and has long been seen as a major investor and stabilising force in the energy sector.
It is this impression that the Fund is trying to change. Established in 1990 to invest surplus revenues of the booming Norwegian petroleum sector, prudent management has seen its value grow to some US$200,000 per Norwegian citizen today. Its value exceeds all other sovereign wealth funds, including those of China and Singapore. Energy shares – specifically oil and gas firms – have long been a major target for investment due to high returns and bumper dividends. But in 2017, the Fund recommended phasing out oil exploration from its ‘investment universe’. At the time, this was interpreted as yielding to pressure from environmental lobbies, but the Fund has made it clear that the move is for economic reasons.
Put simply, the Fund wants to move away from ‘putting all its eggs in one basket’. Income from Norway’s vast upstream industry – it is the largest producing country in Western Europe – funds the country’s welfare state and pays into the Fund. It has ethical standards – avoiding, for example, investment in tobacco firms – but has concluded that devoting a significant amount of its assets to oil and gas savings presents a double risk. During the good times, when crude prices are high and energy stocks booming, it is a boon. But during a downturn or a crash, it is a major risk. With typical Scandinavian restraint and prudence, the Fund has decided that it is best to minimise that risk by pouring its money into areas that run counter-cyclical to the energy industry.
However, the retreat is just partial. Exempt from the divestment will be oil and gas firms with significant renewable energy divisions – which include supermajors like Shell, BP and Total. This is touted as allowing the Fund to ride the crest of the renewable energy wave, but also manages to neatly fit into the image that Norway wants to project: balancing a major industry with being a responsible environmental steward. It’s the same reason why Equinor – in which the Fund holds a 67% stake – changed its name from Statoil, to project a broader spectrum of business away from oil into emerging energies like wind and solar. Because, as the Fund’s objective states, one day the oil will run out. But its value will carry on for future generations.
The Norway Oil Fund in a Nutshell