From Australia (LB): AWE could book a $110mn non-cash impairment on the BassGas (SEN, 31/19) asset in Victoria in the wake of a reduction in the project’s reserves.

The BassGas project consists of the Yolla offshore wellhead platform connected by pipeline to the gas processing facility at Lang in Victoria.

The reserve writedown comes after AWE and BassGas joint venture partner, Origin Energy, provided a preliminary reassessment of reserves for the Bass Strait-located Yolla field based on new data obtained from the recently drilled Yolla-5 and Yolla-6 development wells.

AWE said interpretation of log and pressure data obtained from the two wells had resulted in a reduction in the estimated original gas in place for the field, although further technical work was required to firm up the estimate.

As such, AWE has decided to adopt the preliminary reassessment and reduce its share of reported remaining 2P reserves for the Yolla field by 5.5mmboe to 13mmboe, as at 30 June 2015.

AWE managing director Bruce Clement said the reduced reserve count at Yolla was not expected to have a material impact on production or cash flow during the next three to four years.

‘We anticipate production from the field will increase to a rate close to the facilities’ capacity of 67 terajoules a day, once the Yolla-5 and Yolla-6 development wells are brought on-stream,’ he said.

AWE will now consider accelerating development feasibility studies for the Trefoil (31,16) field in adjacent permit T/18P to determine if its 2C contingent resources of 17mmboe can be developed earlier as an incremental project to Yolla production.

AWE has a 35% stake in the BassGas venture while operator Origin holds a 42.5% interest. Toyota Tsusho Gas and Prize Petroleum International make up the remaining minority interest.