AWE has abandoned plans for the second phase of the Drover-1 exploration program in Western Australia’s Perth Basin, which would have involved hydraulic fracturing.
AWE told the local market of its decision July 24 after undertaking consultation with joint venture partner Titan Energy.
AWE was scarce on details around the decision, saying results from diagnostic fracture injection testing in April combined with analysis of core samples and wireline data taken last year had provided sufficient information for its assessment of the shale gas potential in the southern extent of its Perth Basin acreage, concluding that no further work was required at the location.
The Drover-1 exploration well will now be decommissioned and rehabilitated back to its pre-existing state.
The Drover-1 well is located in exploration permit 455 which AWE holds 81.5% interest and Titan holds the balance.
Drover-1, located on pastoral land in the Shire of Coorow, about 18 km southeast of Green Head and 220 km north of Perth, was designed to test the unconventional gas potential in the far southern extent of AWE’s Perth Basin acreage.
While AWE did not reveal it would revisit Drover-1 once the market picks up, it is possible the Sydney-based company will cast another eye over the area down the track due to the fact the venture has applied to renew EP 455.
While AWE’s decision not to proceed with plans to frack Drover-1 puts another dent in WA’s dormant unconventional sector, the move is unlikely to slow down the company in the Perth Basin as it focuses on developing its conventional sources of gas in the Waitsia gas field.
AWE has high hopes for Waitsia, which the company believes has the potential to be a significant source of gas for the WA domestic market. The play contains an estimated gross 2C contingent resource of 290 Bcf of gas with significant upside of 1.17 Tcf of gas.
Shares in AWE were trading 0.8% lower at $1.18.
Lauren Barrett can be reached at lbarrett@hartenergy.com.
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