Sydney (Platts)--6Feb2013/610 am EST/1110 GMT

Australian exploration and production company AWE has begun studying the feasibility of a commercial development at its 50%-held Senecio tight gas discovery in the north Perth Basin in Western Australia.

"The joint venture's decision to proceed with the feasibility study is another positive step towards the development of unconventional gas in Western Australia," AWE managing director Bruce Clement said in a statement Wednesday. AWE's partner in the project is Australia's Origin Energy.

The Senecio discovery produced gas at a stabilized rate of 1,350 Mcf/day from a 5 meter interval during a flow test in September last year, AWE said. Pressure test and other data gathered since then "demonstrates potentially commercial reservoir flow capacity," the company added.

AWE has previously booked a contingent resource volume of 4.4 million barrels of oil equivalent for its half share of Senecio, which is equivalent to a gross resource of 50 Bcf of wet gas, according to the company. But 2D seismic data has indicated a potential estimated recoverable volume of at least double the quantity currently booked, and the feasibility studies will include an updated definitive resource estimate, AWE said.

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"The results of the pressure test, the flow test, and the Irwin 3D seismic program indicate that a horizontal, multi-stage, hydraulically fracture stimulated well at Senecio could be economically viable," Clement said. "The Perth Basin is potentially a very important source of energy for the Western Australian market and we believe that the timely completion of a development feasibility study will help define a valuable gas resource."

AWE plans to consider using nearby existing plant processing infrastructure where possible, to minimize the project's environmental footprint and development costs. Evaluation of the Dongara and Xyris gas plants and associated infrastructure will form part of the study, the company added.

Detailed work on project planning, budget and product marketing could start as soon as the second quarter of 2013, AWE said.

"The prospect of commercializing Senecio provides strong encouragement for the development of other tight gas opportunities in the Perth Basin, including the Corybas discovery and the High Cliff discovery (the latter in the Arrowsmith-2 well)," Clement said. "Our exploration team is looking at 30 years of accumulated data for the Perth Basin, compiled through conventional oil and gas exploration activities, to identify additional tight gas intersections with development potential."

--Christine Forster, christine_forster@platts.com
--Edited by Irene Tang, irene_tang@platts.com

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