Perth-based oil and gas explorer Buru Energy has taken a significant step in progressing its 2021 Rafael gas discovery towards production after being granted State Government approval for its hydrocarbon Declaration of Location application.
It marks a significant milestone for the company’s 100 per cent-owned Rafael project in the onshore Canning Basin, about 120 km east of Broome, signposting its commitment to developing the resource and contributing long-term clean energy to Western Australia’s Kimberley region.
The approval has given Buru the green light to pursue a production licence at the site.
The company’s discovery has been independently assessed to have the potential to hold recoverable volumes of more than 1 trillion cubic feet of gas and 20 million barrels of condensate.
Buru flow-tested its initial Rafael 1 discovery well last year and produced more than 7 million cubic feet per day of high-quality gas, with low reservoir carbon dioxide and high-condensate content at 40 barrels per million cubic feet.
Flow-testing of the well and proving the successful recovery of hydrocarbons to surface is a significant achievement for Buru. With its approval now firmly in place, it has a clear path towards transforming the energy space in the Kimberley.
The commercialisation of Rafael will require the company to systematically convert contingent and prospective resources into petroleum reserves by clearing up two main uncertainties – hydrocarbon column height and reservoir permeability, which influences recovery factor.
Gas column height determines accumulation size and reducing uncertainly surrounding the column at Rafael will be a major point of focus for Buru as it moves to appraise the accumulation and de-risk hydrocarbon volumes.
Significantly, the section of the reservoir where Rafael 1 was drilled was packed full of gas, with no gas-water contact intersected. It leaves the depth of the base of the gas column open.
Buru has conservatively modelled the base of the column at the lowest gas intersected at Rafael 1, which is gas on rock, providing a theoretical column height of 165m. It has been used to calculate the gross 1C contingent resource of 59 billion cubic feet of recoverable gas and 1.2 million barrels of condensate.
And in reality, the column may be even bigger.
The company says reservoir pressures at Rafael 1 suggest it may be charged with a column of up to 700m, which is generally coincident with structural closure mapped on existing 2D seismic data. Some reservoir pressures suggest a column of up to 900m.
The 3C resource is constrained by a column height of 634m, which is the mapped structural closure of the Rafael accumulation visible on 2D seismic data.
To address the column height – and in turn, volume uncertainty – at Rafael, Buru plans to shoot and interpret a new 3D seismic survey scheduled for this year’s third quarter, along with appraisal drilling next year.
The company believes that as part of the long-term power strategy for the Kimberley, the current 1P contingent resource for Rafael alone could be sufficient enough to provide a lower-emissions solution for the existing power generation systems that are currently serviced by trucked LNG sourced from offshore fields on the North West Shelf.
Buru Energy chief executive officer Thomas Nador said: “We are delivering on our multi-pronged strategy to develop Rafael, and this approval by DMIRS of the Declaration of Location for the discovery is a key step along the path to commercialise this potentially significant resource. With full ownership of the Rafael discovery, we are focused on de-risking the resource through good planning and execution discipline, and by doing so, creating shareholder value.”
The appraisal program next year will allow Buru to assess commercial opportunities through its increased resource confidence. Its resource estimates will this month undergo an internal assurance and approval process in a bid to define the project’s financial metrics.
With its 100 per cent interest in Rafael and 50 per cent operating interest in the nearby Ungani oilfield, Buru has taken an aggressive position in the onshore Canning Basin and continues to be an active explorer.
The company now holds a net 22,500 square kilometres in the basin, making it the dominant net-acreage holder and operator.
ASX punters reacted positively to Buru's latest news, with the company's stock jumping more than 29 per cent in today's trading, rising to a high of 11 cents at market closure from Monday's closing price of 0.085c.
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By Andrew Duffy
