DISCOVERY V I C T O R I A’ S
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INSIDE THIS ISSUE • NEW SEARCH STRATEGY • DEEPWATER DRILLING • NEW ACREAGE RELEASE
26 MAY 2003
15th VIMP
DATA RELEASE
An exciting range of new geoscience data at the 15th VIMP data release. The products to be released include: • new geology and regolith maps and reports; • geophysical data; • a 3D coal model; • GIS CDs; and • digital open file exploration data. 1.00pm – 5.00pm Thomas Carr Centre 278 Victoria Parade East Melbourne To register, contact: Chandri Nambiar Phone (03) 9412 5061
Geological Survey Victoria, Minerals and Petroleum Division
DISCOVERY V I C T O R I A’ S
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contents NEW PLAYER IN GOLD SEARCH
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Reliance Mining develops new strategies in its search for gold
BENDIGO TO DECLARE RESERVES
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Look for a June quarter announcement
OVERVIEW PRESENTS HEALTHY PICTURE
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Victoria’s petroleum industry is in good shape
NEW ACREAGE RELEASE
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Six new oil and gas exploration areas are up for tender
CASTLEMAINE IS THE CENTREPIECE
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New maps of the central Victorian goldfields are about to be released
NEW MAPPING PROJECT
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cover picture
GSV plans a major project in north-eastern Victoria
DEEP DIVER HAS HIGH HOPES
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Santos is hoping to rewrite the history of Victoria’s oil industry
NEXUS JOINS GIPPSLAND BASIN SEARCH
The past and the present. Our main cover picture shows the interior of the famous Long Tunnel mine at Walhalla, which is now a major tourist attraction. (Picture courtesy of the Baw Baw Shire Council). The mine gave access to the worldrenowned Cohens Reef, which produced, in total, 47 tonnes of gold, and was one of Australia’s principal reef gold producers in the period 1885 to 1908. Our small inset picture is a modern-day geological image of the Walhalla/Woods Point area, which is the focus of a major new GSV mapping project starting later this year. (See our story on page 11).
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It’s a core area with ‘considerable potential’ says the company
MPI MINES ITS ‘GOLDEN GIFT’
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Trial mining starts at Stawell
UNDERCOVER WORK AIDS SEARCH
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New exploration techniques encourage our biggest goldminer
ORIGIN EMERGES AS A FRONT RUNNER
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A ‘reborn’ company emerges in the energy industry
GOVERNMENT BACKS SMELTER STUDY
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Another boost for a proposed magnesium plant in the Latrobe Valley
STRAIT GAS FLOWS STRAIGHT TO SYDNEY
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OMV brings its Patricia/Baleen gas field into production
POINT HENRY SMELTER TURNS 40
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It’s a happy birthday for Alcoa and Victorian industry
COSTERFIELD UNEARTHS MORE SURPRISES
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Latest results continue to encourage AGD Mining DISCLAIMER: This publication may be of assistance to you, but the State of Victoria and its officers do not guarantee that the publication is without flaw of any kind or is wholly appropriate for your particular purposes and therefore disclaims all liability for any error, loss or other consequence which may arise from you relying on any information in this publication.
regular features VIEWPOINT
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Energy and Minerals Victoria acknowledges contributions made by private enterprise. Acceptance of these contributions, however, does not endorse or imply endorsement by the Department of Natural Resources and Environment of any product or service offered by the contributors.
Minister Theo Theophanous gives his views
NEWS BRIEFS
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A roundup of Victorian industry news
VICTORIA’S RESOURCES
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All photographs, maps, charts, tables and written information in this publication are copyright under the Copyright Act and may not be reproduced by any process whatsoever without the written permission of the Department of Natural Resources and Environment.
Victoria’s mineral, oil and gas resources
MINERAL LICENCE REVIEW
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Who’s doing what with mineral exploration licences
© Minerals and Petroleum Victoria 2003.
Published quarterly on behalf of the Minerals and Petroleum Division, Department of Primary Industries. Editorial and advertising enquiries to Rex Banks, RBA Communications, 86 Cooloongatta Rd, Camberwell Vic 3124 Tel: (03) 9889 1094 Fax: (03) 9889 9997 EMail:
[email protected] Editorial: Rex Banks. Distribution and NRE enquires to Chandri Nambiar, Manager Marketing Development, Minerals and Petroleum Division, Department of Primary Industries, Level 7, 240 Victoria Parade, East Melbourne, Vic, 3002, Tel: (03) 9412 5061 Fax: (03) 9412 5155. Website:
Australia Post Print Publication PP349472/00128. ISSN Number 13282409.
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GOLD EXPLORATION
New player in gold search A
significant new player, with long-term gold exploration and production experience, believes that Victoria has the potential to return to the glory days of the 1850’s when some of the world’s biggest gold fields were discovered throughout the state.
Reliance Mining’s Stephen Twyerould and Paul Chapman.
cash in the near term, or the ability to produce a substantial discovery.” Dr Twyerould, Reliance Director of Operations, said two examples of the company’s approach and focus are the Andean gold belt in Peru and the Victorian gold belt.
Reliance Mining Limited, a reconstruction of Geographe Resources, has become one of Victoria’s largest exploration tenement holders, and is forecasting a major boost in the search for new orebodies.
In Victoria, the company has acquired or applied for approximately 7,000 square kilometres of ground containing targets ranging from major undercover extensions of known gold belts like Bendigo, Ballarat and Stawell to ‘Brownfields’ exploration targets over historic high-grade mining camps.
It will concentrate its search for new ‘Greenfield’ gold deposits around Rutherglen in the state’s north, Kerang, Ararat South and St Arnaud. The company also will look for extensions to known goldfields or ‘Brownfield’ areas at Ballarat West, Lauriston East, Granya and Reedy Creek. Reliance Mining recently returned to the Australian Stock Exchange trading list with a new management team and a new approach to discovering gold deposits. Made up of several former senior executives from Western Mining Corporation’s gold and nickel division, Reliance plans to use their expertise developed and honed within WMC in the search for hidden gold deposits, with the team looking specifically for covered extensions to Victoria’s major gold fields. This ‘Brownfield’ strategy is the same focus used by Bendigo Mining which is developing major extensions to the Bendigo goldfield, Ballarat Goldfields which is working on a similar expansion of the Ballarat fields and Perseverance Mining which is rapidly extending the known boundaries of the Fosterville sulphide deposit. In addition, a Co-operative Research Centre project on Predictive Mineral Discoveries is looking specifically at the science of discovering new mineral deposits where the orebodies are hidden by overlying material.
“If you are looking for elephants, you have to look in elephant country,” Mr Chapman said, quoting an old mining adage. Reliance Mining Limited was established in November 2001 by former senior executives of WMC Ltd to pursue world-class gold and base-metal projects. Apart from a large portfolio of projects in Australia and overseas, it also has a strategic alliance with WMC Resources Ltd, which provides an ongoing pipeline of mineral exploration projects.
RELIANCE BELIEVES VICTORIA HAS ENORMOUS POTENTIAL FOR THE DISCOVERY OF MULTI-MILLION OUNCE GOLD DEPOSITS AND SAYS THE TIME IS RIGHT FOR SIGNIFICANT INVESTMENT IN THE STATE.
But Reliance Mining Director, Paul Chapman, says the future for mining in Victoria is to look for the hidden targets.
The Reliance management team includes five former WMC executives - Dr Stephen Twyerould, the former head of gold geology and exploration; Paul Chapman, former commercial manager of nickel and gold; Brian Kennedy, former general manager of the Mt Keith and Kambalda nickel mines; Tim Craske, the former principal project generation geologist in the WMC exploration division and Craig Reddell, the former exploration manager for nickel and gold.
He believes Victoria is still highly prospective, and almost totally unexplored by modern standards.
Mr Chapman told Discovery that, “We plan to ‘turn over’ a high number of projects and pick those that have the capability of generating
Up to now, every major Victorian goldfield has been discovered by the outcropping portions, which led miners to the deeper deposits.
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“By July this year, Reliance’s teams in both Victoria and Peru will have completed additional fieldwork to validate anomalies and prioritise targets for drilling,” Dr Twyerould said. Reliance believes Victoria has enormous potential for the discovery of multi-million ounce gold deposits and says the time is right for significant investment in the state. Mr Chapman said that exploration strategy experience has shown that, “if you’re looking to make a significant gold discovery, there are two criteria that have been shown to be extremely effective”: • Go to a province that has produced significant quantities of gold in the past. This shows all the right processes have been operating on an appropriate scale. • Find the under-explored areas of that province that exhibit the right geological ingredients for gold mineralisation. “Victoria certainly meets the first criteria,” Mr Chapman said. “It is the world’s premier slate-belt gold province with total production exceeding 80 million oz. “Twelve goldfields produced more than 1m oz of gold with the largest deposits being Bendigo (23m oz), Ballarat (13m oz), Castlemaine (5m oz) and Stawell (4m oz),” To meet the second criteria, Reliance has taken two approaches: • Greenfields Strategy: Target the covered extensions of known gold-belts, and, • Brownfields Strategy: Acquire underexplored, near-mine extensions to old gold camps. Reliance is also adopting the strategy that has produced large gold discoveries in Western
GOLD EXPLORATION
Australia where the modern exploration effort has been far more intense. This is to explore for targets ‘under cover’. “To explore successfully under cover you need a robust exploration model, large ground holding and techniques capable of making a significant discovery,” Mr Chapman said. “Reliance has established an exploration model in Victoria based on empirical and conceptual parameters. “In essence, there is a well documented association between the location of large Victorian gold deposits and; • the proximal hanging wall position of major N to NNW trending reverse faults, • doubly plunging anticlines and anticlinoria (e.g. Bendigo), • regional WNW, NNE and ENE lineaments, • the margins of granite domains, • graphitic pelitic host metasediments, • lower crustal mafic lithologies, • periodic spacings between major gold camps of 30-36 km along major strike-parallel faults.”
the dating techniques allow some overlap of ages between gold mineralisation and granite emplacement. “This indicates that in many areas the age difference may be insubstantial and hence there may be a closer genetic relationship between gold mineralisation and I-type granites than generally accepted.”
Above: The area around Stawell-Ararat is one of the regions targeted by Reliance Mining in its new search for ‘undercover’ gold. It’s also an area which has long attracted intense geological interest – as this picture of a GSV-hosted field trip shows. Below: Victoria’s gold discoveries in the 19th Century laid the foundation for much of the state’s prosperity.
Mr Chapman also pointed to an analogy between the hidden potential of Victoria with the under cover Yilgarn province of Western Australia.
“Discoveries include: Sunrise Dam 6m oz, Wallaby 6m oz, Kanowna Bell 5m oz, St Ives 4m oz, Bronzewing 3m oz, Red October 1m oz and Norseman 1m oz.
“Victoria has not seen the substantial undercover gold exploration experienced in many of Australia’s other goldfields,” he said.
“This success was achieved by companies undertaking detailed geophysics, reconnaissance drilling and sub-surface geochemistry along the covered extensions of major gold belts, or along major gold-bearing structural zones.
“When compared with the number of undercover exploration successes (discoveries) realised by a number of modern explorers in the Yilgarn of WA, it can be appreciated why Reliance regards the potential of Victoria so highly. “In the Yilgarn, exploration and mining companies have been systematically exploring covered terrains since the late 1980’s.
Reliance has used these parameters to select ‘Greenfield’ target areas under cover to the north and south of several major Victorian goldfields where there is a strong spatial association between gold occurrence and I-type granites. Mr Chapman said that many explorers have discounted this as an important targeting parameter in the belief that the younger age of the granites indicated they could not have influenced gold mineralisation. “Reliance does not share this view. In some areas, for example the Melbourne Zone, the granites are virtually synchronous with gold mineralisation and are themselves mineralised,” Mr Chapman said. “In other areas, the granites are not markedly younger and the permissible age ranges from 3
“Reliance intends employing a similar exploration strategy in Victoria, on project areas already identified and applied for to the north and south of the Ballarat-Wedderburn goldfields corridor, to the south of the StawellArarat goldfields corridor, northwest along the major northwest trending Percydale and St
GOLD EXPLORATION
Arnaud structures and beneath the covered terrain along trend from the RutherglenChiltern goldfields near Wangaratta.” But while the company will be looking for new ‘Greenfield’ projects, it also has developed a clear strategy to look for known extensions of existing goldfields, adopting a ‘Brownfields’ strategy. Mr Chapman again pointed to the Western Australian successes in finding major new gold resources in the vicinity of older gold mines, discovered using modern exploration techniques. The number of discoveries in WA was spectacular, he said, with tens of millions of ounces of gold found near well known mines like Paddington, Kalgoorlie, VictoryDefiance, Lancefield, and Hill 50. Reliance believes the time is right for major extensions of old goldfields to be located in Victoria. “Reliance has embarked on a strategy of acquiring prospective historic mining camps that have received little modern exploration and intends to apply the skills and experience, gained through extensive and successful ‘Brownfields’ exploration within WA, to its new project areas in Victoria,” Mr Chapman added. F O R M O R E I N F O R M AT I O N C O N TA C T:
Paul Chapman Director, Reliance Mining Limited Tel: (08) 9220 9880 www.reliancemining.com.au
BENDIGO TO DECLARE RESERVES B endigo Mining will post its first ever gold reserves statement in June for the newly developed New Bendigo underground mine.
Work at Bendigo has extended the mine decline to 830 metres below the surface and provided direct access to the Deborah and Sheepshead reefs which will allow the reserve calculations to be completed ahead of a final mining decision due by year end. In the company's March quarter report, highly encouraging exploration and development work within the Deborah anticline system allowed Bendigo Mining to clearly identify the gold bearing resources. “As expected, gold distribution is not entirely coincident with quartz distribution in the reefs at Bendigo and, as a consequence, a detailed understanding of the structural controls to gold mineralisation within individual reefs is required to successfully define resources and reserves," the report said. But it added that, “sufficient exploration has now been completed to identify both the resource envelopes and the structural controls to gold mineralisation within the reefs in the D3 ribbon and the upper S3 reef.” “The company is on schedule to delineate indicated resources and probable reserves within these reefs in the June quarter.”
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By posting gold reserves statement, Bendigo Mining will have overcome one of the region's traditional difficulties, which is the uneven distribution of gold within individual reefs. But with detailed drilling information, obtained from underground drill sites provided by the decline and development drives into the reef systems, Bendigo Mining has dramatically improved the scientific understanding of the reef systems. Several bulk samples were also acquired from the Deborah reef system in the March quarter and processed in the new Moon gold plant adjacent to the mine. “These parcels are from the on-reef exploration development and are 1000 tonnes or greater in size,” the company added.
“The first parcel of material, comprising about 6000 tonnes, is from development of within the D3 ribbon. The gold recovered from these tests will help verify grade estimation procedures within the reefs.”
F O R M O R E I N F O R M AT I O N C O N TA C T:
Doug Buerger Managing Director, Bendigo Mining Tel: (03) 5447 1834
OIL
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GAS NEWS
Overview presents healthy picture The Gippsland Basin still supplies almost 20 per cent of Australia's crude oil requirements with a daily average production rate of 156,000 barrels a day during 2001/02.
an initial 59 Bcf to 36.7 Bcf (including the reserves of the undeveloped fields). The developed gas fields are North Paaratte, Iona, Mylor, Fenton Creek, Skull Creek, Dunbar, Penryn, Mcintee, Tregoney, Naylor, Croft and Wallaby Creek. The undeveloped gas fields are Grumby, Langley, Lavers, and Buttress. The initial recoverable reserves of carbon dioxide gas from Boggy Creek and Buttress fields in the Port Campbell area were 19.7 Bcf but cumulative CO2 production from the Boggy Creek Field of 3.8 Bcf reduced the remaining reserves to 15.9 Bcf.
Underground Gas Storage
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Gas production, generally linked to demand level, met Victoria’s 2002 winter peak demand of 900 million cubic feet per day compared to the average winter demand of about 700 Mcfpd.
Exploration, development drilling and seismic data activity hit record levels in 2001/02 and the trend looks like continuing, or increasing, during the current year.
Petroleum development drilling and workover operations by Esso/BHPBilliton continued over several early producing oil fields, notably at Tuna, West Tuna, Flounder, Halibut, Kingfish and West Kingfish.
ictoria’s petroleum industry is in good shape according to an overview presented to the annual conference of the Australian Petroleum Production and Explorers Association in Melbourne during March.
Offshore Gippsland Basin During 2001/02, the offshore Gippsland Basin produced crude oil at an average rate of 156,000 barrels a day. The basin still supplies almost 20 per cent of Australia's crude oil requirements and virtually all of Victoria’s natural gas needs. At June 30 last year, around 3.7 billion barrels of liquid hydrocarbons had been produced from the Bass Strait fields while the estimated remaining recoverable reserves were 354 million barrels. The recoverable gas reserve in Bass Strait declined from an initial 9.86 trillion cubic feet to 4.3 Tcf while the total gas in place in the remaining undeveloped fields is estimated at 4.55 Tcf. This highlights the strong position Victoria occupies as a long-term supplier to the southeast market in Australia.
The major oil and condensate producers were Bream, Flounder, Fortescue, Halibut, Kingfish, Tuna, West Kingfish and West Tuna fields. These eight fields are now responsible for producing more than 67 per cent of liquid hydrocarbons in the Gippsland Basin.
Offshore Otway Basin The total gas in place in the undeveloped Victorian and Tasmanian fields is estimated at 2.53 Tcf. Gas reserves from the Victorian Minerva, La Bella, Geographe and Casino fields are estimated at 1.42 Tcf and from the Tasmanian Thylacine and Yolla fields at about 1.1 Tcf.
Onshore Otway Basin The recoverable gas reserves in the onshore eastern gas fields of the Victorian Otway Basin as at June 30, 2002 were reduced from 5
The Iona gas field, which is located approximately one km northeast of Port Campbell, is the first field in Victoria to be converted for use as an underground gas storage facility. Gas is stored over the low demand summer months to ensure Victoria's supply during the heavy demand in winter. Gas injection into the field started in December 2000, reaching a volume of about 10.4 Bcf to December 2001. A total of 0.8 Bcf of gas was also injected during the first quarter of 2002.
Exploration A total of 5,272 line km of 2D and 3,795 km of 3D seismic data was acquired during 2001/02. Nineteen wells (including one well in Tasmanian waters) were drilled in both onshore and offshore Victoria, consisting of 14 exploration, three appraisal and two stratigraphic wells.
F O R M O R E I N F O R M AT I O N C O N TA C T:
Dr Kourosh Mehin Manager Petroleum Resources Minerals and Petroleum Division Department of Primary Industries Tel: (03) 9412 5074
OIL
,
GAS NEWS
NEW ACREAGE RELEASE T
enders have been called for six new oil and gas exploration areas in waters offshore from Victoria’s Gippsland region.
The release highlights Victoria’s emergence in recent years as an important exploration destination for a number of major local and foreign companies and provides an opportunity for new companies to join the latest '3D seismic driven’ phase of exploration. Even long-established producers like ExxonMobil and BHPBilliton have renewed their search for hydrocarbons through the widespread application of 3D seismic. Having completed a major regional 3D seismic survey along the northern Gippsland Basin margin, the joint venture has recently completed the Tuskfish 3D survey over the eastern shelf edge. The new acreage release includes two State water blocks and four large Commonwealth blocks encompassing 6650 square kilometres. Three of the four gazettal areas are close to known discoveries and producing fields, while one block covers the Pisces sub-basin, a true frontier area on the basin’s eastern margin. Exploration efforts to date have been focussed largely on the uppermost section of the Late Cretaceous (Turonian) to Tertiary (Early Oligocene) Latrobe Group. Most hydrocarbons in the Gippsland Basin are produced from the coarse-grained, often highly-permeable, marine sandstone reservoirs below the Marlin and Latrobe unconformities.
straddling the basin margin faults to the deeper water areas of the productive Central Deep.
COMMONWEALTH EXPLORATION ACREAGE
In view of the geographic and geologic diversity of the release areas, two separate reports under the Victorian Initiative for Minerals and Petroleum have been prepared describing the hydrocarbon potential of the release areas.
Area V03-1
VICTORIAN EXPLORATION ACREAGE Areas 03-1(v) and 03-2(v) Area 03-1(v) straddles the northern margin of the Gippsland Basin. Speculative leads in the Halibut and Golden Beach subgroups have been mapped by previous operators in the southwest of 03-1(v) south of the Rosedale Fault System. Delineation of these leads will require a marked improvement in seismic coverage and integration with existing onshore well and seismic data. This lack of seismic data has hindered exploration in State waters. However, recently acquired aeromagnetic data provides some insight into the subsurface geology of the area. The magnetic data reveal a pronounced anomaly above the granitic body that underlies the Lakes Entrance oil field and extends offshore. Other north-south trending anomalies occur throughout 03-2(v) and may indicate the presence of eroded granitic basement or Oligocene drape plays offshore.
In he 1980s, the deeper intervals of the Latrobe Group, including the Halibut, Golden Beach and Emperor subgroups, became exploration targets, culminating in the discovery of gas at Kipper in 1986. Sub-commercial gas discoveries also were made at Longtom, Angler, Archer and Anemone. However, it is believed that the overall hydrocarbon potential of the deeper Latrobe Group remains under-explored. The blocks currently on offer cover a wide range of play settings from shallow water areas Diagram shows the new acreage releases in the Gippsland Basin and their proximity to producing oil and gas fields.
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Area V03-1 is located in the basin's northwest, approximately 10 km south of the Lakes Entrance oil field. Water depths are very shallow, ranging between 20 m to 40 m. Only four exploration wells have been drilled in the block, which is geologically diverse. The southern section traverses the Rosedale Fault System across which the hydrocarbonbearing Latrobe Group thickens southwards into the Central Deep. The heavily dissected nature of the Northern Terrace/Central Deep transition is favorable for structural traps and numerous discoveries have been made along the southern boundary of Area V03-1. The southwest of the block is probably the most prospective. This area lies south of the Rosedale Fault System between the gas discovery at Golden Beach and the small Seahorse oil field. Two wells have been drilled in this part of the block. West Seahorse-1 was drilled by Hudbay Oil in 1981 and flowed 1827 bopd of 48 degree API oil from Cobia Subgroup sandstones. However, the reservoir interval was absent in the follow-up well, West Seahorse-2. A number of poorly defined Latrobe Group
OIL
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GAS NEWS
New discoveries and offshore pipelines have established Victoria as the major supplier of gas to the southeast Australian market.
It appears likely, therefore, that Kipper-style plays (gas-bearing sandstones sealed by volcanics and lacustrine shales) could be developed along the Darriman Fault System and Longtom-type plays (gas-bearing sandstones within lacustrine Kipper Shale) may exist on the terrace. Although much of the Southern Platform is unexplored, the fact that the Latrobe Group is pinching out between basement and the Tertiary Seaspray Group, creates the potential for pinchout plays, such as the Avon lead.
Area V03-3 Area V03-3 is located in the southeastern part of the Central Deep south of the Blackback oil field and east of the giant Kingfish field. leads have been mapped by earlier explorers along the Rosedale Fault System. The largest of these is the Triggerfish lead, which extends into Area 03-2(v). Recognising the need for better seismic definition, Esso/BHP have extended their northern margin 3D survey to encompass these leads. Although the Latrobe Group thins rapidly northward and is only about 35 m thick in Albatross1, the Northern Terrace provides a possible setting for structural and stratigraphic plays. Two wells have been drilled on the Northern Terrace on the migration pathway from the Central Deep to the Lakes Entrance oil field.
Flying Fish-1, (1971), and Snook-1 (1990) were drilled to test top-Latrobe anticlinal closures on trend with the Mulloway and Whiptail discoveries. Both wells failed to encounter hydrocarbons whilst strong shows in the top-Latrobe Group were recorded in Amberjack (1990) just west of the Dolphin Field. None of these wells penetrated the deeper Halibut and Golden Beach subgroups, which comprise the main targets in this part of the gazettal area.
Water depths vary considerably ranging from 160 m in the northwest of the block to over 2400 m in the east. Although over 50 per cent of the block lies in water depths greater than 1000 m, the area is considered to be highly prospective. Objectives in this gazettal block include Halibut and Golden Beach subgroup plays as well as top-Latrobe erosional remnant plays, similar to Blackback. Depth conversion and seismic imaging in this area of steep bathymetry, canyons and channeling within the carbonates of the Seaspray Group are critical factors for exploration success. Four exploration wells have been drilled in the block: Selene-I and Athene-1 (both drilled by Phillips in 1982/83) failed to reach the Golden Beach Subgroup whereas Angler-I (drilled by Petrofina in 1989) and the nearby Archer-1 and Anemone-lA wells intersected hydrocarbons within the Golden Beach Subgroup.
Albatross -1 (drilled by Endeavour Oil in 1970) and Cuttlefish-I (drilled by Amity Oil in 1999) were both unsuccessful due to a presumed absence of an effective trapping mechanism. However, stratigraphic traps within the Latrobe Group could exist such as the Nicholson lead, identified by Lasmo/Hudbay as an erosional remnant or a marine barrier bar overlying the coal-bearing lower coastal plain sediments.
Billfish-1 (drilled by BHP in 1997) was aimed at an erosional remnant play similar to the Blackback Field. However, depth conversion inaccuracies led to the well being 170 m deep to prognosis.
Area V03-2
Post-drill depth mapping of the top-Latrobe unconformity completed as part of the VIMP initiative suggests that Billfish was probably not a valid structure.
Area V03-2 is located in the basin's west. Water depths are generally shallow and range between 20 m -70 m. Approximately two-thirds of the area extends across the Southern Platform and Terrace, while the northern third lies over the Central Deep, providing access to the deeper stratigraphic section that has been identified as prospective along the northern basin margin.
Kyarra-1 (1983), Wyrallah-1 (1984), Tommyruff-1 (1990) and Broadbill-1 (1998) were drilled without success on the Southern Terrace.
Seven wells have been drilled in the block, primarily targeting top-Latrobe objectives, including barrier bar complexes and structural closures generated during Miocene basin inversion.
New data from Perch-1 has revealed the presence of Turonian sediments immediately south of the Darriman Fault System, indicating that the Emperor Subgroup extends onto the Southern Terrace.
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However, a number of untested top-Latrobe structures exist throughout the block and warrant further detailed study. Seismic mapping also indicates the potential for lower Halibut and Golden Beach subgroup plays analogous to the Angler discovery. Several leads have been identified in the block, including the Oyster lead and those below the total depth of the Selene-I and Athene-1 wells.
DEPARTMENT OF PRIMARY INDUSTRIES M I N E R A L S A N D P E T R O L E U M D I V I S I O N C O N TA C T L I S T: MINERALS AND PETROLEUM BUSINESS CENTRE: Level 8, 240 Victoria Parade, East Melbourne Vic 3002 Australia Tel: +613 9412 5020 Fax: +613 9412 5150 Richard Aldous Executive Director Energy and Minerals Telephone: (03) 9412 4508 Fax: (03) 9412 4183 MINERALS AND PETROLEUM BUSINESS CENTRE: Fax: (03) 9412 5157 Kim Ricketts Client Services Officer Telephone: (03) 9412 5103 GEOLOGICAL SURVEY VICTORIA: Fax: (03) 9412 5155 Phil Roberts Manager Geological Survey Victoria Telephone: (03) 9412 5035 Alan Willocks Manager - Geophysics Telephone: (03) 9412 5131 Peter O’Shea Manager Geological Mapping Telephone: (03) 9412 5093 Roger Buckley Manager Mineral Resources Telephone: (03) 9412 5025 Graham Gooding Regional Manager Ballarat Telephone: (03) 53 336 521 Guy Hamilton Regional Manager Bendigo Telephone: (03) 5444 6697
Bob Harms Manager Petroleum Information Telephone: (03) 9412 5053 Geoff Collins Manager Petroleum Projects Telephone: (03) 9412 5095 MINERALS AND PETROLEUM REGULATION: Fax: (03) 9412 5152
Area V03-4
Rob King Manager Minerals and Petroleum Regulation Telephone: (03) 9412 5069
Area V03-4 is located in the basin’s southeast and contains a small embayment in the Southern Terrace comprising a perched Early Cretaceous rotated half-graben referred to as the Pisces Sub-basin.
George Buckland Manager Minerals and Petroleum Tenements Telephone: (03) 9412 4778
Only one well, Pisces-1 (Union Texas, 1982), has been drilled in the block. Pisces-1 targeted a combined structural and stratigraphic objective in the hanging wall of the bounding fault of the Southern Platform.
Water depths range from 150 m to 1800 m.
The top-Latrobe pinchout play failed to encounter hydrocarbons. However, weak shows were encountered in the upper part of the Golden Beach Subgroup
Graeme McLaughlan Manager Northern Region Operations Chief Mining Inspector Telephone: (03) 5444 6689
Several small leads at the top-Latrobe Group level have been recognised. However, the largest feature is a 43 square km basement/Strzelecki closure in the northwest comer of the block.
John Mitas Manager Southern Region Operations Telephone: (03) 9412 5083
The main targets of this play would be transgressive sandstones and erosional sediments from the granitic basement (Emperor and Golden Beach subgroups) or fluviodeltaic sandstones sealed by either marine or lower coastal plain mudstones (Golden Beach and Halibut subgroups).
Doug Sceney Environmental Manager Telephone: (03) 9412 5107
Seismic data indicates a tentative amplitude anomaly associated with the closure, which is worthy of further investigation. However, submarine canyons distort the true structure.
Horacio Haag Manager Petroleum Operations Safety and Environment Telephone: (03) 9412 5101
Overall, the 2003 gazettal round offers a large area of diverse acreage. Both inshore blocks are near proven hydrocarbon accumulations and lie in shallow waters. The two eastern blocks straddle the modern continental shelf and are located in the middle of renewed exploration activities.
MINERALS AND PETROLEUM POLICY: PETROLEUM DEVELOPMENT: Fax: (03) 9412 5156 Kathy Hill Manager Petroleum Development Telephone: (03) 9412 4208 Kourosh Mehin Manager Petroleum Resources Telephone: (03) 9412 5074 Mike Woollands Manager Basin Studies Telephone: (03) 9412 5135 Maher Megallaa Manager Acreage Release Telephone: (03) 9412 5081
Although all four blocks have been previously explored, many mapped prospects and leads remain untested. However, the most important keys to future success in the basin lie in challenging traditional exploration concepts, together with the application of 3D seismic to concentrate on both subtle structural/stratigraphic plays at top-Latrobe and on the stratigraphically older successions of the Golden Beach and Emperor subgroups.
John Lambert Manager Minerals and Petroleum Policy Telephone: (03) 9412 5068 INFORMATION:
The Basin Studies Group of MPV has published two detailed reports on the hydrocarbon prospectivity of the six gazettal blocks; one on the four nearshore blocks in the northwest of the basin and one on the two southeastern, deeper water blocks.
Janne Bonnett - Manager Minerals and Petroleum Reference Centre Telephone: (03) 9412 5022 Fax: (03) 9412 5157
The exploration history is outlined and the prospectivity of each block is discussed, supported by several seismic lines, maps and cross-sections.
Chandri Nambiar Manager Marketing Development Telephone: (03) 9412 5061 Fax: (03) 9412 5155
The reports are available from Petroleum Client Services at MPV, Department of Primary Industries. F O R M O R E I N F O R M AT I O N C O N TA C T:
Mike Woollands Manager Basin Studies Group Tel: (03) 9412 5135
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REGULAR FEATURE
Digging deep for future recovery V
ictoria’s past, as well as its future, is bound up with the mineral and petroleum industries. In our drive to foster economic opportunities and long-term jobs and prosperity, the Bracks Government is committed both to supporting local ventures and encouraging international investment.
We are pleased with the progress that the mineral sands industry is making in this regard. The Bracks Government will continue to work with industry and local communities to improve the sustainability of Victoria’s mining sector and its long-term success. Meeting or exceeding contemporary expectations for social and environmental practices is critical to the success of industry.
That is why, when Melbourne recently played host to the 4th Global Mineral Sands Exploration and Investment Conference, it was good to see several international industry experts and delegates in attendance
And whether you operate in Virginia or Victoria, critical to that is an understanding of the community in which the industry operates. So far the performance of the mineral sands industry in Victoria has been impressive. The massive show of support by the people of Hamilton for Iluka Resources’ ore processing plant is testimony of the good work that is being done.
I was pleased to play my part in showcasing the development potential of the Victorian section of the Murray Basin. Industry has long recognised Victoria’s potential in the development of titanium and zirconium mineral sands deposits in the Murray Basin and has been rewarded with some excellent discoveries. We already have Murray Basin Titanium’s (MBT) new mine at Wemen, Iluka Resources’ Douglas Project Stage 1 will start later this year and MBT has just triggered the Government approval process for its next project in Victoria. Victoria also has its share of much larger deposits as well. Some, like the massive Douglas Project, are world class and will provide profitable production for a number of decades. The Kulwin Woornack & Rownack project also shows great promise. The fine-grain WIM deposits (Wimmera Industrial Minerals is a subsidiary of Rio Tinto) are not yet viable and await new technology or market conditions. In the Victorian Murray Basin you cannot be more than 60km from a railway line. For more than 85% of the Victorian Murray Basin, it is only 20km. We have a choice of two Panamax-capable bulk ports and Australia’s largest and busiest container port serviced by 45 container shipping lines. All three of these ports have road and rail links. The Bracks Government remains committed to standardisation of key rail lines and to completing this $96 million investment under the Government’s Regional Freight Links Program.
The Bracks Government is strongly supportive of sustainability and all of the companies
Industry has long recognised Victoria’s potential in the development of titanium and zirconium mineral sands deposits in the Murray Basin and has been rewarded with some excellent discoveries. This will end 120 years of incompatible rail gauges in Victoria and stimulate regional industries by improving access to international, interstate and local markets for our miners, farmers and manufacturers alike. There can be no doubt that in the Murray Basin, Victoria is the best place to mine and process these titanium and zirconium minerals. Our roads, rail, towns, deep-water bulk- and container ports, electricity and gas supplies all add up to an enticing atmosphere for industry. On the world stage, Victoria compares very well. All of these projects are located in rural Victoria and will bring new investment, new jobs, new people and new skills to these areas. Nevertheless, industry support from Government is tempered by prevailing social and environmental expectations. Any new industry- mining, agricultural or commercial project must meet those expectations if it expects to maintain that support. 9
exploring in Victoria’s share of the Murray Basin have shown a willingness to work with this Government and their local communities in a sustainable way. For these reasons the Bracks Government supports exploration and mining in this State. In addition, we hope to attract the development of mineral separation plants and secondary processing plants to Victoria. The mine is only one part of the mineral sands story. The upgrading of ore concentrate adds value to the mineral production and boosts our exports. We have more plans and programmes in place to attract these to Victoria, and I look forward to discussing these in future editions of Discovery. Hon Theo Theophanous Minister for Energy Industries and Resources.
VIMP DATA
Castlemaine is the centrepiece
N
ew geological maps of the rich Chewton–Castlemaine goldfields, a part of the rich central Victorian goldfields region, will form the centerpiece of the 15th data release under the Victorian Initiative for Minerals and Petroleum (VIMP) on May 26. The half-day afternoon seminar will be followed by a field trip on May 27 to key locations highlighting the geology of the Castemaine area and the regolith of the Ballarat-Creswick area. Castlemaine, 80 km northwest of Melbourne, is famous for the richness of its alluvial and quartz reef gold deposits. The new maps and accompanying report document the structure, stratigraphy, intrusive and extrusive history, the geophysical character and the mineral resources of the region. A major objective of the project was to extend existing knowledge of the structure and mineral resources of the Ordovician rocks, previously mapped in detail in the Chewton– Castlemaine goldfield by GSV geologist Clive Willman in the early 1990s. As a result, special emphasis was given to building a structural transect in the well-exposed southern part of the Castlemaine map sheet area while additional work focussed on the nature and timing of deposition of the gold mineralisation at Daylesford, Blackwood and Taradale. This work was done in conjunction with the School of Geosciences, at Monash University. Mapping was aided by VIMP airborne magnetic and radiometric surveys flown at 200 metres line spacing, at a height of 80 metres and by colour aerial photographs taken in 1996. The mapping is published as four 1:50,000scale geological maps which also show the locations of mineral resources captured in the corporate VicMine database. The package includes a geological interpretation of the geophysical data at 1:100,000 scale. The Castlemaine mapsheet area lies within the Whitelaw Terrane of the Lachlan Fold Belt and is part of the Bendigo structural zone. Its basement is largely composed of weakly metamorphosed Ordovician sedimentary rocks. Late Devonian I- and S-type granites intrude a small area of basement in the north. Permian glacial deposits overlie the basement in the central part and widespread Neogene fluvial gravels are mostly preserved beneath late Cainozoic volcanic rocks, which are
widespread and cover about 20 per cent of the map area. Alluvial and colluvial Quaternary deposits fill the present-day valley and gully system throughout the area. Primary gold occurs in Ordovician rocks and secondary gold in late Cainozoic fluvial sedimentary rocks. Two main periods of Orogenic gold mineralisation have been identified. In both events gold was introduced into the basement rocks in structurally controlled quartz reefs. The first and most important event was associated with the late stages of the Benambran Orogeny. The second, more minor, event is related to Middle Devonian mineralisation which affected only a few areas in the Bendigo Zone but was the most significant mineralising event in the Melbourne structural zone. About 300 tonnes of gold has been mined from both placer (alluvial) and quartz reef deposits. 10
The most productive goldfields are at Castlemaine and Daylesford. Weathering and erosion has remobilised substantial amounts of gold into some of the Cainozoic units to form placer deposits that were extensively mined in the past. Non-metallic resources include clay, sand, gravel and basalt. Groundwater aquifers are well developed in Cainozoic sub-basaltic gravels and mineral water is a significant resource in some parts of the area. F O R M O R E I N F O R M AT I O N C O N TA C T:
To register for the seminar contact: Chandri Nambiar Tel: (03) 9412 5061 Email: [email protected] For information on the field trip, contact: Peter O’Shea Tel: (03) 9412 5093 Email: Peter.O’[email protected]
MAPPING
New mapping project T
he Geological Survey of Victoria will map the Woods Point-Walhalla goldfields in north-eastern Victoria in a major new regional geological mapping project starting later this year. The Woods Point mineral domain, at the eastern edge of the geological area known as the Melbourne Zone, is the last major gold province in Victoria to be covered by newgeneration geological mapping. Aerial magnetic and radiometric surveys were flown for GSV in 200 metre line spacings in 1999 and 2000 as part of the Victorian Initiative for Minerals and Petroleum. More than 120 tonnes of gold has been produced from the region, principally from the main shoot at Cohen’s Reef at Walhalla, which contributed the bulk of the 47 tonnes of gold mined from Cohens Reef. That reef remains the largest and one of the richest gold shoots in Victoria.
domain have roughly the same distribution as the Woods Point dyke swarm.
• Determine the local and regional controls on orogenic gold mineralisation,
At Woods Point the Morning Star mine produced 19.6 tonnes of gold and the A1 mine 12.1 tonnes of gold.
Mineralisation is controlled by reverse faults and mineral assemblages and ore fluid temperatures are similar to Bendigo Zone deposits.
• Determine geochemical and geophysical signatures of the various styles of orogenic gold mineralisation, and
All three mines produced ore at an average grade of one ounce or 31 grams to the tonne.
The mapping project will run over two and a half years, with maps and reports due for completion by the end of 2006.
• Identify areas prospective for new gold discoveries.
Gold deposits in the Woods Point mineral Above: The Woods Point-Walhalla area is now a popular tourist area with many local attractions based on its rich mining history. Below: Modern-day geological images of the area have the potential to help re-establish the area’s gold mining industry.
A moratorium was placed over the region in September 2002 in anticipation of the project and it is proposed that this will be lifted by December 2006. The project area was chosen to cover the strike extent of Palaeozoic sediments of the Walhalla synclinorium and felsic to mafic dykes of the Woods Point dyke swarm, from the southern edge of the Strathbogie granite in the north to where the sediments disappear under Tertiary cover south of Coopers Creek. Within this belt of rocks, which are mainly Lower Devonian in age, recorded gold mineralisation is mostly confined to a strip of country between the Enochs Point Fault in the west and the Fiddlers Green Fault in the east. A project workshop in November 2002 provided input from academia and industry to the scope of the project and established collaborative links. Following the workshop a list of targeted, GSV-supported, postgraduate projects for the area was circulated to both Victorian and interstate universities. The main aims of the GSV project are to: • Document and interpret the geology and mineralisation of the area,
11
The project team, managed by GSV’s Manager for Geological Mapping, Peter O'Shea, will comprise six mapping geologists, two mineral resources geologists and a geophysicist, with back-up support from technical officers and cartographers. The project will also produce: • a GSV report covering the geology and prospectivity of the project area. • 1:50,000 scale geological maps and 1:100,000 scale geophysical interpretation maps covering the area, along with 1:10,000 scale geological maps over selected goldfield areas, and • An updated Warburton 1:250,000 sheet and a geoscientific data CD containing all digital data collected during the project.
F O R M O R E I N F O R M AT I O N C O N TA C T:
Peter O’Shea Manager Geological Mapping Geological Survey of Victoria. Tel: (03) 9412 5093
REGULAR FEATURE
News Briefs MELBOURNE EXHIBITION PLANNED Victoria is an exciting place to do oil and gas business these days with estimates that $3.5 billion will be spent on the local industry over the next three years
For further information contact: Shaun Smith, managing director, Swan Exhibitions at: Tel: +61 8 9443 3400 Fax: +61 8 9242 1811 Email: [email protected]
Recent developments include the emergence of the Otway Basin as a world class exploration area, a rapidly developing local gas infrastructure, a push to boost oil and gas exploration and production in the Gippsland Basin and the introduction of a number of new and innovative local and international players.
NEW CONVEYOR BELT PLANT
Swan Exhibitions, AustralAsia’s leading oil and gas event organiser, has recognized the new ‘buzz’ emanating from Victoria and in response will hold a major new exhibition in Melbourne in 2004.
Managing Director, David Landgren, said the new plant would result in shorter lead times and superior product quality.
The Inaugural Victoria Oil & Gas Exhibition will be staged at the historic Royal Exhibition Centre in the heart of Melbourne’s CBD on March 4 and 5 2004 and will be accompanied by a two-day technical conference. With the support of the Victorian Government through the Petroleum Division of the Department of Primary Industries, the event will provide an ideal showcase for local companies to exhibit their technologies and skills in front of a key audience. The event is expected to attract strong interest from throughout Australia with large groups from all states among the 100 plus exhibitors. Swan Exhibitions has been the leading oil and gas exhibition organiser in this region since 1981, staging internationally recognised events such as the AustralAsian Oil & Gas (AOG) Expo, the New Zealand Oil & Gas Expo and the Offshore Northern Territory Oil & Gas Expo. It is a sister company to the region’s leading oil and gas journal, Oil & Gas Australia.
Apex Fenner, Australia’s only manufacturer of fabric-reinforced rubber conveyor belts which are used primarily in the mining industry, opened a new $5 million fabric weaving plant in Melbourne during March.
Apex Fenner had its origins in Australia in Apex Belting over 100 years ago. Apex Belting was purchased by the UK-based Fenner Dunlop Group in 2001, becoming part of the world’s largest manufacturer of conveyor belts, changing its name to Apex Fenner in Australia. Around 75% of the company’s local business is aimed at the mining industry, with the remainder spread across quarrying, grain handling, cement, fertiliser and food production.
VICTORIAN GOLD CONFERENCE The resurgence of interest in the Victorian gold fields will be the main topic of discussion when the major players in the Victorian gold exploration and production industry gather in Ballarat on June 16-17 for the annual Victorian Gold Conference. Speakers will include the Victorian Minister for Energy Industries and Resources, Theo Theophanous, the Executive Director of the Victorian Chamber of Minerals and Energy, Chris Fraser and the industry’s major producers and explorers. Organised by the Australian Journal of Mining, the conference has become the landmark event for the local gold industry, which is starting to show major signs of life after being almost dormant for the past few decades. The rise in exploration activity has resulted in one of the largest coverages of Victoria being held under exploration or mining licence in recent years. Company executives explain the workings of Apex Fenner’s new $5m conveyor plant to VIP guests.
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Driven by programs such as the Victorian Initiative for Minerals and Petroleum (VIMP), which has generated a mass of new geological data, reforms to the state’s mining legislation and a growing realization that Victoria can offer low-cost access to the most prospective regions, the state has become a high priority for many companies. Victoria is also the subject of two major Cooperative Research Centre programs to apply modern technologies to the search for new mineralisation systems. Projects like the Stawell mine, new developments like the underground operation at Bendigo and a host of potential projects such as Fosterville, Costerfield and Ballarat, have given Victoria’s gold industry a new lease of life, 150 years after the first official discovery. For more information contact: Australian Journal of Mining conferences on (02) 9080 4307.
NEW COAL TENDER AWARDED HRL Developments Pty Ltd has been granted the latest exploration licence awarded under the Victorian Government’s brown coal tender process. The tender was launched in 2001 to open up the vast brown coal resources of the Latrobe Valley for commercial exploitation for the first time in many decades after the region was originally locked up for the exclusive use of the then State Government-owned electricity industry. HRL Developments also plans to investigate the use of brown coal as a fuel for electricity generation, but the company is aiming at environmentally friendly coal gasification technology to dramatically increase the efficiency of the fuel usage to increase the power generation capacity. Burning brown coal in traditional furnaces is thermally inefficient, a problem the Latrobe Valley generators are working hard to overcome. HRL plans to build a 100 megawatt demonstration power plant as an intermediate step ahead of a full scale 800 Mw plant costing around $A1.5 billion. Victorian Energy Industries and resources Minister, Theo Theophanous, said the award of the tender to HRL Developments represented a world first and created the opportunity to reduce greenhouse gas emissions by 30% over present emission levels.
REGULAR FEATURE
News Briefs ANGLO AMERICAN JOINS FORCES South African mining giant, Anglo American has joined forces with the Australia Power Energy Ltd group to investigate the viability of a brown coal liquefaction project generating low sulphur diesel fuel and electricity in the Latrobe Valley. APEL won access to the Latrobe Valley’s brown coal leases through the Victorian brown coal tender process. APEL’s proposal, dubbed the Victorian Power and Liquids Project, has the potential to create Australia’s first ever zero-emissions base-load power station. Carbon dioxide produced during the power generation phase would be captured and inserted into deep underground rock formations in a process known as geosequestration.
VICTORIA TOP STATE FOR MINERAL SANDS Victorian mineral sands developments in the Murray Basin are way ahead of those in New South Wales and South Australia, the 4th Global Mineral Sands Exploration and Investment Conference in Melbourne was told in April. Already the state boasts one operating mine, with a second major project due to start later this year. Murray Basin Titanium’s mine at Wemen is the first mineral sands operation in the state but Iluka Resources’ Douglas Project Stage 1 is on track to make Victoria a significant player in the global titanium industry, an industry in which Australia is already the world's leading supplier. Approvals have also been sought from the Victorian Government for a third mineral sands project. Victoria’s Minister for Energy Industries and Resources, Theo Theophanous said: “Industry has recognised the prospectivity of Victoria’s section of the Murray Basin and has been rewarded with some excellent discoveries. “There can be no doubt that in the Murray Basin, Victoria is the best place to mine and process these titanium and zirconium minerals.”
He said that the state’s roads, rail, towns, deep-water bulk and container ports, electricity and gas supplies provided a package difficult for other states to match. “So far the performance of the mineral sands industry in Victoria has been impressive. The massive show of support by the people of Hamilton for Iluka Resources’ ore processing plant is testimony of the good work that is being done,” Mr Theophanous added. “As well, Victoria hopes to attract the development of mineral separation plants and secondary processing plants.”
MINERVA PROJECT ON SCHEDULE BHP Billiton's Minerva gas field off the coast of Port Campbell in Western Victoria is nearing completion, with the first gas expected to flow early next year. The project, in which BHP Billiton holds a 90% equity share, is progressing quickly with the offshore drilling and the two new sub-sea wells completed. Civil engineering works have started on the gas plant site near Port Campbell. Work is also continuing on the onshore flowline and the horizontally directionally-drilled flowline shore crossing. The $US136 million project is one of several new offshore gas fields currently being developed off the Victorian coast. Woodside Petroleum and Origin Energy are developing the Thylacine and Geographe 13
Victoria’s only operating mineral sands mine at Wemen continues to show the way for other larger developments planned for the state.
fields in the Otway Basin while the Patricia/Baleen and Yolla fields in Bass Strait are also under development.
GAS MARKET REVIEW The operator and market manager of Victoria’s wholesale natural gas market, VENCorp, is reviewing options aimed at making the market more responsive to rising demand. Rapid growth and Victoria’s emergence as a major gas trading hub and supplier to the majority of Australian states, has placed unprecedented demands on the gas market system. A number of major new gas fields are about to be added to the system and a major pipeline linking the Victorian system into the South Australian grid is nearing completion. Victorian Energy Industries and Resources Minister, Theo Theophanous, said the VENCorp review would “reexamine the workings of the wholesale market to ensure it continues to be best placed to meet the changing requirements of a rapidly emerging national energy market.” The review will investigate the move from daily price setting to hourly pricing and other matters raised in a recent study by the Australian Competition and Consumer Commission.
REGULAR FEATURE
Victoria’s LEGEND Gold field:
0.5 - 1.0 million oz
Gold field:
1.0 - 5.0 million oz
Gold field: >5.0 million oz - Values include production and reserves Brown coal resource: < 100 million tonnes Brown coal resource: > 100 million tonnes Base metals deposit - Resource / Reserve
14
REGULAR FEATURE
mineral, oil and gas resources Oil field
Cainozoic
Mineral sand resource - HM-heavy mineral; R-rutile; Z-zircon; I-Ilmenite
Gas field
Marine and continental sedimentary rocks Continental volcanic rocks Continental sedimentary rocks
Mesozoic
City
Continental and minor marine sedimentary rocks
Continental trachyte Granite and trachyte Continental and marine glacial sedimentary rocks Continental sedimentary and volcanic rocks Cauldron volcanic complexes Marine sedimentary rocks
Devonian
Rift and cauldron volcanic complexes Silurian-Devonian fault rocks Silurian to Mid. Devonian marine and minor continental sedimentary rocks Marine and continental rift sedimentary rocks Marine rift volcanics Marine and continental sedimentary rocks
Silurian Ord. Camb. Palaeozoic
15
Marine sedimentary rocks Marine sedimentary rocks Marine volcanic rocks Palaeozoic intrusives (granites and tonalites, minor diorite and gabbro)
LICENCE REVIEW
Mineral Licences
January/March 2003
EXPLORATION LICENCE APPLICATIONS TENEMENT NO. STATUS
MAP SHEET
PRIMARY OWNER
EVENT DATE
EL4735
APPLICATION
BAIRNSDALE
RIO RINTO EXPLORATION PTY LTD
14/01/2003
AREA SIZE 158 GRATS
EL4736
APPLICATION
CRESWICK
MOUNT ROMMEL MINING PTY LTD
23/01/2003
47 GRATS
EL4737
APPLICATION
HORSHAM
NEWCREST OPERATIONS LIMITED
21/02/2003
130 GRATS
EL4738
APPLICATION
HORSHAM
MPI GOLD PTY LTD
21/02/2003
91 GRATS
EL4739
APPLICATION
BACCHUS MARSH
HIGHLAKE RESOURCES NL
12/03/2003
255 GRATS
EXPIRY DATE
EXPLORATION LICENCES GRANTED TENEMENT NO.
STATUS
EVENT
MAP
PRIMARY OWNER
EVENT DATE
EL4704
CURRENT
GRANT
HEATHCOTE
AGD OPERATIONS PTY LTD
10/01/2003
09/01/2008
EL4687
CURRENT
GRANT
WOODEND
RELIANCE MINERALS LIMITED
10/01/2003
09/01/2008
EL4694
CURRENT
GRANT
WANGARATTA
RELIANCE MINERALS LIMITED
10/01/2003
09/01/2008
EL4692
CURRENT
GRANT
YEA
RELIANCE MINERALS LIMITED
10/01/2003
09/01/2008
EL4696
CURRENT
GRANT
BALLARAT
RELIANCE MINERALS LIMITED
10/01/2003
09/01/2008
EL4720
CURRENT
GRANT
RUPANYUP
RANGE RIVER GOLD NL
23/01/2003
22/01/2008
EL4656
CURRENT
GRANT
EUROA
GOLDSTAR RESOURCES LIMITED
06/02/2003
05/02/2008
EL4710
CURRENT
GRANT
CASTERTON
PURUS ENERGY LIMITED
06/02/2003
05/02/2003
EL4721
CURRENT
GRANT
ST ARNAUD
SIERRA MINERALS LIMITED
06/02/2003
05/02/2003
EL4722
CURRENT
GRANT
CASTLEMAINE
SIERRA MINERALS LIMITED
06/02/2003
05/02/2003
EL4718
CURRENT
GRANT
NAGAMBIE
SIERRA MINERALS LIMITED
19/02/2003
18/02/2008
EL4719
CURRENT
GRANT
NAGAMBIE
SIERRA MINERALS LIMITED
19/02/2003
18/02/2008
EL4665
CURRENT
GRANT
BAIRNSDALE
RIO TINTO EXPLORATION PTY LTD
20/02/2003
19/02/2008
EL4676
CURRENT
GRANT
MURRUNGOWAR
RIO TINTO EXPLORATION PTY LTD
20/02/2003
19/02/2008
EL4537
CURRENT
GRANT
WARRAGUL
NEXUS ENERGY AUSTRALIA NL
06/03/2003
05/03/2008
EL4685
CURRENT
GRANT
MOE
HRL DEVELOPMENTS PTY LTD
06/03/2003
05/03/2008
TENEMENT NO.
STATUS
MAP
PRIMARY OWNER
EVENT DATE
EXPIRY DATE
EL4354
SURRENDERED
DUNOLLY
DUNOLLY GOLD DEVELOPMENTS PTY LTD
10/01/2003
10/01/2003
EL4563
SURRENDERED
ROBINVALE
TAMAS KAPITANY
23/01/2003
23/01/2003
EL4485
SURRENDERED
NAGAMBIE
JOHNSON’S WELL MINING NL
19/02/2003
19/02/2003
EL4486
SURRENDERED
EUROA
JOHNSON’S WELL MINING NL
19/02/2003
19/02/2003
EL4487
SURRENDERED
EUROA
JOHNSON’S WELL MINING NL
19/02/2003
19/02/2003
EL4488
SURRENDERED
EUROA
JOHNSON’S WELL MINING NL
19/02/2003
19/02/2003
EL4451
SURRENDERED
CORANGAMITE
BIOGREEN LIMITED
06/03/2003
06/03/2003
EL4387
SURRENDERED
PORTLAND
BIOGREEN LIMITED
06/03/2003
06/03/2003
EL4206
SURRENDERED
CASTLEMAINE
RANGE RIVER GOLD NL
06/03/2003
06/03/2003
EL4700
SURRENDERED
WEDDERBURN
AURIONGOLD EXPLORATION LIMITED
19/03/2003
19/03/2003
TENEMENT NO.
STATUS
MAP SHEET
PRIMARY OWNER
EVENT DATE
AREA SIZE
MIN5388
APPLICATION
HEATHCOTE
FLITEGOLD PTY LTD
15/01/2003
2.6HA
EXPLORATION LICENCES SURRENDERED, CANCELLED OR EXPIRED
MINING LICENCE APPLICATIONS
MINING LICENCES GRANTED TENEMENT NO. STATUS
EVENT
MAP
PRIMARY OWNER
EVENT DATE
EXPIRY DATE
EXPIRY DATE
NIL
MINING LICENCES SURRENDERED, CANCELLED OR EXPIRED TENEMENT NO.
STATUS
MAP
PRIMARY OWNER
EVENT DATE
MIN5136
SURRENDERED
HOPETOUN
DENNIS A HUF
10/01/2003
10/01/2003
MIN5221
CANCELLATION
DUNOLLY
HERBERT C BRADLEY
20/02/2003
20/02/2003
MIN5345
SURRENDERED
DUNOLLY
HEATHER FORD
20/02/2003
20/02/2003
MIN5040
SURRENDERED
WEDDERBURN
LESLIE R STYLES
20/02/2003
20/02/2003
MIN5281
SURRENDERED
HOPETOUN
GYPSUM AUSTRALIA PTY LTD
20/02/2003
20/02/2003
ABBREVIATIONS: SURR - SURRENDERED, CANC - CANCELLATION CAN/AM - CANCELLED/AMALGAMATED
16
OIL SEARCH
Deep diver has high hopes
A
relative newcomer to the high-stakes, ultra- deep-water exploration game will soon sink three of the biggest exploration wells to be drilled in Victorian waters since the 1960’s.
Later this year, Santos Ltd will drill a wildcat well in around 1,400 metres of water in the offshore Otway Basin about 200 kilometres south of Warrnambool. Two others, closer to the coast, will follow soon afterwards. Santos is hoping the well will find “several hundred million barrels of recoverable oil”. While a discovery of this size is necessary to be commercial in this high-cost environment, it could also rewrite the history of Victoria’s oil industry. Santos’ Manager of New Ventures, Trevor Brown, hopes the pioneering, deep-water effort by Santos, will produce a change of fortune for the company which is itself one of the pioneers of Australia’s onshore oil and gas industry. As Santos’ onshore fields dry up the company is seeking a major new source of crude oil production to bolster its reserves.
shelf in the Otway Basin, may hold the key to major oil accumulations.
Santos believes it has the expertise, the scientific data and the money required to open a major new chapter in the petroleum industry’s history in Australia.
As Australia and continental Antarctica separated about 60 million years ago, a massive valley was opened, allowing the sea to flood in.
Like Lewis Weeks, the American geologist who pointed BHP towards the offshore Gippsland Basin in the 1960’s, Santos has a geological team which believes the ultradeep-water, over the edge of the continental
The concept is relatively simple.
This rift valley, with steep edges resembling a cliff almost 2000 metres high, but lying under the sea, gradually widened as Antarctica drifted southwards. Over time, sands eroding off the southern edge of Australia, were deposited into this narrow seaway from river systems, building up sand deposits close to shore. These sands were deposited further outboard than the reservoirs which hold the offshore petroleum fields discovered in the Otway Basin to date, notably the Minerva, La Bella, Thylacine, Geographe and Casino discoveries in a sedimentary sequence known as the Waarre formation. Sands, initially deposited close to shore, were transported further out to sea and the river systems continued to dump sediment into the ocean. In time, massive volumes of sand were transported out to the edge of the continental shelf where it tipped over the edge to fall to the bottom of the cliff, spreading out into vast, multiple layers on the deep seabed. Santos and many other geological teams believe that these younger sediments may host 17
Santos will drill three new wells in the VIC/P 51 and VIC/p 52 areas offshore from Portland later this year. Below left: Santos’ Manager of New Ventures, Trevor Brown.
significant reserves of oil and gas, which, until recently, have been beyond the reach of offshore drilling technology. The occurrence of deepwater continental margin oil and gas fields has already been proven along the west coast of Africa and the east coast of South America where many ultradeep-water fields have been found and brought into production. Santos is so interested in the deep-water prospectivity of Victoria and Tasmania that it has already secured four new offshore exploration leases in the deep-water zone stretching from the Victoria/South Australia border eastwards to the edge of Bass Strait and south to the bottom of Tasmania. Trevor Brown told Discovery that when Santos won control of the offshore permits VicP51 and VicP52, it made record work program bids. The VicP52 permit, containing the ultra deepwater prospect, was awarded just a year ago. “We’ve come with a mission to be fast, flexible and efficient,” Mr Brown said. “To acquire a permit, acquire seismic data, and get a drill target ready in 12 months is
OIL SEARCH
remarkable. Welcome to the new Santos,” he said.
Santos is hoping its onshore successes in the Otways will be repeated in its deep water drilling off the Victorian coast.
“If the well is successful, we will move straight into appraisal drilling,” he added, with up to two more wells possible.
The field, which contains up to 20 trillion cubic feet of gas, was discovered by drilling three wells over the past two years in around 1,300 metres of water at a cost of about $50m per well.
Two wells will be also drilled in the shallower Vic P51 permit area, which has a water depth of generally less than 200 metres.
The massive costs put such exploration beyond the reach of all but the biggest players in the global petroleum industry.
Just before Santos drills its wildcat in the Deep Otway Basin region, Woodside Petroleum aims to test a similar concept by drilling a wildcat well in about 1,300 metres of water in the Great Australian Bight. The Gnarlyknots 1 well, 1300 km south of Ceduna in the Bight in 1400 metres of water, will test the similar deepwater sands being targeted by Santos further to the east. Shortly after the Gnarlyknots well is completed, Santos and its partners, Unocal of the US and Inpex of Japan, will drill Prospect R, about 150 km south of Portland in western Victoria in approximately 1500metres of water in the ultra-deep part of the offshore Otway Basin. Similarly exposed to the weather, Prospect R, which is expected to be renamed, will test a similar geological theory used by Woodside which suggests that oil fields may have formed in these hard-to-find areas.
Now the ultra-deep-water exploration effort is moving eastwards, where explorers hope oil will be found in preference to large gas fields.
Santos’ well is expected to utilise Unocal deep-water expertise to reduce the cost but a figure of $20m to $30m is still in the ballpark. The advance of drilling technology, engineering and remote sensing techniques and the lure of very big oil fields is driving the industry into deep water. At the Australian Petroleum Production and Exploration Association conference in Melbourne in March, ExxonMobil and its partner Chevron Texaco, revealed the discovery of Australia’s biggest ever gas discovery in the Jansz field, which is about 200 km off the West Australian coast.
The ultra-deep-water exploration concept is taking off around the world. In the Gulf of Mexico, BP, Chevron, ExxonMobil and others have recently made a string of major discoveries and BHP Billiton is involved in three separate ultra-deep-water oil field developments in the same region at a cost of several billion dollars. F O R M O R E I N F O R M AT I O N C O N TA C T:
Graeme Bethune General Manager, Business Development Santos Limited Tel: (08) 8218 5157
NEXUS JOINS GIPPSLAND BASIN SEARCH
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exus Energy Ltd has joined the hunt for new oil and gas reserves in the Gippsland Basin through a deal with Liberty Petroleum Corp in which Nexus will acquire a 100% equity interest in the newly awarded Vic/P54 exploration permit.
three years of its permit tenure which could throw up additional drilling targets.
In exchange Nexus has granted Liberty a 3% royalty over the first 50 million barrels of any oil production and a 4% royalty over any crude oil production over the 50m barrel threshold.
The company said the proximity to existing infrastructure as well as relatively shallow drill depths (700 - 2700m) and water depths of just 36 to 60m would enhance the economics of any discoveries.
The new permit lies close to the existing Turrum, Marlin, Tuna, Sunfish and Patricia/Baleen discoveries A 410 metre gross hydrocarbon intersection in the previously drilled Longtom prospect, but which has never been fully evaluated, is one of Nexus Energy’s highest priorities. The company said in a recent statement that the Longtom discovery, “warrants further technical study to determine its reserves potential and scope for possible commerciality with further appraisal.” A 3D seismic survey over a large part of the Nexus permit, acquired by ExxonMobil will be made available to Nexus during the first
Nexus said it was “strongly attracted” to the permit because of the existing Longtom gas discovery, the proven prospectivity and a variety of play types, with several leads already identified.
“The permit is relatively unexplored with only two wells having been drilled to date,” the company statement said. “Work over the next two years will focus on the potential viability of Longtom and the utilisation of 3D seismic data to mature prospects in the permit area for drilling in the third year of the permit work program.” “Several leads in the permit have already been identified on the existing 2-D seismic data coverage and Nexus believes that with the application of new technology through the utilisation of 3D seismic data further new structures will be delineated for drilling,” the company said. 18
“For such a prolific basin, the Gippsland Basin is relatively unexplored and Nexus believes there is still considerable potential for significant discoveries in this acreage and future gazettal.” “Securing 100% of the VIC/P54 permit represents significant progress in Nexus’ strategy of securing high quality exploration opportunities in prospective areas proximal to developed infrastructure and markets,” the company said. “The high equity level which Nexus holds in the block provides the opportunity for the company to gain leverage from its technical and commercial skills by attracting joint venture participants via a farmin or as part of an exploration joint venture fund across a broader portfolio of exploration assets. Nexus is continuing to focus on the Gippsland Basin as a core area of exploration portfolio development.” F O R M O R E I N F O R M AT I O N C O N TA C T:
Ian Tchacos, Nexus Energy Tel: (03) 9620 0320
GOLD MINING
MPI mines its ‘Golden Gift’ The Stawell gold mine continues to be Victoria’s largest, with annual production expected to remain at approximately 90,000 oz until 2004. Below left: MPI Chairman, John Geraghty.
The Stawell gold mine produced 100,602 oz of gold at a total cash cost of A$407 per oz in 2002. Mill throughput was a record for the year due to higher than forecast ore production and a higher mill feed grade. Gold was first discovered at Stawell in 1853, and production from both alluvial sources and high-grade quartz reefs totaled 2,670,000 oz in the 73 years until the last mine closed in 1926. Production resumed in 1984 when a WMC/Central Norseman Gold joint venture reopened the Stawell gold mine. The mine produced 336,000 oz of gold in its first nine years. Since MPI and Pittston acquired the mine in 1992, production has increased dramatically, generating 915,000 oz of gold in the past four years. PI Mines Ltd has begun trial mining at its ‘Golden Gift’ orebody beneath the existing workings at the Stawell gold mine ahead of a plan to formally commit to the full-scale development of the project.
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the project as well as completion issues and the price of gold.
But a final investment decision remains dependent on MPI achieving full ownership of
MPI Mines owns 50% of the Stawell mine and exploration tenements along the Stawell regional structural corridor.
In the meantime, MPI is extracting a small volume of ore from the ‘Golden Gift’ orebody to gauge its processing characteristics and its metallurgy.
It also has an agreement in principle to acquire the other half of the venture from US-based Pittston Minerals Inc as well as Pittston’s 25% stake in the Coolgardie gold operations. Once the deal is complete, MPI will own 100% of Stawell and 50% of Coolgardie. However, MPI Chairman, John Geraghty said in the group’s annual report, released in late March, that, “Documentation of this transaction is proceeding at a slower pace than envisaged, principally due to Pittston needing to restructure the entities owning the gold assets prior to completion. “Whilst it is hoped that completion of this purchase can be achieved during the second quarter of 2003, resolving the detailed terms and conditions relating to the transaction may result in further delays with the possibility that no final agreement can be reached.” 19
Total field production, together with the estimated mineral inventory at June 2002 of 1.6m oz, gives the field a total endowment of 5.5m oz. Since 1992, MPI has discovered and added over 2.1m oz to the mineral inventory at Stawell.
SINCE MPI AND PITTSTON ACQUIRED THE MINE IN 1992, PRODUCTION HAS INCREASED DRAMATICALLY, GENERATING 915,000 OZ OF GOLD IN THE PAST FOUR YEARS. Current reserves support a mine life at Stawell to the end of 2004, but with a total gold inventory (reserves plus resources) of 1.6 million oz and a history of the steady conversion of resources to reserves, MPI believes there is good potential for the mine life to be extended, subject to feasibility and gold price. The current mine plan is designed to take the operation to a depth of 966 metres and, based on the historic level of conversion from resources to reserves, MPI expects to maintain
GOLD MINING
Below: MPI’s Managing Director Brian Phillips. The company believes there is good potential to extend the life of the present Stawell mine beyond 2004.
Mr Geraghty said that as stoping activity in the Magdala mine runs down, increasing mining rates in the Golden Gift orebody would be expected to maintain production rates. production at around 90,000 oz of gold a year until 2004. MPI’s evaluation of the ‘Golden Gift’ resource and a conceptual mining study is due to be completed soon. The company said that depending on the study outcome, the gold price and government approvals, a decision to commit to deepening the mine and extending the mine life may then be made.
“Initial indications are that higher grades that could be mined from the Golden Gift may compensate for the higher mining costs due to the longer trucking distances and increased depth. “Total cash cost is expected to be maintained at approximately $A420 per ounce,” he said. Testing by MPI on the use of the Victorian designed and made In-Line Pressure jigs to recover gold from the Stawell mine have also shown that they can enhance gold recoveries.
ALL MINE WATER AND PLANT TAILINGS ARE STORED ON SITE. LAND IS PROGRESSIVELY REHABILITATED AND RESEARCH INTO NEW USES FOR TAILINGS IS BEING CONDUCTED IN CONJUNCTION WITH THE UNIVERSITY OF MELBOURNE. MPI said in its annual report that test work had shown that the jigs “can increase gold recoveries in the mill by several percentage points.” The Stawell mine is also maintaining a high standard of environmental management. “Operations are managed in accordance with MPI’s commitment to the Australian Minerals Industry Code for Environmental Management,” Mr Geraghty said. “The mine operates on the basis of zero discharge of water or solutions from site. “All mine water and plant tailings are stored on site. Land is progressively rehabilitated and research into new uses for tailings is being conducted in conjunction with the University of Melbourne.” F O R M O R E I N F O R M AT I O N C O N TA C T:
Brian Phillips Managing Director MPI Mines Ltd Tel: (03) 9628 2222 email: [email protected]
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GOLD EXPLORATION
Undercover work aids search
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ictoria’s biggest goldminer, the Mining Project Investors (MPI) group, is making significant progress in its search for new gold resources hidden by overlying material.
A major exploration program on locating ‘under cover’ gold deposits is now being conducted through a national research project, the Cooperative Research Centre for Predictive Mineral Discovery of which MPI Mines is a major sponsor. The project aims to “generate a fundamental shift in exploration practice by developing a vastly improved understanding of mineralising processes and a four dimensional understanding of the evolution of the geology of mineralised terrains.” MPI Mines controls a 140 kilometre corridor of exploration tenements northwest from Stawell, into the Murray Basin in which ten major magnetic dome structures, lying under cover, have been identified through interpretation of similar magnetic and gravity patterns to the Magdala dome at Stawell. The company believes that the potential for extensions of the 5.5 million-oz endowment of the Ararat-Stawell goldfield setting has been confirmed through aircore and diamond drilling of several of the ten magnetic dome targets. At Wildwood, a zone of mineralisation has been confirmed by 200 metre spaced aircore geochemical drilling traverses on the northeastern shoulder of the dome.
MPI says that drilling in the area northwest of the existing Stawell mine have confirmed extensive zones of mineralisation.
cover, has partially defined a dome of 5km strike length with mineralised volcanogenics rocks on both flanks.
Highly anomalous, mineralised volcanogenics have been defined over an 800m strike length, associated with a bedrock high that lies within 7m of the surface.
Trialling of detailed ground-based gravity surveys during 2002 effectively discriminated the magnetic Wildwood, Kewell and Wallup domes from other, less prospective, magnetic features.
Aircore drilling assays of up to 3.5g Au/t and averaging greater than 0.5g Au/t have been recorded from the zone.
Extension surveys highlighted other conceptual dome targets at Byrneville, Wallup North and Willenabrina (Peppers Plains).
The Kewell dome is 100km northwest at Stawell under 110m of Murray Basin cover.
Further gravity surveys are required to define targets at Ashens, Wal Wal, Lubeck and Caledonian.
Aircore geochemical drilling on 200m spaced traverses has defined a 3km- long dome with highly anomalous, mineralised, volcanogenic rocks on both flanks. On the southwestern flank of the dome an anomalous zone of 1.6k strike length with peak assays of up to 5.4g Au/t and averaging greater than 0.5g Au/t has been defined. Aircore drilling of the Wallup dome, located 2km along strike from Kewell below 130m of
The Stawell regional exploration budget for 2003 is $300,000, which will provide for: • prospect scale mineralisation targeting and initial construction of a Stawell Belt scale geology model for future prospect generation; • aircore drilling at Wallup to complete geochemical ranking and define the extent of anomalous mineralisation; 21
THE COMPANY BELIEVES THAT THE POTENTIAL FOR EXTENSIONS OF THE 5.5 MILLION-OZ ENDOWMENT OF THE ARARAT-STAWELL GOLDFIELD SETTING HAS BEEN CONFIRMED THROUGH AIRCORE AND DIAMOND DRILLING OF SEVERAL OF THE TEN MAGNETIC DOME TARGETS. • geochemical ranking and mineralisation modeling of the Wildwood, Kewell and Wallup domes to define reverse circulation and diamond drilling targets; • additional detailed gravity surveys to further define conceptual targets.
F O R M O R E I N F O R M AT I O N C O N TA C T:
John Dugdale MPI Tel (03) 5358 9243 Email: [email protected]
INDUSTRY NEWS
Origin emerges as a front runner
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rigin Energy, one of Australia’s fastest growing utility groups, has come a long way in a short time but its rapid evolution belies the group’s 140-year history as a significant player in the oil and gas industry.
Left: Origin Energy’s Chief Executive Grant King. Facing page: Work on the $500m SEA Gas pipeline is progressing rapidly with the gas scheduled to start flowing next January.
Mid 2001, Origin made its first major move, buying the Powercor electricity retail business for $315 million. This was followed by the acquisition of Citipower’s Victorian electricity retail business for $137 million. Over the same time it was increasing its interests in gas fired power generation by buying Fletcher Challenge’s 50 per cent stake in the South West power project in Western Australia for $68.5 million.
In the few years since its rebirth, Origin Energy has joined the rapidly changing Australian energy market and quickly cemented a place alongside its peers such as AGL Ltd and TXU Australia. Origin’s name and focus might be relatively new but its roots go back a long way. The company was born from within the old Boral building products conglomerate in 2000, when the parent group hived off its construction and building products operations, and left the energy division, renamed Origin, free to pursue its own fate. Under the guidance of Chief Executive Grant King, Origin Energy set out to create and develop a vertically integrated structure within the energy industry, incorporating both gas and electricity. It was a strategy that has baffled many initially, but two years on it is proving its worth as a string of oil and gas discoveries work their way into the Origin retail network. Grant King says Origin has not fundamentally changed anything since being demerged from Boral in 2000. “I think we’ve been extremely consistent about what we said we would do, and we’ve kept on doing it,” he said. Origin’s success in discovering large-scale gas reserves in Victoria’s offshore Otway Basin will quickly feed gas into its own retail market, and it explores on the basis of seeking gas where there are markets. “Holding gas in inventory for 30 years while you look for a market makes no sense to us,” Mr King said. “What we always had [internally] were skills. The asset position was disparate. We applied those skills to the assets ... and I think we have ended up growing as quickly, if not more quickly, than we had hoped.’ “We didn’t make too many bad decisions and we’ve benefited from our awareness of the risks associated with the business.” Origin has always planned to grow into a substantial, vertically integrated oil and gas producer.
The project supplies steam and power to the Worsley alumina refinery and electricity to Western Power Corp. Origin built the Quarantine power station in Adelaide and, in December last year, the company bought the Mt Stuart Power Station, a 288mW gas turbine peaking plant in north Queensland, from AES Corp. But it was also keen to stake a claim in the emerging retail end of the market. While energy sector deregulation still has a long way to go, Origin Energy realised that a spate of asset sales could inflate prices for many former state-owned assets, in particular, assets such as gas and electricity distribution networks and retail energy sales networks. So it waited while the first round of electricity generation assets in Victoria were sold, but now is moving to secure assets in the second round of sales.
WHILE ENERGY SECTOR DEREGULATION STILL HAS A LONG WAY TO GO, ORIGIN ENERGY REALISED THAT A SPATE OF ASSET SALES COULD INFLATE PRICES FOR MANY FORMER STATE-OWNED ASSETS The strategy is similar in the gas and electricity distribution sector, where a second round of industry consolidation is under way. “We were cautious in the early days and we’ve been able to make some acquisitions in more recent times that I think have been made on quite favorable terms,’” Mr King said. 22
Since then, it has also committed to building the SEA Gas pipeline from Victoria to Adelaide as a conduit for its offshore Otway Basin gas in the Geographe and Thylacine gas fields, and to developing the Yolla gas field in Bass Strait at a cost of $450 million. “There was quite a bit of caution and consideration about what we did in the early days of deregulation, but that in fact left us in quite a strong position when the asset cycle turned and more people began leaving [the industry] and more opportunities arose,” Mr King said. Origin has been active in the Otway Basin for 10-15 years, but its strategy now is to find gas reserves that it can quickly bring into production. If you include the pre-Origin days of SAGASCO, it was also involved in the Bass Basin and the Gippsland Basin to the east from even earlier days. “Esso-BHP has always had its foot on the Gippsland Basin so the Bass and Otway were the two geological basins that had most interest for us,” Mr King told Discovery. “We had the position in the Bass Basin, in Yolla, which we now call BassGas, which is being developed at a cost of $A450 million and should be on-line in the third quarter of next year. “That puts the physical infrastructure into the Bass Basin and that will drive subsequent rounds of exploration there,” Mr King said.
“Another piece in the puzzle is the Otway Basin. Historically, the interest has been onshore where a lot of companies had been picking the terrain over.
“But whether it was good luck or good management, the gas was there and I think that whole area has now become a bit of a frontier province,” Mr King said.
“Through those early years, the geological understanding had built up and when we began, in the mid 90’s, to look ahead at what deregulation meant, it became clear that is was worth looking for gas again near markets.
“There is a lot of exploration ahead of us in the Thylacine/Geographe permits and I would think the offshore Otway has a lot ahead of it.”
“Strategically, it made much more sense to look for gas where it was easy to sell it than to look where it was easy to find it. For gas you really have to explore where it is easier to sell.”
“We believe there are a number of significant targets that will warrant drilling. The priority is to get the gas we have found into production.”
Mr King said that, “For a company our size, we couldn’t afford to find a lot of gas and hold it in inventory for 30 years waiting for an LNG project. That doesn’t create any value for us. “In the offshore Otway, we had the geological understanding from the onshore experience, we had the adjacent Bass Basin experience then, through the mid-90’s, we built a lot of market knowledge that made us confident that there was going to be a significant demand for gas opening up. “The trick was to find it somewhere near those markets. At the end of the day you had to ask where are the best opportunities and the offshore Otway was fundamentally the best spot you could target the effort.” For Origin, it was a big call. The company had a large exposure, amounting to almost $A50 million, in the first round of exploration that led to the Thylacine and Geographe discoveries.
On the exploration front, Origin has now acquired more seismic data.
But, as time goes by and demand continues to grow for Otway gas, Mr King is confident the demand will drive additional exploration. “Our explorationists say that they still see significant remaining potential. “Experience tells us that when an area opens up and you find a trillion cubic feet or so of gas with your first wells, you generally find more.” Traditionally, exploration tends to find the big field first so has Origin found the best the Otway has to offer? “That is difficult. No one knows until you drill. I think a better way of thinking about Otway and Bass is that for the first time infrastructure is going in - first in the BassGas project then in the Thylacine and Geographe project. “What infrastructure will do is make economic a whole lot of targets that would never have otherwise been drilled in the absence of infrastructure. So, whether there is another TCF field to find or whatever, I think a better view
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is that the next step in the development of these provinces is to get the infrastructure in and that will then drive subsequent rounds of exploration because the … commercial threshold falls significantly,” Mr King said. Already BHP’s Minerva field is being developed, as is Yolla along with Thylacine/ Geographe. Discovery asked whether Grant King was surprised at the pace of natural gas development in Victoria. “I would like to think that we felt that this was the way the market would develop and that there would be real opportunities. I’d say the evidence for that is the positions that we took,” he replied. “We bought the retail positions in Victoria, we acquired the exploration acreage, we risked the exploration capital and now we have got the BassGas project in development. “I think the very positive thing is that deregulation of the market has worked. “One of the long-held catch cries of the upstream industry was that we need more resources and more competition and that has come about, perhaps much more quickly than people thought.” F O R M O R E I N F O R M AT I O N C O N TA C T:
Yvette Reade Public Relations Manager, Origin Energy Tel: (08) 8217 5376
GOVT SUPPORT
Government backs smelter study T
he Victorian Government has pledged $A1.4 million towards a feasibility study into the creation of a magnesium smelter in the Latrobe Valley.
The proposed smelter will use magnesium-rich ash waste (top) from the Latrobe Valley’s power generating stations (below).
char, precipitated calcium carbonate and sodium sulphate.
The smelter, which could produce at a rate of up to 100,000 tonnes a year, is expected to cost close to $A1 billion to complete.
“Precipitated calcium carbonate is used in paper manufacture and could be pumped to a nearby paper mill in the Latrobe Valley,” he said.
The smelter will utilise magnesium-rich ash waste from the Latrobe Valley power generators as its feedstock.
“The ash is a valuable resource for the production of bricks and has already attracted interest in building a brick plant adjacent to the smelter.”
Its promoters, the Latrobe Valley Magnesium joint venture, say the project will be the world’s only magnesium smelter to utilise a waste product as its feedstock. That would also help the smelter achieve the world’s lowest cost metal production.
Mr Sylvester said the plant could also attract a magnesium die-casting facility adjacent to the smelter.
The company has already been granted another $1.4m from the Commonwealth Government towards the cost of the feasibility study.
Magnesium production is growing worldwide, driven primarily by the demand for lighter and more fuel efficient cars in the drive to reduce waste emissions.
Victorian State and Regional Development Minister, John Brumby, said the proposed smelter had the potential to generate 1100 jobs in the Latrobe Valley and up to 4000 jobs during the construction phase.
In Europe, new regulations require the carbon dioxide emissions of cars to be reduced dramatically and that 85% of an entire car be recyclable by 2006, with heavy tax impositions for cars which don’t comply.
“If the planned smelter proceeds, it will have a maximum annual output of 100,000 tonnes of magnesium with an estimated value of $A400m,” Mr Brumby said.’
These regulations are likely to extend worldwide. Magnesium is 33% lighter than aluminium and has many advantages over plastics, steel and aluminium in car manufacture. It is also easy to recycle.
ITS PROMOTERS, THE LATROBE VALLEY MAGNESIUM JOINT VENTURE, SAY THE PROJECT WILL BE THE WORLD’S ONLY MAGNESIUM SMELTER TO UTILISE A WASTE PRODUCT AS ITS FEEDSTOCK. Latrobe Magnesium chief executive, Chris Sylvester, said the feasibility study would take two years. “The proposed plant site is located within the boundary of the Hazelwood Power station in the Latrobe Valley. The site offers sufficient land to establish further industries including magnesium alloy die-casting facilities and brick making from the residual ash waste,” he said.
“The project allows decade old waste to be turned into valuable products. “It creates and strengthens existing links between a number of industries in Gippsland; it creates employment and has the potential to build up cooperation between industries and research facilities like the Monash University campus in Churchill and the planned Australian Sustainable Industry Research Centre in Traralgon.” Mr Sylvester added that there were possible benefits from the sale of other by-products, including some to local industries such as
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“Following completion of the bankable feasibility study, the design and construction of the facility is scheduled for commencement in the last quarter of 2005 and completion towards the end of September 2007,” Mr Sylvester said. “The plant will be wet commissioned by January 2008 and magnesium will be produced and sold at that date. “Allowing for a slow ramp up, the full production rate of 100,000 tonnes a year will be achieved by the end of 2008 or early 2009,” he added. F O R M O R E I N F O R M AT I O N C O N TA C T:
Chris Sylvester Chief executive, Latrobe Magnesium Ltd Tel: (02) 9940 3707
GAS PRODUCTION
Strait gas flows straight to Sydney E
uropean-based oil and gas company, OMV Australia, has crowned a remarkable few years for the company by bringing the Patricia/Baleen gas field in Bass Strait into production. And, in a reflection of the rapid changes in south-east Australia’s natural gas market, Patricia/Baleen gas is being piped directly into the Sydney market. The $120 million project, the first Bass Strait hydrocarbon production not controlled by the Esso/BHP Billiton partnership, is at the leading edge of several major new offshore gas projects to be developed in Victoria over the next few years. Victoria will quickly move from having one major supplier, the Esso/BHP Billiton joint venture, which supplies at least 91% of the market, to having five separate offshore gas suppliers and a number of smaller onshore gas producers as well. The new projects include Minerva and the Yolla – BassGas project, which are now being developed, and the Geographe/Thylacine project, which is undergoing environmental assessment. OMV came to Australia in December, 1998 and quickly launched a hostile takeover bid for Cultus Petroleum, giving it control of the offshore Patricia/Baleen gas field. A successful appraisal well gave the company the confidence to commit to the project’s development. Coupled with the construction of
the Duke Energy Eastern Gas Pipeline and the rapid deregulation of the natural gas market, OMV quickly found it had backed a winner.
Gas from the Patricia/Baleen field is processed at a newly constructred plan onshore near Orbost.
Gas began to flow from the Patricia/Baleen field in March this year as the project began its commercial life. The Patricia/Baleen field is located 24km offshore in Bass Strait south of Orbost. The gas flows through a sub-sea
pipeline to a newly constructed gas processing plant onshore near Orbost. The 12-inch diameter sub-sea gas pipeline is, “sized to accommodate much larger quantities of gas,” said OMV operations manager, Graham Dwyer, “and the plant configuration is capable of expansion.” The raw gas from the field, which lies in production license VIC-L21, contains 98% methane (natural gas) and no harmful components such as hydrogen sulphide. It also has a low carbon dioxide component, allowing it to be piped directly from the field to the gas processing plant onshore. OMV Australia is the project’s operator with a 40% stake, while Trinity Gas Resources also has 40% and Santos Ltd the remaining 20%.
GAS BEGAN TO FLOW FROM THE PATRICIA/BALEEN FIELD IN MARCH THIS YEAR AS THE PROJECT BEGAN ITS COMMERCIAL LIFE.
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GAS PRODUCTION
Onshore pipeline and plant construction provided a major boost to local employment in the Orbost area of East Gippsland.
Mr Dwyer said OMV aimed to keep the offshore wells as simple and as economical as possible and to minimise the amount of hardware in the well by using proven and commercially available technology. The Patricia and Baleen fields contain gas reserves within the variable-quality Gurnard formation. The Gurnard overlies the Latrobe group sandstones which have yielded the majority of hydrocarbon production from Bass Strait over the past 35 years. The fields are adjacent but separate structures and were discovered through the drilling of the Baleen-I (1981) and Patricia-I (1987) exploration wells.
Proven recoverable reserves in the Patricia/ Baleen field stand at 77 billion cubic feet from a total in-place resource of 108.4 bcf.
The offshore development consists of two subsea development wells with a gas pipeline and umbilical cable connecting them to the onshore facilities from where the wellheads are controlled by an electro-hydraulic control system.
The gas is reservoired in the Gurnard Formation, which flowed in the initial discovery well at a rate of 6.3m standard cubic feet a day. The Gurnard Formation is younger and less widespread than the Latrobe Group, which has produced the bulk of the hydrocarbons in Bass Strait to date.
The only physical presence of the fields at sea level is a navigation buoy. The shore crossings were also designed to minimise disturbance of the natural environment and used a new technique to get the pipelines ashore and to the gas plant.
OMV was largely unknown in Australia until its 1999 takeover of Cultus Petroleum, but the group is well known in Europe.
A hole was drilled directionally under the beach zone and the pipeline was guided into it from onshore with a similar operation used to push the pipe containing the umbilical control cable under the coastal dunes and out to sea.
It is Austria’s biggest listed industrial company with consolidated sales of EUR7.7 billion in 2001,and is one of central and eastern Europe’s leading oil and gas groups, operating oil refining and marketing, gas distribution, chemicals and plastics businesses.
Previous techniques for crossing the sensitive shore area involved more intrusive open trenching and subsequent rehabilitation of the area.
It also has oil and gas producing interests in Austria, the UK, Libya, Pakistan, Australia and New Zealand and is exploring in Albania, Iran, Ireland, Sudan, Tunisia, and Yemen.
THE SMALL SCALE OF THE PROJECT MEANT THAT OMV HAD TO BE INNOVATIVE ABOUT HOW IT EXECUTED ITS DEVELOPMENT PLAN. The group’s main focus in Australia has been the Patricia/Baleen development. Once pre-feasibility studies were completed in 1999, OMV was keen to proceed with the project, but it wanted to reduce its equity from 100%, as a risk reduction strategy. In May 2001, Trinity Gas Resources (a partnership of Mitsubishi and Tokyo Gas) farmed in for a 40% interest.
Initially the gas processing plant will process 50 terajoules a day (TJ/D) but it has been designed to cope with up to 75 TJ/D while the gas sales pipeline can handle 200 TJ/D. Later the same month OMV completed a gas sales agreement with the Queensland Government’s wholly-owned gas retailer, Energex, for 60 petajoules (PJ) of gas over eight years allowing the partners to approve the Patricia/Baleen development in July 2001. The small scale of the project meant that OMV had to be innovative about how it executed its development plan. So OMV used the regional experience of local industry for engineering and installation capabilities. The same philosophy extended to the necessary work of well drilling and offshore installation.
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The excess capacity is designed to allow the plant to process gas from other suppliers in the region. The gas plant is located near the small communities of Newmerella and Orbost in East Gippsland and the overall project is the first significant industrial development in the area, following the dramatic decline of the local timber logging industry.
F O R M O R E I N F O R M AT I O N C O N TA C T:
Graham Dwyer OMV Australia Pty Ltd Tel: (08) 9223 5000
ALUMINIUM INDUSTRY
Point Henry smelter turns 40 A
lcoa of Australia’s Point Henry aluminium smelter celebrated its 40th year of operations during April and looks set to remain an important component of the state’s industrial landscape for many years to come. Located on the shores of Corio Bay at Geelong and operating in conjunction with the Angelsea brown coal-fired power station, Point Henry and its newer and bigger counterpart at Portland, are two of Victoria’s biggest and most successful industrial enterprises. They form part of a wider, global system which forms the Alcoa alumina and aluminium business spanning more than a dozen countries. Alcoa was first incorporated in Australia in 1958 when it was granted a mineral lease to mine bauxite in Western Australia 1961. Construction of both the Kwinana alumina refinery, south of Fremantle, and the Point Henry smelter, started that year. The decision to build the smelter in Victoria came only after much deliberation and searching. Neither cheap coal nor cheap electricity were available in WA at the time so the smelter had to be located elsewhere. While New South Wales or Tasmania seemed the most likely choices for cheap power, it was ultimately Victoria, with its vast brown coal
reserves and an investment-hungry government, which clinched the project. The Geelong development site quickly became a tourist attraction as people flocked to see this ‘industrial revolution’. The smelter was an immense project at the time, representing one sixth of the annual
Above: The potline at Alcoa’s Point Henry smelter. Below left: an aerial view of the facility.
investment by the whole of Australia’s manufacturing industries in 1960 and 1961. Aluminium metal is produced from bauxite which is refined into alumina and then smelted into aluminium metal. It takes two tonnes of alumina and the addition of enormous quantities of electricity to produce one tonne of aluminium metal, hence the need for a large-scale supply of low-cost electricity. Initially, the alumina produced at Kwinana was too fine for the Point Henry smelter to use but by February 1964 the initial teething problems were solved and the first alumina was ready for shipping on board the bulk carrier, Lake Sorrel, which departed Western Australia on February 22, 1964. Although the alumina shipment was bound for the Point Henry smelter, the smelter had been in operation, using imported alumina. The first molten metal was poured at Point Henry on April 17, 1963 Alcoa’s Victorian aluminium production of 530,000 tonnes a year is equivalent to 30 per cent of Australia’s total aluminium production. A total of 5735 people contribute to, and rely on, Alcoa’s businesses.
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ALUMINIUM INDUSTRY
Alcoa produces 530,000 tonnes of aluminium a year – or 30 per cent of Australia’s total aluminium production.
The two smelters, rolling mill, power station and Alcoa’s Melbourne sales and marketing office pump over $476 million into the Victorian economy annually. This includes wages and employee benefits ($143m), goods and services and supplies from State-owned enterprises ($134m) and the private sector ($188m) plus payments to State and local governments ($11m). Alcoa is Victoria’s largest exporter with annual overseas sales worth $1.6b, equivalent to 7% of the State’s total exports and 0.6% of Victoria’s gross state product (GSP).
The aluminium rolling mill at Point Henry, exports 58% of its production, mainly to Asia. The Anglesea power station produces 41% of the power needed by the Point Henry smelter, with the rest coming from the State electricity grid. Alcoa recently developed world-first technology to treat smelting waste (Spent Pot Lining) and to capture the fluoride contained in the material. The process, developed at Portland, attracted global interest and the EPA of Victoria has
given approval for the end product - synthetic sand – to be used in applications such as roadbase material and concrete. F O R M O R E I N F O R M AT I O N C O N TA C T:
Paula Benson Manager, Corporate Affairs, Victoria Tel: (03) 9270 6387 Email: [email protected]
COSTERFIELD UNEARTHS MORE SURPRISES rilling on the Costerfield gold and antimony deposit near Bendigo has thrown up more high-grade results, lending weight to the likelihood of a commercial mine being developed.
D
MH 46 was drilled to test C reef 7m up dip from a previously-drilled diamond hole, MH 15, which intersected 144cm averaging 134.3g/t (4.3ozs) gold and 18.5% antimony from a depth of 22.4m.
Reserves and resources containing 197,700 oz of gold and 29,770 tonnes of antimony have been established.
AGD Mining plans to investigate this hole further as part of its ongoing exploration program.
A new discovery of high-grade gold and antimony, the Augusta Zone, was made in 2001.
The recent drill intercepts have extended the East Reef resource by a further 80m to the north increasing the known strike length of the East Reef to more than 400m and open to the north.south and at depth.
Recent drilling of this system increased its reserves by 20% to 290,000 tonnes at 12g/t gold and 6.2% antimony, or 112,000 oz of gold and 18,000 tonnes of antimony. The deposit remains open at depth. The best result from the recent drilling program was found in hole MH 46 which averaged 41.6g/t gold and 2.95% antimony over a recovered width of 547cm from a drill depth of 14.3m. The intersection included a 70cm intercept assaying 318g/t (10.2ozs) gold and 19.8% antimony and 9cm assaying 44.3g/t (1.4ozs) gold and 13.4% antimony.
Two holes, MH 49 and MH 50, were drilled beyond the previous northern limits of the reserve and both intersected broad widths of mineralisation. MH 49 intersected 242cm averaging 7.2g/t gold and 7.7% antimony including 52cm assaying 20.2g/t gold and 13.2% antimony and 21cm assaying 21.1g/t gold and 49.6% antimony. MH 50 recovered 170cm averaging 19.8g/t gold and 10.4% antimony including 44cm
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assaying 46g/t (1.5ozs) gold and 36.5% antimony and 22cm assaying 60.4g/t (1.9ozs) gold and 7.8% antimony. One infill hole, MH 45, intersected the West Reef over a width of 110cm and averaged 10.9g/t gold and 4.7% antimony, including a 29cm section assaying 40.6g/t (1.3 oz.) gold and 17.7% antimony. Drilling is presently underway north of MH 49 and MH 50. The rig will then be moved to explore southern extensions of the three reefs outlined in the Augusta deposit. The Augusta gold project is 100 % owned by AGD Mining and is located in the southern parts of AGD’s ground position at Costerfield. Augusta is 1.2km from the company’s treatment plant. F O R M O R E I N F O R M AT I O N C O N TA C T:
AGD Mining Tel: (03) 9663 5355 Email: [email protected]
BASIN STUDIES GROUP PETROLEUM DEVELOPMENT BRANCH MINERALS AND PETROLEUM VICTORIA
FROM DPI’S PETROLEUM DEVELOPMENT BRANCH
VICTORIA PETROLEUM ATLAS OF
AUSTRALIA
november 2001
THE PETROLEUM ATLAS OF VICTORIA This publication summarises the results of regional geological work carried out by the Basin Studies Group of the Petroleum Development Branch. It contains a compilation of new maps and digital images that provide an overview of the geological controls on hydrocarbon occurrences in the Otway and Gippsland basins. The Atlas costs $150 (for hard copy and CD-ROM) or $100 (for CD-ROM only)
TO ORDER CONTACT: Dee Ninis, Petroleum Development Branch, Level 7, 250 Victoria Parade, East Melbourne, Victoria 3002 Tel (03) 9412 5169. Fax (03) 9412 5156. Email: [email protected] or Minerals and Petroleum Business Centre, Level 8, 240 Victoria Parade, East Melbourne, Victoria 3002 Tel (03) 9412 5020. Fax (03) 9412 5157. Email: [email protected]
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