Empire takes bite of Australia's apple isle
News agencies
US exploration company Empire Energy unveiled a $31 million programme to drill
up to eight test wells at key locations in an exploration lease covering 23%
of Australia's island state of Tasmania, according to reports.
It also released an independent expert's prediction that the lease could hold
between 67 million and 145 million barrels of oil and between 344 billion
and 799 billion cubic feet of natural gas.
The company said that on current record prices, this assessment by consultancy
RPS Energy would put the value of the resource at between $7 billion and $15
billion.
"Really the potential could be significantly more, but you have to be
conservative. You can comfortably say that (exploration) tenement can hold
up to $15 billion - I don't think that's a wild assertion," said Phil
Simpson, executive director of Empire's local subsidiary, Great South Land
Minerals.
The Tasmanian government, which stands to reap 12% of the wellhead value of
any oil or gas discovered in royalties, is excited by the development but
also cautious.
"Rising oil costs and diminishing world reserves makes the Tasmanian
exploration very important," Resources & Energy Minister David
Llewellyn told the Australian newspaper.
He said the state - known as the apple isle because of the island's
distinctive shape - would dearly love to export natural gas to the mainland
after an extended period of having to import energy using the Basslink
subsea pipeline.
He said none of the eight proposed well sites was in environmentally sensitive
areas, such as national parks or forest reserves.
About $21.5 million had already been spent on extensive seismic, gravity,
magnetic, geochemical and geophysical data to assess the potential and the
company was ready to drill test wells at eight key sites.
The drilling programme would begin in July and might take 12 months or longer.
It would be guided by continuing technical and survey work.
The drilling programme is believed to be one of the first significant onshore
exploration efforts for oil and gas in Tasmania even though the state is
separated from the Australian mainland from the oil-rich Bass Strait,
royalties from offshore production go to the commonwealth.
As well as the RPS Energy report, Empire is buoyed by the release of analysis
by investment research company Beacon Equity Research.
Beacon senior analyst Victor Sula concluded the company was undervalued, given
the potential value of the lease, which it said is among the largest in the
Western world controlled by a single company.
However, his report raised doubts about whether the Kansas-based Empire had
enough capital to cover the high costs and uncertainties of further
exploration.
08 May 2008 16:37 GMT
| last updated:
08 May 2008 16:51 GMT
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