The proposed Dorado oil development will be the first new Australian oil project in many years, and has lifted the mood for exploration in the country, writes Russell Searancke.

The last standalone oil projects in Australia were in 2010 when BHP brought on stream the Pyrenees field, and Apache started up Van Gogh.

For Santos, the operator of Dorado, it is the first new operated offshore project in Australia since Mutineer-Exeter in 2005.

The country has been crying out for a new oil province, and it was thought the Great Australian Bight would be the answer.

Nobody picked the Bedout sub-basin as a significant oil resource; indeed, Dorado-1 was originally thought to be a gas target.

Santos and its joint venture partner, Carnarvon Petroleum, have locked in what is thought to be the prime acreage in the Bedout — four permits called WA-435-P, WA-436-P, WA-437-P and WA-438-P.

The Dorado and Roc discoveries are in WA-437-P, while the Phoenix field is in WA-435-P.

No drilling has occurred yet in the other two permits but the joint venture partners have already identified prospects and are currently acquiring a substantial volume of 3D seismic to aid the next round of exploration and appraisal drilling, as well as assist with the first phase oil development of Dorado.

Carnarvon is an original holder of the four permits in the Bedout sub-basin.

It retains a 20% to 30% interest in the four blocks, with Santos holding the remainder. Santos’ participation came via its acquisition of Quadrant Energy, which itself had previously bought Apache’s Australian subsidiary.

The level of interest in the Bedout and surrounding areas is reflected in the fact that seven competing bids were submitted earlier this year in Australia's 2018 licensing round for one exploration block that sits alongside the four blocks owned by Santos and Carnarvon.

The identity of the seven bidders has not been disclosed, and the federal government is currently assessing the bids.

Carnarvon describes Dorado as a world-class discovery that “represents a new play type of high-quality oil, gas and condensate located in multiple stacked, high-quality sandstone reservoirs trapped by a shale channel”.

The company says that its share of the current exploration and appraisal drilling programme comprising the Dorado-2, Dorado-3 and Roc South-1 wells is being “comfortably funded” with its own cash. It says a final investment decision on the Dorado first phase oil project is expected in late 2020.

Carnarvon’s share price has increased about 380% since the Dorado-1 discovery in July and August last year.

The Perth-based independent says the impact of Dorado on its market capitalisation has resulted in it being included in the Australian Stock Exchange’s 300 index.

“The discovery of oil and gas in the Dorado well has marked the beginning of a remarkable transformation for Carnarvon.

"Moments like these are the reason we are explorers. The significance of the discovery cannot be understated and, with further follow-up potential in the immediate area, I am incredibly excited about what the future holds,” said Carnarvon chairman Peter Leonhardt.

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Dorado lifts mood for Australia's oil sector