2017 WESTERN AUSTRALIAN STATE ACREAGE RELEASE PESA Deal Day 14 May 2017 Richard Bruce Petroleum Division Welcome to Western Australia’s onshore bid rounds presentation. I will be highlighting onshore petroleum acreage proposed for work program bidding. Numerous SPA/AO applications certainly demonstrate interest in the basin. It is hoped that acreage opportunities will be taken up by new cashed-up players that are willing to engage in a counter-cyclical approach, and that by the time native title negotiations are concluded, the oil price may have improved.

Outline Acreage position and players 2017 work program bid round Acreage release process Further information I will refer to The current acreage position The current bid round and prospectivity of release areas The acreage release process, including the updated guideline relevant to bid assessment Where to get more detailed information.

Acreage position – a big State These maps show the principal basins in WA jurisdiction, and are colour coded by company names. are available at WA’s booth in the Exhibition area. The key benefit of a granted title is that the native title agreement has been reached and there is commercial certainty pertaining to indigenous land access and land usage expectations and requirements. A number of companies could benefit by cash injections and new ideas to accelerate their work programs, in exchange for some equity. Much acreage has been dropped in the last year or so, especially in the Canning Basin. However, a counter-cyclical strategic approach could be beneficial. It can take 2 or more years from bids closing to grant of an Exploration Permit due to approval processes and the Native Title process. If the oil price is improved in 2 years time, that would be an advantage to the explorer.

PETROLEUM ROUND 1 OF 2017 Release 16 May 2017 Bids close 1 February 2018 5 Canning Basin release areas L17-1 to 5 5324 km2 to 6667 km2 APPLY ONLINE only www.dmp.wa.gov.au/acreage_release recommended to register at least 2 working days ahead of submission There are five onshore release areas in the central Canning Basin. Work program bids close on Thursday 1 February 2018. However, as bids may only be made online it is recommended that you register at least 2 working days ahead of submission. Release area size varies from 5324 km2 to 6667 km2. A large Paleozoic basin (the size of France!) with some world class source rock and seals – plenty of room for a, so far, elusive giant! There are a range of possible plays including sub-salt, sandstones and carbonates The Canning Basin is remote from the State capital Perth (~1300km). However, Canning oil has been trucked to the Kwinana oil refinery in the south of the State and more recently to a northern port for shipping to refineries in SE Asia.

Intracratonic basin with salt seals 'The best remaining frontier prospects lie … in older basins with a high preservation potential such as intracratonic basins with evaporite seals.' Duncan S Macgregor, BP, 1996 The subsalt potential of the Canning Basin is yet to be fully evaluated and has perhaps been overlooked. New exploration approaches are needed, such as mapping the hydrocarbon fluid systems of the subsalt succession before identifying large traps.

Room for a giant? A giant field is yet to be found in the Canning, but there are factors in its favour: May be the least explored Paleozoic basin with proven petroleum systems. Excellent salt seals Excellent oil-prone source rocks e.g. Ordovician Goldwyer Formation. At least three active petroleum systems. Widespread shows at many stratigraphic levels and geological settings. Worldwide there is a predominance of giant fields and major petroleum reserves in cratonic sag basins. > 130 giant and super-giant oil and gas fields with Paleozoic source and reservoir similar to the Canning Basin. The Canning Basin checks many of the boxes. It may be the least explored Paleozoic basin with proven petroleum systems. At least three active petroleum systems. Excellent salt seals and excellent oil-prone source rocks. Widespread shows at many levels and settings. There are similar Paleozoic basins around the world that have giant fields.

Canning Basin map This map shows the release areas, with wells. There is a gas pipeline to the large Telfer goldmine on the southern margin of the basin and a gas pipeline has been proposed along the coast of the onshore basin. Interest in the Canning Basin has increased in recent years, with: New play oil discoveries at Ungani in 2011 and Ungani Far West 1 in 2016. Good oil and gas shows in Ordovician Goldwyer Formation shale in the Theia 1 well drilled in 2015. There are many large mines on the Pilbara Block to the southwest of the basin, some of which are changing from diesel to gas as the power source.

Canning Basin cross-section This cross-section is a basin-wide dip section sketch. Of particular note is the Ordovician Goldwyer Formation source rock. Salt seals are present in the overlying late Ordovician to early Silurian section.

Ordovician source maturity & petroleum migration The widespread occurrence of hydrocarbon shows in the northern Release Areas demonstrates that petroleum has migrated across Release Areas. Subsalt Ordovician source rocks are mature to overmature across the region. The Goldwyer Formation in the Kidson Sub-basin is believed to have increasing maturation toward the axis of the sub-basin. Salt seals are less likely to be breached and this may favour lateral migration from kitchens in the central Kidson Sub-basin. The basin’s richest Ordovician oil-prone source rocks have been sampled within Release Areas L17-2 and L17-3. The shale-rich upper part of the Goldwyer Formation is oil prone on the Barbwire Terrace. The southern flanks of the platforms are considered to have excellent source potential as well as access to hydrocarbon generated in sub-basins.

Plays Subsalt Ordovician plays include sandstones, as well as fractured and cavernous carbonates. Suprasalt plays include Silurian, Devonian and Permian sandstones. In the southern Release Areas, subsalt plays are particularly attractive as mature source intervals may intergrade with, or lie adjacent to potential reservoirs.  Seals are less likely to be damaged and the areas lie across the migration route from kitchens in the central Kidson Sub-basin.  There are multiple potential seals and a reduced risk of petroleum biodegradation or reservoir-flooding by meteoric water in the sub-basin.   In the northern Release Areas, there is the additional possibility of salt-related plays and access to petroleum generated in both the Kidson and the Gregory Sub-basins.  The possibility of an Upper Devonian or Lower Carboniferous play on the Barbwire Terrace cannot not be ruled out at this stage.

Release areas L17-1, L17-2 & L17-3 The northern three Release Areas, L17-1 to -3, are contiguous and collectively cover 17,664 km2 . These maps show the northern three release areas, with wells and seismic. The northern limit of the Mallowa Salt is shown in yellow. These areas are accessible from Broome via the Great Northern Highway and extend from the southeastern Broome Platform eastward, across the northwestern Crossland Platform and the central Barbwire Terrace, and into the Gregory Sub-Basin. These are among the best explored regions of the Canning Basin, where 15 wells have recorded hydrocarbon shows, including Looma 1, Acacia 2, Mirbelia 1 and 2 and Sally May 1. Shell drilled the Looma 1 well in 1996 in the southern Canning Basin, intersecting a significant oil column in tight reservoirs, proving the potential of the sub-salt Ordovician section as an exploration target and the existence of the Kidson sub-basin petroleum system. Release Areas L17-1 to -3 are considered prospective for both subsalt (Ordovician) and suprasalt (Devonian) plays. A new Devonian play has been proposed for the Barbwire Terrace, where a series of en echelon wrench-related anticlines have been interpreted from seismic data.

Release areas L17-4 & L17-5 The map shows the southern two release areas, with wells and seismic. The southern two Release Areas, L17-4 and L17-5, collectively cover 12,905 km2 and are regarded as frontier acreage, with much less on-ground exploration than the northern three Release Areas. However, couldn’t there be room for a large discovery? Salt may provide traps in areas of the basin that lack major block faulting. The closest well to the southern Release Areas is Gibb-Maitland 1, drilled during December 2012. Logging was limited. The well failed to reach its planned total depth. In the southern Release Areas, subsalt plays are particularly attractive as mature source intervals may intergrade with, or lie adjacent to potential reservoirs. Minimal post-Devonian movements have taken place to damage seals. The Carribuddy Group provides a high-quality regional seal. This Group is up to 1500 m thick in the Kidson Sub-basin, about one-third of which is the massive Mallowa Salt unit. The basal Elsa Sandstone Member, of the Silurian Worral Formation conformably overlies the Carribuddy Group and is a potential suprasalt reservoir.

Acreage release process Maps – available areas (native title, environment, tectonic elements, wells & seismic) PRE-BID Acreage selection meeting/s Referrals to stakeholders – internal & external Acreage release package coordination Gazettal & advertising AFTER BIDS IN Bid assessment Offers to “preferred applicants” Native title process Grant of petroleum title The acreage release process can be considered in two main parts: pre-bid and after bids are in. Initially, maps are prepared which show wells and seismic in the context of tectonic elements, as well as maps showing registered native title claimant and determination areas and environmental aspects. Meetings are held involving staff with relevant expertise to discuss and select potential  release areas. Consideration is given to prospectivity and land access issues. Referrals are made to key stakeholders such as registered native title claimants and Local Government. An acreage release package is developed aiming to provide a one stop shop comprehensive suite of information for potential applicants to consider against the requirements of the Acreage Release Guidelines. The package has information on prospectivity and petroleum data, how to apply for acreage, native title, environment and so on. The release is published in the Government Gazette and it is publicised by various means, such as the WA DMP website, conferences and with articles.   Once the bids come in, they are assessed based on a number of criteria as shown on my next slide. The selected Applicant is then notified of the decision and once confirmation is received that the Applicant wishes to proceed with the application, the Government will facilitate the commencement of the Commonwealth Native Title Act 1993 future act processes.    Once the native title, future act processes has been successfully concluded, a petroleum title may be offered for grant.

Bid rounds – apply online only No longer hand delivery or by post. Must be registered! If not already then register for online submission and online payments, in advance of acreage release closing date to ensure access. recommended to register at least 2 working days ahead of submission. Use DMP’s secure online system PGR at: www.dmp.wa.gov.au/pgr This has a video of online lodgement. From now on work program bids can only be made online.   Must be registered before accessing the Petroleum and Geothermal Register https://pgr.dmp.wa.gov.au/PGR/ If not already registered register for online submission and online payments in advance of acreage release closing date to ensure access. recommended to register at least 2 working days ahead of submission Instructions are available online. www.dmp.wa.gov.au/pgr_help/

Bid assessment Bid assessment has more emphasis on stakeholder engagement plans and financial capacity. Also Land access, Native title and heritage Environmental management Geological evaluation, exploration rationale and expertise. Details on DMP’s website. www.dmp.wa.gov.au/acreage_release Get ready to bid! The guideline for assessment of acreage release applications has recently been thoroughly updated. The complete document is part of the acreage release package on DMP’s website. It includes: More emphasis on community engagement and evidence of financial capacity Land access, Native title and heritage, Environmental management Geological evaluation and exploration rationale

Discuss with us See and discuss APPEA Exhibition area booth 251. Card USB, Executive Summary flyer. For details such as Release area and basin prospectivity reports Petroleum data availability Titles regime, updated bid assessment guidelines Land access, native title and environment Fiscal aspects See www.dmp.wa.gov.au/acreage_release Email petroleum.acreage@dmp.wa.gov.au Generic information may be obtained from the Department’s website right now. However, information specific to this acreage release may be viewed from release date of Tuesday 16 May 2017. Release information includes prospectivity of release areas, a Canning Basin summary, available data listings, new bid assessment guidelines, land access and environment considerations, schedule of fees and information regarding how to make a valid application for an Exploration Permit. More detail on the prospectivity of the Release Areas has been described by the Geological Survey of Western Australia. I particularly acknowledge Norm Alavi for his work describing the prospectivity of the petroleum release areas.