Beach says Kupe may not need further drilling

By Gavin Evans

Oct. 9 (BusinessDesk) - Beach Energy says it may be possible to drain the Kupe gas field without drilling further wells.

The field off the southern Taranaki coast is the country’s fourth-largest and is a major supplier for part-owner Genesis Energy’s generation, gas retailing and LPG business.

Beach, which acquired Origin Energy’s operating stake at the start of this year, says the nine-year-old field has more than a decade of production remaining.

The venture is considering installing onshore compression, which Adelaide-based Beach describes as a “low-risk, high-value” project to extend Kupe’s production plateau and field life.

It’s possible that no further wells will be needed to drain the field, Beach says in a presentation it will use for investor roadshows in Hong Kong and Singapore this week. A final investment decision on the compression project is expected in the second half of 2019, it said.

Kupe, owned by Beach, Genesis and New Zealand Oil & Gas, delivered 25 PJ of gas last year, 1.2 million barrels of light oil and 94,700 tonnes of LPG from the project’s three original wells. It is expected to continue producing out to 2034 if a second phase of development is undertaken.

In late 2016, when NZOG sold a 15 percent interest to Genesis, the scale of that phase-2 capex was estimated at up to $250 million, including adding compression and the drilling of at least one additional well.

In August, Genesis estimated its 46 percent share of the inlet compressor cost at up to $30 million across the 2020 and 2021 financial years. It noted that front-end engineering and design work for the project had not been completed and that the partners had not settled on an estimated cost or timing.

Beach has major stakes in the Waitsia gas field in Western Australia, the onshore Cooper Basin, and in the offshore BassGas and Otway Basins. Last week it agreed to sell a 40 percent interest in its Victorian Otway interests to the Ofer Global Group – parent company of NZOG.

Beach described Kupe as a producer of "valuable liquid-rich gas" that would account for about 10 percent of the company’s free cash flow during the next five years.

The main variables in that outlook were ongoing customer demand for its output and whether an additional well is required.

(BusinessDesk)

ends

© Scoop Media