(MENAFN - ProactiveInvestors - Australia) Buru Energy (ASX: BRU) and Mitsubishi Corporation has reached a unique agreement with the Western Australian State Government that gives it a 25 year tenure over five exploration permits in the onshore Canning Basin.
This will facilitate the development of a domestic gas project and pipeline and potentially a liquefied natural gas development, once sufficient gas reserves are identified.
The State Agreement over EP 371, 391, 428, 431 and 436 is the first agreement covering onshore exploration and development as it recognises the unique scale, prospectivity and strategic importance of the joint venture's permits.
It also provides a mechanism to relieve the permits from their existing relinquishment obligations until 31 January 2024, preserving the core areas of the Laurel Formation gas play and the Ungani oil trend.
Appraisal work for gas discoveries can be credited against ongoing statutory work commitments for adjacent permits, allowing work programs to be optimised for the efficient and timely development of the permits' gas resources.
Under the agreement, the Western Australia Department of State Development will take the lead agency role in the development of a domestic gas pipeline, facilitating the timely and effective approval of a domestic gas project providing energy security for the state.
It also provides a framework for the development and facilitation of a project to deliver gas to an LNG facility in the Pilbara once sufficient gas has been identified to sustain the domestic gas project.
Ungani oil production
Buru has continued to record strong results from the extended production test over its Ungani oil field in the onshore Canning Basin.
During October, both wells were on flow for 27 days, primarily from the Ungani-1ST1 well, which is still producing large amounts of what is believed to be drilling fluid.
Ungani-2 has been intermittently flowed to ensure average production rates of 400 barrels per day have been maintained.
Data from this flow period has supported previous interpretation of potential recoverable reserves of between 8 million and 20 million barrels of oil though pressure data has not being sufficiently robust to provide any additional certainty due to the varying flow rates while attempting to clean up Ungani 1.
Buru has since run in additional pressure gauges in the two wells and plans to continue flowing Ungani-2 at steady rates to provide a sustained flow test for continuing reservoir analysis.
The next flow period will attempt to provide a long enough period of steady state flow to acquire data that can help further define the reservoir parameters.
Buru is also planning to drill the Yulleroo-4 well to test reservoir development in the Yulleroo structure.
The well is also being drilled outside the apparent structural closure limits of the field to test whether the Yulleroo accumulation is part of a broader basin centred gas accumulation in the Yulleroo area.
Recent technical review of the Yulleroo and Valhalla accumulations by North American consultants familiar with these types of accumulations has helped reinforce Buru's views that this is likely to be the case.
Discussions have continued with rig contractors for the supply of a rig that would be capable of reaching deeper targets to provide additional flexibility for the 2013 drilling program. The rig market is currently quite fluid and there are several options under consideration.
The company expects discussions for the rig to be concluded in time for it to be available for use in the 2013 dry season drilling program.