Front End Engineering and Design (FEED) studies for the field are now well advanced, with the development schedule still on target to meet first gas sales in Q1, 2006.

“Prior to the Casino-3 appraisal well, the field’s 2P reserves were estimated by the joint venture to be in the order of 140 PJ (gross), so increasing that reserve by over 100% is an outstanding result for our shareholders,” said AWE managing director Bruce Phillips.

“We look forward to working with our co-venturers to complete the development of the field in the shortest possible time frame.”

Discovered in September 2002, the Casino-1 well encountered a 47-metre gas column in the Waarre sandstone. Following success at Casino-1, the joint venture immediately drilled the Casino-2 well, which also encountered a gas filled reservoir in the Waarre Sandstone. Analysis of the second well indicated that the second well intersected a younger reservoir, which was potentially not in pressure communication with the discovery well.

Initial reserve calculations over the Casino field indicated that recoverable gas reserves were of the order of 140 PJ. This was not of sufficient size to justify an economic development of the field.

Later analysis of the seismic and well results indicated that the Casino field might extend further downdip in the younger sand, consistent with the seismic amplitude anomalies and the differential pressure data from the initial 2 wells.

The Casino-3 well was proposed and drilled in the second half of 2003, proving that the gas column in the younger sand extended for in excess of 290 metres. Importantly, the reservoir quality remained high and the pressure data indicated that both wells in the younger sand were in apparent pressure communication. The well flowed gas at a rate of 45 million cubic feet of gas per day.

The development concept for the Casino gas field incorporates two development wells, connected to an undersea gas pipeline via sub-sea completions. The gas will be treated at TXU’s Iona gas plant, with raw gas sold to TXU via a 12 year gas sales agreement.

The Vic/P44 joint venturers will retain ownership of any associated condensate production.

In August 2003, the Casino joint venture signed a Gas Sales Agreement with TXU Electricity for the sale and purchase of gas from the VIC/P 44 exploration permit. The agreement was conditional on the Casino-3 well proving up sufficient volumes to justify an economic development of the Casino field.

The Gas Sales Agreement is for an initial sales volume of up to 293 petajoules (PJ) of gas from the permit, with an option, on behalf of the sellers, to extend this volume for a further 200 PJ.

Preliminary capital expenditure estimates for the development of the Casino field are approximately $200 million with initial gas sales to TXU are planned for Q1, 2006.

Participants in VIC/P 44 are Peedamullah Petroleum Pty Ltd (AWE) 25%, Santos (Operator) 50% and Mittwell Energy Resources Pty Ltd (Mitsui) 25%.