Lakes Oil to drill Gippsland basin well in Australia

Australian oil and gas explorer Lakes Oil (LKO) has submitted an application to drill the Wombat 5 well in the Gippsland basin in 2014.

The drilling proposal follows a memorandum of understanding with Asian refiner Sinopec to investigate a possible joint development of the company’s permits in the basin.

The well will be drilled conventionally and will not involve hydraulic fracturing. The company noted similarities with the conventionally drilled Longtom offshore gas field in the Bass Strait.

LKO chairman Robert Annells said that the decision to drill Wombat 5 was made after the company’s geology team studied conventional discoveries in Australia as well as overseas.

"We believe our company can achieve commercial gas production using traditional methods to recover gas from the weathered zone at the top of the Strzelecki Formation, proved to be present over a wide area in Gippsland," Annells said.

Wombat 5, once successful, will commercialise the complete Wombat structure and also potentially the Macalister, Trifon and Gangell fields, which are expected to deliver a significant amount of gas at a time of rising prices and projected shortages.

The company intends to restrict the sale of this cheaply produced gas to Victorian and New South Wales customers only.

"We believe this new supply, when in production, will help to bring down domestic gas prices. Worth noting is that the onshore gas we are looking to supply contains less than 0.1% CO2 unlike other gas being produced in the country, which can contain up to 40% CO2," Annells added.