DIGGING & DRILLING Magazine

AUSTRALIA • CHINA • INDIA • JAPAN • NEW ZEALAND • ASIA PACIFIC

OCTOBER - DECEMBER 2018 • ISSUE 22

NORTH WEST SHELF PROJECT WESTERN AUSTRALIA ROY HILL AND GE WELCOME PINK LOCOMOTIVES LITHIUM VALLEY FULL REPORT RELEASED

AUSTRALASIA

AUSTRALASIA’S QUARTERLY OIL , GAS & MINING MAGAZINE

Editor’s Letter Australia’s coal industry supports thousands of jobs nationally and is bringing millions of people around the world out of poverty. The latest forecasts show coal exports will hit a record high this financial year.

The United Nations’ Intergovernmental Panel on Climate Change (IPCC) has released a special report stating global greenhouse gas emissions must reach zero by about 2050 in order to stop global warming at 1.5 degrees Celsius. Australian Federal Environment Minister Melissa Price suggests the 91 scientists behind the report have got it wrong. Minister Price has argued some of the world’s leading climate scientists are “drawing a long bow” in calling for an end to coal power in a bid to limit global warming.

LEN FRETWELL Publisher / Managing Editor Digging & Drilling Australasia Magazine

The Australian government has rejected the IPCC report’s call to phase out coal power by 2050, claiming renewable energy cannot replace baseload coal power. The deputy prime minister, Michael McCormack, said Australia should “absolutely” continue to use and exploit its coal reserves, despite the IPCC’s dire warnings the world has just 12 years to avoid climate change catastrophe. He said the government would not change policy “just because somebody might suggest that some sort of report is the way we need to follow and everything that we should do”. The Federal Government maintains it will meet its commitment to the Paris climate agreement.

In March 2015, India Prime Minister Narendra Modi called for bringing down India’s import dependence on oil and gas to 67 per cent of its requirement by 2022. Prime Minister Modi used 77 per cent oil import dependence in the fiscal year 2013-14 as the reference to call for reducing import dependence to 67 per cent by 2022. India’s import dependence has, however, increased and rose to 81.7 per cent in 2016-17 and further to 82.8 per cent in 201718. Prime Minister Modi recently reviewed the oil and gas production profile of state-owned ONGC and OIL over the near to medium term to assess how his target to cut oil imports by 10% would be met.

At the ‘Urja Sangam’ conference in March 2015, it was highlighted that the India government altered the exploration policy regime to offer more flexibility to investors. Exploration companies can now legally exploit unconventional hydrocarbon resources like shale and coal bed methane from fields allotted for harnessing traditional oil and gas. These measures will result in increased oil and gas production but will take few years to happen, sources said.

The global lithium-ion battery market is expected to reach USD 93.1 billion by 2025, growing at a CAGR of 17.0%, according to a new report by Grand View Research, Inc. The electric vehicle market alone is set to drive lithium-ion battery demand for decades to come. Tesla delivered its 250,000th vehicle during the September 2018 quarter. British luxury brand Aston Martin presented its Volante Vision Concept, luxury flying autonomous hybrid-electric vehicle at Farnborough in July 2018, which is featured on pages 28 and 29.

The world’s largest 100-megawatt and 129-megawatt hour lithium-ion battery storage system, capable of powering 30,000 homes recently went live in South Australia, to provide a backup source of energy for the state. South Korean manufacturer Hyundai Electric and Energy Systems also plan to launch its own 150MW lithium-ion system in Ulsan by February next year. AES Energy Storage looks set to develop and install a 300MW battery system in the United States due to be completed in 2023. With many governments around the world looking into similar systems, more massive lithium-ion battery systems on the way.

The critical metals in most batteries include lithium, graphite, cobalt and nickel and with the booming lithium-ion battery market, these minerals could become the ‘gold’ of modern times.

Best regards

Len F retwell Len Fretwell Publisher/Managing Editor

www.diggingdrilling.com

@DigandDrill

WHAT’S IN THIS ISSUE »

IN THIS ISSUE 3 EDITOR’S LETTER 6 MOMENTS IN PICS: QME 2018 10 NEWS IN BRIEF: OIL, GAS & MINING NEWS HIGHLIGHTS FOR THE QUARTER 14 NORTH WEST SHELF PROJECT WESTERN AUSTRALIA 18 ROY HILL AND GE WELCOME PINK LOCOMOTIVES 22 QUADRANT ENERGY & CARNARVON PETROLEUM OIL DISCOVERY 24 LITHIUM VALLEY FULL REPORT RELEASED

DIGGING & DRILLING AMP TOWER - LEVEL 28 AUSTRALASIA 140 ST GEORGES TERRACE PERTH WA 6000 TEL: +61 1300 284 637 FAX: +61 (8) 9300 9435 FEEDBACK INFO@DIGGINGDRILLING.COM NEWS INQUIRIES EDITOR@DIGGINGDRILLING.COM ADVERTISING INQUIRIES LEN.FRETWELL@DIGGINGDRILLING.COM • MOBILE: 0417 001 080 EDITOR WRITERS GUEST WRITER SPECIAL FEATURES

LEN FRETWELL LENA KOZAK, STEPHEN DAWSON COLIN HAY, NICK HOWE EMMANUEL SOLOMON

GRAPHIC DESIGNER BRANDON WANG SUBSCRIPTION SUBSCRIPTION@DIGGINGDRILLING.COM PUBLISHING DIGGING AND DRILLING IS A TRADING NAME OF LF FAMILY TRUST INFORMATION ABN: 97 893 623 301 VISIT US AT WWW.DIGGINGDRILLING.COM FOLLOW US ON TWITTER @DiggandDrill COVER

(L-R) OCKERT VAN ZYL, SENIOR ACCOUNT EXECUTIVE GE ANZ, MRS GINA RINEHART, CHAIRMAN OF ROY HILL; CLAIRE PIERCE, REGION EXECUTIVE AND COMMERCIAL LEADER ANZ, GE TRANSPORTATION, RAJU MOGAVEERA - SERVICE LEADER GE TRANSPORTATION, HAKAN SUN, FLEET PROGRAM MANAGER GE TRANSPORTATION AND GARY MCNESS, PROJECT MANAGER UGL LIMITED.

Digging & Drilling Australasia welcomes comments and suggestions, as well as information about errors that call for corrections. We are committed to presenting information fairly and accurately.

Disclaimer: Reasonable care is taken to ensure that Digging & Drilling magazine articles and other information are up-to-date and accurate as possible, as at the time of publication, but no responsibility can be taken for any errors or omissions contained herein. The opinions expressed are those of the authors and do not necessarily reflect the views of Digging & Drilling Magazine. The publisher, editors, contributors and related parties shall have no responsibility for any action or omission by any other contributor, consultant, editor or related party.

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Moments

MOMENTS IN PICS »

QME 2018

7  DIGGING & DRILLING MAGAZINE | OCTOBER - DECEMBER 2018

QUEENSLAND MINING EXHIBITION (QME) 2018 Strength of Australia’s mining and engineering sector on show at QME 2018 Queensland Mining and Engineering Exhibition (QME) 2018 has enjoyed one of its most successful editions in its 25-year history, with more than 4,000 attendees visiting the event to explore the latest strategies and technologies driving productivity, profitability and protection of the industry.

tralian economy and supporting half a million jobs, QME 2018 also welcomed Australian Government representatives, Senator the Hon Michaelia Cash (Minister for Jobs and Innovation), Senator the Hon Matt Canavan (Minister for Resources and Northern Australia) and Mr George Christensen MP (member for Dawson).

The representation from key mining companies Adani, Anglo American, BHP, Glencore and Yancoal reaffirmed QME as the must attend event for the Queensland mining industry. Collaboration was an underlying theme in the QME Seminar Series sponsored by March IT. As industry conditions improve, more work is being done across the entire value chain to ensure the prosperity of the sector.

Brandon Ward, Director of QME 2018, said the success of this year’s exhibition reaffirmed the strength of the industry and its continued importance to the Queensland economy, with initial reports indicating a multi-million-dollar boost to the region during QME.

With Australia’s mining equipment, technology and services (METS) sector contributing $86 billion to the Aus-

“With the sector playing such a significant role in the nation’s prosperity, it’s important that leading companies, decision makers, and personnel in mining and engineering have a major calendar event to come together to network and source the latest products and services,”

said Brandon Ward. “We would like to thank our supporters and all of the attendees, exhibitors, and speakers who chose QME 2018 to be that event, and Mackay to be that location.”

Ian Macfarlane, Chief Executive of supporting partner Queensland Resources Council (QRC), said the popularity of QME 2018 represented tremendous opportunity for businesses in the region.

“QME has been a fixture in Mackay for the last 25 years and remains the most important trade show for the region’s mining industry. It is truly a festival of innovation – brimming with ideas, energy and pavilions of all the latest products,” said Ian Macfarlane.

“The exhibition provided a great opportunity for industry to come face-to-face with the best innovators the country, and find new opportunities that will safeguard the industry for generations to come in Australia.”

QRC figures show that last financial year, minerals and energy companies injected almost $14 billion into Mackay and Fitzroy regional economies. A survey of QRC’s CEOs showed that more than half were looking to increase their

spending with local businesses this year.

More than 230 exhibitors attended this year’s event, an impressive 41 per cent increase on QME 2016.

Industry heavyweights included Downer Group, Flender, Flexco, FLSmidth, Puma Energy, SMW Group, thyssenkrupp and Valley Longwall International.

QME also played host to the 2018 Queensland Mining Awards, celebrating the spirit of innovation, excellence and collaboration that is fostered within the highly competitive industry. QME sponsored this year’s Best Product Launch Award, this year won by Control Systems Technology who took out the award for their launch of IntelliRoll, an autonomous ‘plug-and-play’ conveyer belt weigher.

QME will return to Mackay in July 2020 but the next major event for engineers, mining personnel, production managers and other professionals in mining and engineering will be the Asia-Pacific International Mining Exhibition (AIMEX) set to be held August 2019 in Sydney.

NEWS IN BRIEF »

OIL, GAS & MINING NEWS HIGHLIGHTS FOR THE QUARTER

SUCCESS IN FIRST STAGE OF BID FOR CRC • The bid for the Future Battery Industries Cooperative Research Centre progresses

Woodside Energy (Myanmar) Pte Ltd holds a 40% stake in Block A-6 and is the joint operator of the block and operator of the Shwe Yee Htun-2 well. MPRL E&P Pte Ltd, with a 20% interest, is joint operator of Block A-6. Total E&P Myanmar holds the remaining 40% interest in the block.

• Stage 2 application to be submitted by November 26, 2018 The McGowan Government is pleased that the application for the Future Battery Industries Cooperative Research Centre (FBI CRC) has been shortlisted to the next round by the Cooperative Research Centres program.

Stage 2 of the submission process involves providing a comprehensive business case for consideration by the CRC Advisory Committee.

The FBI CRC chairperson-elect Tim Shanahan and other members of the bid team, will be invited to present in person to the committee in Canberra in February 2019.

If the bid is successful, Perth will host the FBI CRC headquarters and the State Government will invest $5.5 million, through the Minerals Institute of Western Australia and $500,000 from the Department of Jobs, Tourism, Science and Innovation towards the CRC.

WOODSIDE CONFIRMS SUCCESSFUL SHWE YEE HTUN-2 APPRAISAL WELL OFFSHORE MYANMAR Woodside advises that the Shwe Yee Htun-2 appraisal well in Block A-6, located offshore Myanmar, has successfully appraised the 2016 Shwe Yee Htun-1 discovery.

The Shwe Yee Htun-2 appraisal well was drilled down-dip from the Shwe Yee Htun-1 well and intersected a gross gas column of 168 m (measured depth rotary table (MDRT)) (143 m true vertical thickness). A total of 41 m of net pay (true vertical thickness) has been interpreted within a high quality-reservoir.

The gas column has been confirmed through wireline logging and pressure measurements, which have also demonstrated that the intersected reservoir is highly likely to be in pressure communication with the Shwe Yee Htun-1 discovery, which is approximately 10 km east of the current drilling location. The minimum total gross gas column based on wireline pressure data from both wells is now estimated to be approximately 237 m. The Shwe Yee Htun-2 well was spudded on 20 July 2018 and reached a total depth of 4820 m (MDRT) in the main well bore. The well was subsequently sidetracked and drilled to a total depth of 4850 m (MDRT), which enabled the successful acquisition of conventional core, additional wireline logs and completion of a drill stem test. These tests have confirmed good reservoir quality, permeability and well production deliverability.

The drill stem test was performed across a 35 m section of the reservoir and flowed at ~53 mmscf/d on a 40/64” choke over 80 hours.

The well will be plugged and abandoned as planned. Woodside CEO Peter Coleman said the initial results from the Shwe Yee Htun-2 well were positive and helped to build Woodside’s knowledge of the resources in Block A-6. “The well has encountered good quality reservoir, with a gas column at the high-end of our pre-drill estimates.

We look forward to completing detailed analysis of the well results.

“The results are encouraging and we hope that the resources in the permit can contribute energy that will support Myanmar’s future economic development,” he said.

SPEEDY PASSAGE OF TPP-11 LEGISLATION CRITICAL FOR EXPORTERS, STATEMENT FROM TANIA CONSTABLE, CHIEF EXECUTIVE OFFICER Speedy passage of the Trans-Pacific Partnership (TPP11) legislation is critical to give Australian exporters the opportunity for an early ‘double’ tariff cut under the landmark Asia-Pacific trade deal.

With the Senate due to consider the TPP-11 bill, it is important to understand that delays in ratifying the agreement could see Australian exporters forced to wait an extra year to secure the second instalment of tariff cuts under the agreement. This would put Australian exporters in sectors like mining, farming, manufacturing and wine at a competitive disadvantage in TPP-11 export markets like Japan and Canada.

Economic modelling has shown that by 2030 the TPP-11 will: • Increase Australia’s national income by $15.6 billion • Boost Australia’s exports by $29.9 billion • Generate additional direct investment into Australia of $7.8 billion and additional overseas investment by Australian businesses of $26 billion • Lift real wages with higher wage gains for lower-skilled workers.

The TPP-11 will enter into force 60 days after six countries have ratified the agreement. This will see an immediate round of tariff cuts for countries that have ratified the deal. If the TPP-11 comes into force before the end of December, there will then be a second tariff cut on 1 January 2019 – but only for countries that have ratified the agreement. Mexico, Japan and Singapore have already ratified the TPP-11. New Zealand and Canada look to be on track to ratify the agreement in coming weeks and Vietnam is advancing its ratification processes.

If Australia and two other countries ratify the TPP-11 by the end of October, the agreement will enter into force in December with immediate tariff cuts followed by further tariff cuts in January. Delays in the Senate could deny Australian exporters the opportunity of this double tariff cut, putting them at a disadvantage against competitors from countries which ratify the deal speedily.

The TPP text has now been in the public domain for more than two years. The agreement has been examined by three Australian Parliamentary inquiries, analysed by nine modelling studies which all show it will boost Australian incomes, and supported by a wide range of Australian industries and businesses. Lowy Institute polling shows that 67 per cent of Australians say trade is good for the economy and their own living standards and 55 per cent say trade creates jobs in Australia.

iws-d&d_advertisement.indd 1

8/05/2014 5:31 p

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Arriving by private elevator, the marble foyer provides a moment’s pause to relish in the expansive luxury laid at your feet. There’s a sense of arrival as the eye is drawn immediately to the incredible views. The enormous open-plan living room is understated in design and yet, decadent in materials such as American walnut timber floors, marble, panelled timber ceilings, a hand-blown glass chandelier and exquisite artworks.

Located in Claisebrook Cove, and walking distance to eateries and shops, the views of the Swan River, parkland, hills, city, Crown complex and Matagarup Bridge are simply staggering.

Featuring customised state-of-art fixtures and fittings, the 6-bedroom and 8-bathroom penthouse includes two gourmet kitchens, butler’s pantry fit for a large catering team, maid’s quarters, temperature-controlled wine cellar, fully-equipped gym, sound-proof theatre room, three-metre high ceilings throughout and views from every room.

Contact Brent Morfesse to discuss the details or arrange a private viewing + 61 419 900 747

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and Views •

Total area space of 1897sqm, with 898sqm of internal space, 774sqm external balconies, 220sqm carpark with 8 car bays and storage. Additional riverside office-space is negotiable

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Superb views of the Swan River from this absolute waterfront location

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Massive wrap around terrace/balcony

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Two kitchens with Gaggenau appliances two laundries, plus full size butler’s pantry

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Temperature controlled 350 bottle wine cellar

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Voluptuous ceilings throughout

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Fully ducted zoned air conditioning, temperature control’s in every room

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Heated rooftop pool and jacuzzi overlooking the river, Crown complex and city

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08 9286 5555

NORTH WEST SHELF PROJECT The Woodside-operated North West Shelf (NWS) Project’s facilities constitute Australia’s largest oil and gas development and represent an investment of more than $34 billion.

Accounting for more than one third of Australia’s oil and gas production, the NWS Project is a joint venture between six major international companies. The six equal participants in the North West Shelf Project are: BHP, BP Developments Australia Pty Ltd, Chevron, Japan Australia LNG (MIMI) Pty Ltd, Shell Australia Pty Ltd and Woodside. The China National Offshore Oil Corporation is also part of the North West Shelf Venture but does not have an interest in its infrastructure.

It is one of the world’s largest liquefied natural gas (LNG) producers, supplying oil and gas to Australian and international markets from huge offshore gas, oil and condensate fields in the Carnarvon Basin off the north-west coast of Australia.

Plant, one of the most advanced, integrated gas production systems in the world, where LNG, domestic gas, condensate and LPG is produced.

The Karratha Gas Plant facilities include five LNG processing trains, two domestic gas trains, six condensate stabilisation units, three LPG fractionation units as well as storage and loading facilities for LNG, LPG and condensate. The facility is located 1260 kilometres north of Perth, Western Australia and covers about 200 hectares.

For over 30 years, the NWS Project has been Western Australia’s largest producer of domestic gas.

With an international reputation for the safe and reliable delivery of LNG to customers in the Asia Pacific region and other parts of the world, the NWS Project has delivered more than 4000 LNG cargoes since 1989.

The NWS Project also produces liquefied petroleum gas (LPG), oil and condensate – a light crude oil – for international energy markets.

The NWS Project continues to invest in its long-term future, pursuing new opportunities through operational excellence and investing in existing operations.

The NWS Project is committed to continuous improvement of production and cost performance, growing investment in Western Australia and expanding opportunities in the Carnarvon and Browse Basins.

In 2017, the NWS Project participants issued a non-binding tolling proposal to third-party resource owners for processing gas through the Karratha Gas Plant (KGP). Discussions and technical studies continue to be progressed with interested parties to confirm commercial viability before entering into binding commitments. The feasibility studies are expected to continue during 2018.

The Karratha Gas Plant has an annual LNG export capacity of 16.9 mtpa which is reliably exported to customers in the Asia Pacific region and beyond. Woodside operates these facilities on behalf of the North West Shelf Project participants.

Offshore facilities The NWS Project’s offshore production facilities include the North Rankin Complex, Goodwyn A and Angel platforms, and the Okha floating production storage and offloading (FPSO) facility.

Onshore facilities

Hydrocarbons from the offshore production facilities are transported to the Karratha Gas Plant for processing by two subsea pipelines, also known as trunklines. Oil from the Cossack, Wanaea, Lambert and Hermes fields is processed on the Okha Castoron Pipelay Vessel FPSO.

Karratha Gas Plant

North Rankin Complex

The North West Shelf Project facilities include the Karratha Gas

The North Rankin Complex comprises the North Rankin A and

North Rankin B platforms. Connected by two 100 metre bridges, the platforms operate as a single integrated facility.

enables it to be safely and securely powered and remotely controlled from North Rankin Complex via a subsea cable.

Located 135 kilometres north-west of Karratha, NRC stands in 125 metres of water and has a daily production capacity of up to 66,000 tonnes of dry gas and 6,000 tonnes of condensate from the North Rankin and Perseus fields.

Goodwyn A Platform The Goodwyn A platform is connected to the condensate-rich Goodwyn gas field located 23 kilometres south-west of the North Rankin A platform and about 135 kilometres north-west of Karratha.

Dry gas and condensate produced from the Goodwyn area reservoirs and Searipple and Perseus satellite field reservoirs are exported by an interfield pipeline, before being transported via a trunkline system to the Karratha Gas Plant for processing.

Okha FPSO The Okha FPSO is an oil production facility moored to a riser turret between the Wanaea and Cossack oil fields, 34 kilometres east of the North Rankin Complex.

The Cossack, Wanaea, Lambert and Hermes oil fields are connected by flexible flowlines to subsea wells and have been producing since 1995. Crude oil is offloaded from the facility via a flexible line to bulk tankers, while a pipeline exports LPG-rich gas from the Cossack and Wanaea fields to the North Rankin Complex, before being transferred to the Karratha Gas Plant for processing.

Angel Platform The Angel platform is located about 120 kilometres north-west of Karratha and is connected to the North Rankin Complex via a 50 kilometre subsea pipeline.

Producing from the Angel field, the platform’s unique design Material Source: Woodside Energ y Ltd.

POSTCARD PROJECT»

Karratha Gas Plant NWS Project

16 DIGGING & DRILLING MAGAZINE | OCTOBER - DECEMBER 2018

OCTOBER - DECEMBER 2018 DIGGING & DRILLING MAGAZINE  17

Roy Hill and GE Welcome Pink Locomotives to Port Hedland in support of breast cancer patients and research Roy Hill, Hancock Prospecting and GE celebrated a Pilbara, Australia and Australasia first with the arrival of two new pink locomotives at an event held at Roy Hill’s Port Hedland rail terminal yard.

The two locomotives and ore cars join Roy Hill’s ex- “This marked the first time GE has painted a locomoisting fleet of 21 GE trains, and have been painted tive pink and we are proud to support such an imporpink in honour of Chairman Gina Rinehart’s continu- tant cause. These locomotives will serve Roy Hill well ing commitment to support patients and research into both in hauling millions of tons of ore and demonstratbreast cancer. ing their commitment to breast cancer prevention, diagnosis, treatment and survivorship,” said Nalin Jain, At the event, Mrs Rinehart christened one of the lo- President and CEO, International at GE Transportacomotives ‘For Mothers’, and Dr Patricia Kailis AM tion.

OBE christened another locomotive with the name of ‘Women of the North’.

In addition to the pink locomotives, guests on the day also marvelled at the rake of pink ore cars standing Understanding Mrs Rinehart’s deep commitment to proudly on the rail line. supporting breast cancer patients and research for better treatments and cures, GE was excited to sup- “We also acknowledge with thanks the China Railway port Roy Hill’s request to have the new locomotives Rolling Stock Corporation (CRRC) who last quarter painted pink. delivered 130 pink ore cars to Roy Hill. These cars, when attached to one of our new GE pink locomo“We deeply value our relationship with Roy Hill and are tives will create a striking image as they forge their thrilled to celebrate the arrival of these locomotives to way across the Pilbara. May these pink trains contintheir fleet,” said Claire Pierce, Executive Leader for ue to inspire us to do more for breast cancer patients GE Transportation in Australia. and support research to help fight this truly terrible and sad disease” Mrs Rinehart said.

Left to Right: Ockert Van Zyl, Senior Account Executive GE ANZ, Mrs Gina Rinehart, Chairman of Roy Hill; Claire Pierce, Region Executive and Commercial Leader ANZ, GE Transportation, Raju Mogaveera - Service Leader GE Transportation, Hakan Sun, Fleet Program Manager Ge Transportation and Gary McNess, Project Manager UGL Limited.

OCTOBER - DECEMBER 2018 DIGGING & DRILLING MAGAZINE  19

AUTOMAC TRANSMISSIONS IS PERTH’S AUTOMATIC TRANSMISSION SPECIALIST Bailey Automatics acquired Automac Transmissions in Myaree in April 2011 and with this acquisition we became a ZF Services Partner, selling genuine ZF parts.

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We provide a full range of services for all vehicle makes and models using the latest in electronic diagnostic equipment. We are also passionate about F250s, heavy duty upgraded automatic transmissions, mining and performance transmissions.

20 DIGGING & DRILLING MAGAZINE | OCTOBER - DECEMBER 2018

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OCTOBER - DECEMBER 2018 DIGGING & DRILLING MAGAZINE 21

Quadrant Energy & Carnarvon Petroleum oil discovery offshore Australia Australia’s Quadrant Energy and Carnarvon Petroleum oil discovery at its Dorado-1 well offshore Australia drilling campaign.

Highlights • Significant oil discovery in primary target, the Caley Sandstone • Excellent reservoir and fluid characteristics • Caley Sandstone contains a net oil pay thickness of 79.6m • Hydrocarbon bearing sands also identified in Baxter Member • Additional potential in Crespin and Milne Sandstone still to come Carnarvon Petroleum Limited (“Carnarvon” or “the Company”; ASX:CVN) confirms that the QuadrantCarnarvon Joint Venture has made a significant oil discovery in the Caley Member as part of the current Dorado-1 well drilling campaign.

Light oil has been recovered from excellent reservoir containing a gross hydrocarbon package of 96.1 metres and a net pay thickness of 79.6 metres in highly porous and permeable sands. The results were confirmed after wireline testing was undertaken at the Dorado-1 well, after it drilled down to around 4,044 metres Measured Depth (“MD”) MD in 8-1/2” hole. Currently the well is still in a hydrocarbon bearing column.

Carnarvon Managing Director Adrian Cook said the result is transformational for the company. “This is a significant discovery given the quantum of the net pay thickness, the quality of the oil and the extremely good reservoir characteristics,” Mr Cook said.

“Currently, we estimate the net oil pay is around 80 metres, with more drilling still to come this is very exciting for Carnarvon Petroleum.

“With multiple targets still left, the focus now is to complete the drilling program through the Baxter, Crespin and Milne Members.

In April we highlighted the possibility that the Dorado structure could contain a substantial oil accumulation.

Given this outcome has now occurred, Carnarvon will make an assessment of and issue a revised volume estimate as soon as we possibly can once drilling operations have finished.”

Annexure to Dorado Oil Discovery – Carnarvon Technical Summary Wireline and formation evaluation tools have confirmed the presence of a hydrocarbon column in the Caley Member in the Dorado-1 well, with light oil recovered to surface. An additional hydrocarbon accumulation has been observed in the Baxter Member, with drilling and evaluation still to be completed in that section of the well.

Drilling through the Caley Member, logging while drilling tools indicated a sandstone reservoir section with elevated gas readings and increased resistivity, indicating the presence of hydrocarbons. Given the significance of these results, it was decided to bring the proposed wireline program forward.

While drilling sufficient hole to accommodate the wireline logging tools, further reservoir sands were encountered in the Baxter Member with accompanying indications of hydrocarbons. At the completion of drilling, at around 4,050 metres Measured Depth, the well had yet to encounter water saturated sands and all sands were hydrocarbon charged.

The wireline logging tools have confirmed the well encountered a total gross Caley hydrocarbon package of 96.1 metres True Vertical Thickness (“TVT”) with a net oil pay of 79.6 metres TVT. Excellent reservoir characteristics were interpreted from the logging with average porosity of around 20% with hydrocarbon saturation of 82.5%.

Permeabilities ranged between 100 to 1,000 millidarcy

22 DIGGING & DRILLING MAGAZINE | OCTOBER - DECEMBER 2018

in the Caley hydrocarbon zone. The high quality of the reservoir was further reinforced by the rapid time taken to extract the oil samples and the high mobility recorded while undertaking formation testing. A number of oil samples were extracted in the Caley sandstone interval with a very light oil being recovered to surface. Estimates of the oil characteristics from the rig indicate a 49.6⁰ API oil.

Carnarvon had previously disclosed prospective resources for Dorado of 545 Bscf of gas and 30 million barrels of associated condensate (being 125 million barrels of oil equivalent (“boe”), gross, Pmean) on 23 April 2018.

Carnarvon noted that there is a possibility for the structure to contain a substantial oil accumulation. Given the oil discovery outcome in this well, Carnarvon will issue a revised volume estimate as soon as it can following the completion of drilling, which will be a contingent resource of oil.

The pressure measurements undertaken with the wireline formation tester indicate a hydrocarbon column across the whole gross hydrocarbon bearing thickness of 96.1 metres TVT in the Caley. No water contact was encountered in the The prospective resources referred to above are prepared well indicating the total oil column could extend past the as at 23 April 2018 (Reference: CVN ASX release 23 April currently drilled extent of the well. The combination of light 2018). These prospective resources have been prepared in oil and excellent reservoir characteristics support potential accordance with the definitions and guidelines set forth in for high flow rates on production. A further hydrocarbon the SPE-PRMS and have been prepared using probabilistic accumulation in a sandstone in the Baxter Member was methods. There are numerous uncertainties inherent in intersected towards the very bottom of the well. The estimating reserves and resources, and in projecting wireline logging tools were not able to assess at this time future production, development expenditures, operating whether this is part of the same accumulation or a new expenses and cash flows. Oil and gas reserve engineering accumulation of oil. This sand is yet to be fully evaluated. and resource assessment must be recognised as a subjective process of estimating subsurface accumulations Following the completion of the wireline formation of oil and gas that cannot be measured in an exact way. evaluation, the well will be deepened to approximately 4,550 metres MD to evaluate the newly discovered Baxter Prospective Resources are the estimated quantities sand and the secondary targets in the Crespin and Milne. of petroleum that may potentially be recovered by the It is likely that a 7” liner will be set prior to drilling into the application of a future development project and may Crespin and Milne Members. relate to undiscovered accumulations. These prospective resource estimates have an associated risk of discovery Notwithstanding that the prospective volumes for this and risk of development. Further exploration and appraisal well were indicated to be gas-condensate, the very light is required to determine the existence of a significant nature of the oil means that the two fluids show similar quantity of potentially moveable hydrocarbons. characteristics while drilling and hence the formation testing tool was required to differentiate between fluids.

Shareholding: Carnarvon Petroleum 20% and Quadrant Energy (Operator) 80%.

Location of the Phoenix Project

Predicted Lithology at Dorado from 2017 Seismic Inversion Project Image source: Carnarvon

LITHIUM VALLEY FULL REPORT RELEASED “WA can ensure the world has a smooth transition to a clean energy future,” says Peter Newman, Professor of Sustainability at Curtin University.

Speaking at the launch of the report Lithium Valley: Building the Case for Energy Metals and Battery Manufacturing for Western Australia, Professor Peter Newman said, “Suddenly WA has become critical to security of supply for battery metals as we are the only place in the world that has them all.”

Lithium Valley is a set of collaborating and competing industries that are based around the New Energy economy of Lithium Ion-based batteries. This report sets out why Lithium Valley should be in WA due to the presence of the required minerals that are now being called energy metals. There will be various geographical locations for the industries but this report makes a case for Kwinana, The report provides the background and a series of rec- Geraldton and Kemerton with other components in the ommendations to unlock the potential for ensuring se- Pilbara and Goldfields. Energy metals are those that curity of supply for a world based on renewable energy, help in the supply of batteries now so critical to elecbatteries and electric vehicles. It also shows how WA tricity and transport futures: lithium, nickel, manganese, can become a centre for processing the minerals, mak- cobalt, vanadium, tin, tantalum, magnesium, rare earths ing the batteries, using them and recycling them. and others.

“Not only do we have the resources but we also have the Western Australia (WA) will continue to enjoy competitechnological capability and skilled workforce to service tive advantages as an efficient and reliable supplier of this emerging industry,” Professor Newman said. “The most energy metals for the foreseeable future. By conworld needs us and we can create ‘Lithium Valley’ to ser- trast developing and advanced industrial economies, vice this need.” have long held competitive advantages across much of the rest of the value chain. This has been a missed opActing Regional Development Australia (RDA Perth) portunity for WA because the economic value of goods Chair Elizabeth Taylor added, “We are very excited increases sharply as they proceed up the value chain. about this report. It will set the benchmark to measure For WA to continue its remarkable growth story it must progress in developing this potential. RDA Perth is en- capture more economic value per unit mined as the bathusiastic about the possibilities that exist through this sis of future jobs, prosperity and strategic advantages as initiative that will drive new business investment and job a trading partner. growth into the future.”

The following are some excerpts from the report:

Executive Summary

What is the New Energy market?

The foundation element of the new energy market is lithium. This metal is now being used in many products but increasingly in batteries for transport and electricity (Figure 1).

Figure 1: Global Annual Lithium Demand Projection to 2025

The price of lithium ion batteries has been dramatically reducing as manufacturers gear up for electricity storage and especially electric vehicles (Figure 2).

Figure 2: Global Annual Use of Lithium Batteries Renewable energy from wind and solar requires battery storage and future projected growth in renewable energy will be met with growth in battery storage (Figure 3).

Figure 3: Global Renewables Capacity Projections

Why is WA the best place for Lithium Valley?

global economy and WA’s position in it.

Fourth stage technologies offer WA the opportunity to develop a much larger industrial base that is complementary to its world-leading resource extraction sector. These technologies shift the competitive advantage of early stage value adding away from low cost labour countries to the earliest point in the value chain where all the input materials can be brought together for highly automated manufacturing processes. Components are then shipped to the major global manufacturing centres for later stage manufacturing where proximity to markets or low -cost labour still afford an advantage.

According to Klaus Schwab, the Founder and Executive Chairman of the World Economic Forum,1 the world is in the middle of the fourth industrial revolution (the fourth stage). Information technologies, artificial intelligence, automation and new energy systems are the fourth stage technologies that will underpin an energy metals processing industry in WA, but the term also refers to social media, online communities, gaming, 3-D printing, genetics, breakthroughs in the materials sciences and virtual and augmented reality. Collectively, these tech- WA is in the unique position of having abundant quannologies are fundamentally altering the way we live, work, tities of almost all the energy metals, giving it a large and relate to one another. They are also transforming the advantage in electro-chemical processing.

OCTOBER - DECEMBER 2018 DIGGING & DRILLING MAGAZINE  25

Australia’s abundance of New Energy metals, mostly in WA, leads the world (Figure 4).

Figure 4: Country Reserves of Key Battery Materials A good example is lithium, as the main component (after of lithium’s ultimate value mainly as simply processed nickel) of energy storage devices. WA has the largest exported ores. 99.5% (A$213bil) of the value of lithium hard rock reserves of lithium globally and its consisten- products is paid to Australia’s trading partners for value cy is most suitable to manufacturing. Almost the entire added through electrochemical processing, battery cell value of this important strategic resource is captured in production and product assembly by WA’s trading partother countries and by other processes (Figure 5). Cur- ners. Secondary processing in WA alone would capture rently Australia captures approximately 0.5% (A$1.1bil) an additional 12-27% of the value available.

WA’s Western Trade Coast in Kwinana offers another important advantage. It is one of the most integrated, efficient and productive industrial estates globally. It services world scale oil and gas, resources and agricultural sectors through a concentration of refining, fabrication, chemical, research and innovation, service and supporting companies. The chemical precursors and other requirements for electro-chemical processing are already in place. It has one of the best global examples of industrial ecology with over 158 waste exchanges between industries. This is based on a strong collaborative approach represented by the Kwinana Industries Council that can be a major building block for creating Lithium Valley.

Global competition for the emerging energy metals market is vigorous. Other countries recognise the importance of energy metals and storage devices for future growth and are concentrating significant resources to control these supply chains. WA still has the advantage of being upstream of all of them, but this will erode rapidly if competitors are able to establish long term trading arrangements and attract processing facilities to their shores. Ensuring this does not happen requires an integrated policy and infrastructure response at all levels of government to ensure the logistics and industrial infrastructure, the research and development base, as well as the policy levers are all in place to attract proponents to the State.

Figure 5: Value Leakage of Lithium Processing

The report is available electronically on the RDA Perth website or can be picked up from the RDA Perth offices.

Senator the Hon Matt Canavan

Minister for Resources and Northern Australia

Mining industry to earn Australia a record quarter-trillion dollars in exports Australia’s mining industry is set to deliver a record $250 billion in exports to the Australian economy this year.

The export figures are contained in an in-depth federal gov-

ore exports in 2010 and is great news for the major coal-pro-

ernment report released today by Minister for Resources and

ducing states of Queensland and New South Wales,” he said.

Northern Australia Matt Canavan.

“With strong demand and high prices for metallurgical coal, “The current estimate is that exports of resources and energy

used in steel-making, it is expected to bring in $36 billion.

will bring in more than $250 billion – or a quarter of a trillion

Continuing strong demand from China and India in particular

dollars – in the current 2018-19 financial year,” Minister Cana-

for thermal coal, used in power stations, will see it earn a

van said. “They contribute well over half of Australia’s total ex-

record $25 billion. “It is likely coal and iron ore will continue

ports of goods and services, highlighting the fact the mining

to fight it out for the title of Australia’s top export-earner in

boom in this country is far from over.”

coming years, and this is great news for the Australian economy. “LNG is also performing strongly, with exports likely to

Minister Canavan said Australia was now the world’s number

increase in value by 54 per cent from $31 billion in 2017-18 to

one exporter of lithium, while coal was expected to be the na-

$48 billion in 2018-19 – driven by both higher export volumes

tion’s number-one export earner in 2018-19 at more than $61

and higher prices – before levelling out next year.”

billion, narrowly ahead of iron ore at $60 billion. Liquid natural gas (LNG) exports were set to lift sharply to $48 billion, as

Minister Canavan was commenting after the release today

record investments by LNG companies in Australia continue

of the September 2018 “Resources and Energy Quarterly”,

to pay off.

compiled by the Department of Industry, Innovation and Science, and providing in-depth analysis of commodity markets

“These are huge sums and reflect the success and hard work

and detailed forecasts for production, exports and prices.

of Australian exporters in supplying the growing Asian mar-

“Lithium is the subject of a special chapter in the publication

ket,” Minister Canavan said. “These exports are benefitting

this time, reflecting its growing importance as an Australian

Australians everywhere by providing jobs, wages and spend-

mineral export,” Minister Canavan said.

ing on goods and services, not just in the regions where mining is carried out but also in cities like Brisbane and Perth

“The Office of the Chief Economist has examined the grow-

and other capitals, where so many mining companies have

ing global market, new mines opening in Western Australia

offices. “These companies also contribute royalties that are

and future prospects for the lithium industry in Australia. “The

boosting the coffers of state governments and make the pro-

report says exports of spodumene ore, the precursor materi-

vision of vital services possible. For example, if not for mining

al for lithium, have risen from around $117 million in 2012 to

royalties, every household in Queensland would pay an extra

$780 million in 2017, and are expected to rise to around $1.1

$2,000 a year in state taxes to maintain the current level of

billion by 2020, and points out even greater value could be

services and infrastructure the state government provides.

unlocked if Australia progresses in refining these ores into more valuable forms of lithium. “A separate lithium chapter

“The higher the level of export earnings, the higher the contribution of mining companies across the national economy.

will be an ongoing feature of future editions of the ‘Resources and Energy Quarterly’.

These export figures are great news for Australian families.”

Minister Canavan said the strong demand for high-quality

The September 2018 “Resources and Energy Quarterly” is

Australian coal would see coal regain its traditional position

available at at https://www.industry.gov.au/data-and-publica-

as our single most valuable resource export. “Coal held this

tions/resources-and-energy-quarterly-september-2018

position for decades until it was overtaken by booming iron

OCTOBER - DECEMBER 2018 DIGGING & DRILLING MAGAZINE 27

FEATURE ARTICLE»

ASTON MARTIN RACE TO THE SKIES

•

Volante Vision Concept design to explore luxury personal air mobility

•

Aston Martin working with partners Cranfield University, Cranfield Aerospace Solutions, and Rolls-Royce

British luxury brand Aston Martin presented the Volante Vision Concept, a luxury concept aircraft with vertical takeoff and landing (VTOL) capabilities at Farnborough in July 2018. Produced in partnership with Cranfield University, Cranfield Aerospace Solutions and Rolls-Royce, the concept aircraft aims to bring luxury personal transportation to the sky.

The Volante Vision Concept is a demonstration of Aston Martin’s design ingenuity. With room for three adults, the concept is a near future study that previews a flying autonomous hybrid-electric vehicle for urban and intercity air travel, providing fast, efficient and congestion free luxurious travel.

University, Cranfield Aerospace Solutions, Rolls-Royce and Aston Martin, this new concept unites the world’s best aerospace experts, propulsion specialists and designers.

The skills offered by each partner ensures that the Volante Vision Concept promises to offer an exciting alternative transportation solution for customers across the globe.

Aston Martin President and CEO Dr Andy Palmer said: “With the population in urban areas continuing to grow, congestion in towns and cities will become increasingly demanding. We need to look at alternative solutions to reduce congestion, cut pollution and improve mobility. Air travel will be a crucial part in the future of transportation, the Volante Vision Concept is the ultimate luxury mobility solution.

The Volante Vision Concept will take full advantage of the latest advances in aerospace, electrification and “Humans have always spent on average, one hour autonomous technologies, coupled with Aston Martin’s commuting to and from work. The distance we live from signature design. Combining the strengths of Cranfield our workplace has been determined by the methods of

transportation available. The Volante Vision Concept will enable us to travel further with our hourly commute, meaning we are able to live further away from where we work. Cities will grow, and towns that are today too far away from cities to be commutable will become suburban.

Royce has already delivered hybrid-electric systems for other applications including ships and trains, and we’re very excited about the potential of the technology in aerospace. This is a great opportunity to collaborate on a pioneering project which will use high performance hybrid-electric propulsion technologies for personal air mobility concepts that could transform the future of transportation.”

“With Aston Martin and our ‘dream team’ of British innovation across industry and academia, we are positioned to change the future of transportation, giving our customers a new dimension of freedom”. Professor Iain Gray, Director of Aerospace at Cranfield University said: “We’re delighted to be part of this exciting and forward-thinking project that showcases British innovation and the way that Cranfield works with and supports business.

The Volante Vision Concept exemplifies Cranfield’s unique capabilities in digital aviation, autonomous systems and the electrification of aerospace, and is an excellent example of how the University combines cutting-edge research, academic rigour and real-world application.”

Cranfield Aerospace Solutions (CAeS) CEO Paul Hutton said: “The introduction of autonomous and electric propulsion technologies into new aircraft designs is both inevitable and challenging, and as the UK’s leading aircraft design and production SME we are excited to be playing this key role in the Volante Vision Concept and so to be at the vanguard of this revolution in aerospace.”

Director, Rolls-Royce Electrical Rob Watson said: “We are delighted to be involved in the Volante Vision Concept, which showcases the best of British design and engineering. Rolls-

As the designer of cars such as the Aston Martin DB11, the new Vantage, the DBS Superleggera and Aston Martin Valkyrie hypercar project – Aston Martin EVP and Chief Creative Officer Marek Reichman holds the key to the distinctive design language of the new Aston Martins.

“We are at the beginning of a new generation of urban transportation, vertical mobility is no longer a fantasy. We

have a unique chance to create a luxury concept aircraft that will represent the ultimate fusion of art and technology.” says Reichman. “ We have used forms and proportions that express the same devotion to design, engineering and beauty that shape our cars.”

Publication of gas export parity prices to improve transparency The ACCC has commenced publication of LNG netback prices on its website. An LNG netback price is an export parity price that a gas supplier can expect to receive for exporting its gas. It is calculated by taking the delivered price of LNG and subtracting the costs of liquefying natural gas and shipping it to the destination port.

It represents the price that a gas supplier would expect The series shows that LNG netback prices are volatile to receive from a domestic gas buyer to be indifferent and can change significantly over time. LNG netback between selling the gas to the domestic buyer and ex- prices have increased considerably since the start of porting it. The LNG netback price is certainly not the sole the ACCC’s gas inquiry, driven by an increase in global factor that influences domestic prices in the east coast demand for gas and a weaker Australian dollar. The avgas market. Individual prices paid by gas users will, for erage LNG netback price at the Wallumbilla Gas Supply example, also reflect other factors that may be relevant Hub has been $10.69/GJ so far in 2018, compared to to their circumstances, including the terms and condi- $7.27/GJ over the same period in 2017 and is currently tions of their gas supply and any applicable transporta- expected to be on average around $12.40/GJ over the tion or retailer charges. same period in 2019. “While industry analysts expect international LNG prices to ease over time with an in“The prices paid by domestic gas users could also depend crease in global LNG supply, conditions in the east coast on demand and supply. If there were sufficient additional gas market remain very challenging for domestic gas gas produced to fill existing LNG train capacity, excess buyers, particularly commercial and industrial gas users,” gas available to the domestic market could see prices Mr Sims said. below the LNG netback price,” ACCC Chair Rod Sims said. When the current ACCC gas inquiry commenced As the ACCC reported in July, there remains an urgent in April 2017, however, many domestic gas buyers in the need to produce more lower-cost gas, particularly in the east coast were receiving offers for gas supply at prices south, to lower prices to gas users. “While commissionthat were well in excess of LNG netback prices. “This ing import terminals can bring additional quantities of gas was a clear sign to us that the gas market in the east into the south, greater benefit can be gained from procoast was not operating effectively,” Mr Sims said. “Do- ducing additional, lower cost gas,” Mr Sims said. “This mestic gas buyers clearly should not have to pay more could mean that instead of paying import parity prices or for gas produced in Australia than the overseas buyers.” paying to transport gas from Queensland, domestic gas The published LNG netback price series will assist east users in the south could be paying prices that are closer coast gas users to identify trends in LNG netback prices to the cost of producing additional gas – a difference of and to estimate an indicative reference price of gas for up to about $4/GJ based on current estimates.” supply over the near term.

“We continue to urge state governments to adopt policies This publication does not represent the ACCC setting a that consider and manage risks of individual gas devellevel of gas prices or an ACCC forecast of either interna- opments rather than implementing blanket moratoria and tional or domestic gas prices. The ACCC is making this regulatory restrictions,” Mr Sims said. The published forinformation publicly available to help fill an information ward LNG netback price series is likely to be most useful gap that has existed in the east coast gas market since for gas users that are negotiating gas supply with a term LNG producers in Queensland began to export gas in of up to two years.

2015. “Since the linking of the east coast and international gas markets, gas users have not had access to readily The ACCC recognises that a number of gas users are available information about export parity prices and how seeking to enter into longer term agreements for supply they are calculated,” Mr Sims said. “Gas users have reg- over the next 5 to 10 years. To inform those negotiations, ularly commented to us that our publication of gas prices users are likely required to estimate indicative reference and LNG netback prices in our interim gas reports helps prices based on other gas price markers. them in their gas supply negotiations.“Publication of LNG netback prices on our website will further improve Over the course of the gas inquiry, the ACCC will publish gas price transparency and reduce the information im- additional information on its website to assist gas users, balance between gas buyers and sellers,” Mr Sims said. including information on transportation charges.

30 DIGGING & DRILLING MAGAZINE | OCTOBER - DECEMBER 2018

OFFICE & WORKSHOP 49 Candlewood Boulevard, Joondalup 6027 Tel: (08) 9300 3135 Fax: (08) 9300 3236 Email: mark@mechbro.com.au

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