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Senergy February 2013 CPR ? Comments by EZ on Risk Assessment
The Tasmania basin offers an unrivalled opportunity to test all the elements of a working petroleum system, with live oil seeps (at Lonnavale), world?class source rocks (Tasmanite oil shale), large closed structures, and multiple potential reservoirs. Potential Ordovician reefs at two prospects (Bellevue, Thunderbolt) have solid play elements, providing a compelling reason and material opportunity for exploration drilling at these two locations.
Exploring for oil and gas is a risky business, as we all know. There are different kinds of risk: geologic, economic, environmental and political. But in this review we consider only the geologic risk, or chance of success (COS), defined as the probability of discovering commercial quantity of hydrocarbons prior to drilling.
Exploration risks in Tasmania revolve around source rock properties and play dynamics (hydrocarbon charge); other play elements (reservoir, seal, trap geometry) have a lower exploration risk.
A systematic assessment of potential exploration outcome in terms of oil?equivalent barrels or cubic feet of gas, and of the associated exploration risk that may deny that outcome, has been completed by Senergy (February 2013).
Because of the nature of risking, estimating the chance of success (COS) is an inherently imprecise and rather subjective process, with methods relying on a number of chance factors that are often incomplete and based on indirect, analogical data. The Senergy model of dual play chance and prospect chance follows petroleum industry standard procedure, and is based on narrow probability intervals of risk factors assessed.
Taking the Bellevue Prospect as example, the overall chance of success for this structure is estimated by Senergy to be 6% (the product of play chance, 29%, and prospect chance, 20%). The 6% value is a rather restrictive and conservative view of the overall COS of the prospect, but is consistent with high risk exploration opportunities, and compares with most petroleum evaluators' perception of about 5% to 6.5% COS on a wildcat well in frontier areas.
The reader must be aware that the Senergy approach is but one of many. TOG adopts a more neutral approach to evaluation of COS values, as we believe there is more latitude and flexibility in quantifying risk factors in a data?poor basin like Tasmania. We also remain skeptical on the choice of very restrictive values based solely on no or very poor data.
A case in point is the rather low value (36%) assigned to the presence of source rocks for the Larapintine (Silurian?Ordovician) petroleum system in the Bellevue Prospect. We believe that, with no actual evidence of negative data on this specific factor, a neutral assessment of 45% to 50% is more than justifiable, resulting in the upgrade of the overall COS value to about 8%, which is still within the high risk range.
In addition, we believe that, because they share the same frontier basin geologic features, plays and prospects have similar independent chance of success. Consequently, we take the single prospect specific chance as an indicator of more credible probabilities of success.
For Bellevue, the prospect specific chance is estimated by Senergy to be 20%. This value provides a more favourable and encouraging presentation of the potential of the Tasmania project to the financial market and investor community.
Finally, the history of oil/gas forecasting teaches geologists to be wary of risk assessments based on sparse and poor data. Such is the case of Tasmania, where the estimating of resources and risk assessment is predicated on a limited database and on a considerable degree of uncertainty. There is room for doubting the present choice of value of some of the risk factors: other choices and a wider spread of risk probabilities, are definitely possible.
Let's not forget also that today's producing or hydrocarbon discovery areas were yesterday's frontier areas. The Levantine basin (East Mediterranean) and Rovuma basin (Mozambique?Tanzania) were all viewed with skeptcism by the petroleum industry in the mid?late 2000s. Well, we all know now what the results of exploration drilling in those two basins during the last few years are. Those companies that took a pessimistic view of the opportunities and decided to stay away because they regarded these areas as having high exploration and investment risk, are now nursing their wounds, as they missed a bonanza of multi?Tcf gas discoveries.
Let's not forget this lesson, as we assess the prospectivity of the Tasmania basin.
Enzo Zappaterra
London
6 February 2013
