The sandstones are about 15km west of the Cliff Head platform and Arrowsmith infrastructure, with Pilot aiming to zero-in on an estimated prospective resource of 1.1 TCF recoverable gas. The company believes the possibility of success is between 24 per cent to 36 per cent for each of its three target reservoirs.
Pilot Energy managing director Brad Lingo said: “Securing the environmental approval to conduct the Eureka 3D seismic survey is a major advancement for the WA-481P exploration program. The approval provides certainty to prospective farm-in partners that the Kingia gas fairway exploration program can progress over the near term to a drill ready target for the Leander gas prospect.”
The seismic survey is being acquired strictly to conduct oil and gas exploration. The WA 481-P exploration licence, coupled with Pilot’s potentially gigatonne storage G-12-AP greenhouse gas assessment permit, happen to overlap, with both contiguous to the Cliff Head carbon storage project’s Declaration of Storage Area.
Following its acquisition, the 3D seismic can then be licensed to the Cliff Head carbon storage project and the G-12-AP permit holders, enabling the use of key subsurface data to assess the potential for additional carbon storage resources for the project.
Pilot bought the WA-based Cliff Head oil facility from previous JV partner, ASX-listed Triangle Energy Global, with plans to repurpose the asset as a carbon capture and storage facility within its Mid West Clean Energy project.
The company believes it has obtained first-mover advantage in WA carbon storage, supported by domestic and global tailwinds for its new-age approach to suppressing carbon emissions.
A consortium of South Korean mega-energy firms led by Korea Southern Power Co is looking to link up with Pilot and acquire a 60 per cent interest to jointly develop the Mid West project to secure an ammonia supply. The consortium comprises Korea Southern Power Co, Korea East-West Power, Samsung C&T and hydrogen producer Approtium.
The ammonia will be used for hydrogen co-firing in coal-fired power plants in Korea.
Pilot plans to repurpose the depleted Cliff Head oil well into a facility capable of storing liquefied carbon emissions from WA’s industrial emitters. The company will create a carbon storage business, charging third-party emitters to add to its clean energy ammonia project arsenal.
The ownership of all the previous JV onshore and offshore assets in the state’s jurisdiction has been transferred to Pilot. The National Offshore Petroleum Titles Administrator is expected to transfer the ownership of any project pipelines in Commonwealth waters in due course.
In a canny move, management recently secured a $5.9 million finance facility from Finport Finance, one of a wave of new lenders specialising in advancing funds against tax refunds owed to the companies.
The lending arrangement allows for the payment of 40 per cent of petroleum resource rent tax refundable expenditures, to be claimed at tax time at year’s end by the JV vehicle, Triangle Energy Operations (between Pilot and Triangle).
The refundable expenses are attributable to the abandonment, decommissioning and rehabilitation expenses (ADRE) associated with historic oil production from the Cliff Head oil field operations.
The facility will enable the funding of a sizeable portion of ongoing expenditures at Cliff Head in the next two years as it transitions to a carbon storage facility. Drawdowns to the tune of 40 per cent are permitted under the facility for ADRE expenses as they are incurred, equal to the amount of refund from the ATO that the JV company can claim at year-end.
It reduces the capital outlay required to be contributed from the two firms to the JV company as expenses arise, with full repayment made to the loan when the ATO refund is received by the JV company.
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