There is strong evidence of an oil charge in the basin, especially on the Indonesian side of the border, as demonstrated by the Kau oil discovery (47oAPI) and the Bukit (35oAPI) and Sesknut oil seeps, all of which lie to the north of the block. The Kau oil discovery is considered by previous license holders to host 50-60 mmbbl recoverable oil. The offset discoveries in PNG (Stanley, Ketu/Elevala/Tingu/Ubuntu) are characterized by high CGR gas (20-60bbls/mmscf).
The acreage is under-explored and has seen very little activity for over 25 years. Available wells are old (1950’s and 1980’s) and often distant. The nearest well Aripoe-1 (Shell, 1958, 35km west) drilled on the western border of the PSC, tested a bald gravity high, narrowly missing the zero edge of the prospective sequence (see seismic section below). Seismic data acquired by Continental Oil Company (Conoco) in the early 1980’s is likewise old and sparse (>25km dip-line spacing) but the data content is good. Conoco also acquired limited fold and offset seismic data in the Digul river system in the early 1970’s with one such line bordering the northern edge of the Raksasa lead. Unfortunately, none of the field tapes for either of these vintage seismic surveys can be located.
Nonetheless, regional studies incorporating all available gravity/magnetics, seismic and well data, including the PNG foreland basin, together with well correlations, basin modelling and surface seep sampling strongly suggest that all the elements necessary for a substantive oil and gas play are present. In many ways, the western flank of the Papuan Basin is an analogue of the highly productive western flank of the Cooper/Eromanga Basin of South Australia, where early generated oil and wet gas is pushed to the flanks of the basin by a later generated dry gas charge emanating from the basin deep.
The leads identified to date suggest considerable upside and Transform believes that the acreage has potential for 150-300mmbbl of recoverable oil and/or >1Tcf gas. There are numerous follow-up features to target given success.
The block offers an early entry point with long tenure and high equity. Work commitments are low with gravity/magnetics and 2D seismic only within the first 6 years. The remaining first term commitment for passive seismic will be completed during 2020 subject to Covid19 restrictions. The secondary term commitment includes 200km of passive or active seismic. Transform believes conventional seismic can be acquired at a cost of between US$3 – $4 million using existing roads and tracks as shown on the preceding map.
There are no drilling commitments in either the primary or secondary term providing considerable flexibility around the timing of expenditure. The Raksasa lead is relatively shallow (1500-2100m) and drilling conditions benign, such that an exploration well can be drilled with a relatively light casing scheme and drilling rig. The existing network of roads and tracks provides good access.
Transform has spent some US$4 million since project inception.
The Raksasa Lead
The SE Papua PSC contains the large “Raksasa” lead which is identified by its gravity signature, a 1970’s river seismic line which crosses its northern margin and a 2D passive seismic line acquired during 2019. The lead, which is some 50km in length overall and up to 21 km in width, requires conventional 2D seismic to de-risk and mature. Transform was preparing to complete a (3D) passive seismic survey by Q3 2020 but this activity has been delayed until at least Q4 because of the Covid19 pandemic.
An initial 2D reconnaissance seismic survey (50-100km) could be acquired along the existing roads and tracks at relatively low cost to confirm the lead. This survey could use dynamite, accelerated weight drop or vibrosesis as a source. All of these methods should prove effective given the good geophone coupling and shallow depth to the objective (1,500m). If results are encouraging this initial survey can be followed by a more detailed infill survey.
The vacant acreage to the north of the SE Papua PSC contains the smaller “Sedikit Raksasa” lead, which is defined by two regional seismic lines. This lead also requires further 2D seismic to de-risk and mature. Once again, Transform believes that the most cost-efficient way to proceed is to acquire initially a 2D reconnaissance survey (50km) along the existing roads and tracks.
The SE Papua PSC area can be accessed by road from Merauke, by ocean-going vessels via the Digul River as far as Asike river port (30km west) and by air via Tanahmerah (80km north).
Asike river port can accommodate large, ocean-going vessels up to 6,000 DWT
Tanahmerah River Port, 80km upstream from Asike, can be reached by barges up to 500 DWT.
The SE Papua PSC is subject to Indonesian frontier cost recovery terms but can be converted to the newer gross split terms (MR52/2017) if desired. Contractor take under the gross split terms can be negotiated to match or exceed take under the old cost recovery terms.
The SE Papua PSC displays robust economics for both oil development and small-scale LNG (1.5 – 2Mtpa) under conservative project cost and reservoir performance assumptions. Liquids export would be via the Digul River, which is navigable by ocean-going vessels from the Asike river port.