Helium currently commands around US$100 per thousand cubic feet, compared to around US$3.00 in Australia for equivalent volumes of natural gas.

Transcription

1 TO: Manager, Company Announcements ASX Limited CONTACT: John Heugh NEW RESULTS SET CENTRAL AUSTRALIA ON COURSE AS POTENTIAL GLOBAL SUPPLIER OF HELIUM GAS New geoscientific data released today has set Central Australia on a potential path of emerging as Australia s foremost supplier of the high-in-demand and premium priced inert gas, Helium, to global markets. The findings announced today by ASX-listed multi-energy explorer, Central Petroleum Limited (ASX code CTP -Central) could see production of commercial volumes of Helium from two or more areas south of Alice Springs transported for export to Darwin where a new Helium extraction plant is already currently under construction as part of that city s expanding LNG hub. The BOC (now Linde Group) has announced plans to extract low concentrations of Helium from the dregs of gas processed in the Darwin LNG hub. In a major announcement of its Helium prospects in the Red Centre, Central Petroleum said today the calibre of the data was such that the Company and its joint venture partner, He Nuclear Limited, now anticipated to drill test during 2009 up to two target areas located within key sub-salt petroleum plays in the Amadeus Basin, the Mt Kitty Prospect and the Magee Prospect. The drilling plans followed a review of new seismic survey information over the areas acquired in 2008 by Central Petroleum and a reinterpretation of known well data from the Basin. The stratigraphy of the target areas includes sub-salt structures comparable to those in Siberia, China and Oman which host giant oil and gas fields and with similarities to structures in the southwest USA which historically have hosted the world s largest Helium production reservoirs. Central Petroleum said today that leads and prospects outlined to date in the two target prospects indicated their potential to host up to 200 billion cubic feet of Helium in Undiscovered Gas Initially In Place (UGIIP)as well as 4.4. trillion cubic feet of natural gas. Helium currently commands around US$100 per thousand cubic feet, compared to around US$3.00 in Australia for equivalent volumes of natural gas. On test, in the Magee 1 well drilled in 1992, the area s Helium concentration has also shown to be in the order of 6.3% and if that is maintained commercially subject to exploration success, Central Australia could rank within the top 5% of world suppliers, Central Petroleum s Managing Director, Mr John Heugh, said today. Significantly, world production of Helium is currently less than 10 billion cubic feet per annum but demand is growing as historic emergency reserves have dwindled and the gas is increasingly being used in high technology applications and planned for fourth generation more environmentally friendly nuclear reactors, Mr Heugh said. Unlisted Australian resources company, He Nuclear Limited, has funded 50% of pre-drilling seismic surveys, mapping analysis and will fund two wells, to earn a 25% interest in the two Helium-rich prospect blocks. The targets comprise Central Petroleum s Mt Kitty prospect in EP125 and the Magee Prospect in EP82 both in the Amadeus Basin and located within 250km kilometres south of Alice Springs. Salt as a sealing medium to trap large volumes of oil and gas takes on a more significant role in Central Australia as our review has confined many potential Helium target areas to depths of less than 3,000 metres, Mr Heugh said.

2 This compares with overseas production reservoirs under salt layers many of which are at ultra-deep offshore depths many times greater than the onshore targets south of Alice Springs - so the task of exploration drilling and developing these Amadeus prospects will be far less expensive and technically easier, he said. Mr Heugh said most predrilling seismic had now been completed by the joint venture on both Mt Kitty and Magee with drill locations currently being finalised. In 2005, Central Petroleum signed a Memorandum of Understanding with BOC Global Helium (now Linde) one of the world s largest international marketers and producers of Helium to exchange information and work towards the joint exploitation of any successful Central operated Helium discoveries. Further details on Central Petroleum s summary of the Magee and Mt Kitty prospect blocks is included in the attached Technical Report John Heugh Managing Director Central Petroleum Limited MEDIA CONTACT: John Heugh Kevin Skinner Central Petroleum Limited Field Public Relations (O8) (08)

3 1,400 BCFG (1.4 TCFG) with 15 BCFG Helium UGIIP Potential Magee Prospect Block (CTP Technical Note ) He Nuclear Limited, (HEN), an unlisted Australian junior resources company, is farming in to two large prospect blocks operated by Central Petroleum Limited, (Central), the Mt Kitty prospect block in EP 125 (2,326 km 2 ) and the Magee prospect block (4,623 km 2 ) in EP 82. The Joint Venture is targeting significant gas, condensate and Helium potential in both blocks, many of which are based on sub-salt plays. Globally, the importance of sub-salt petroleum plays has long been reflected in the giant oil and gas fields in the Eastern Siberian Platform, the Sichuan Basin and within Oman. More recent sub-salt discoveries in the sediments of the Santos Basin offshore Brazil in ultra deep (and ultra-expensive to drill) waters have underscored the significance of salt as a sealing medium capable of trapping large volumes of oil and gas. The super-giant Tupi oil field in which British Gas and Petrobras are partners is expected to ramp up to 500,000 bbls/day production and has recoverable reserves of up to 8 Bnbbls (Billion bbls). Exxon has recently announced another oil discovery in the same sub-salt portion of the Santos Basin. Sub-salt plays then represent worthy targets in general. Central has previously described a number of subsalt plays in the little known and relatively un-explored onshore southern Amadeus Basin where it holds a dominant acreage position. Many of these plays are at depths of less than 3,000m making the task of exploration drilling far less expensive and technically easier than drilling in ultra-deep waters offshore. The Mt Kitty prospect, in EP 125, which is ready to be drilled, is thought to host up to 3 TCF of gas in the Undiscovered Gas Initially In Place category (UGIIP) with up to 180 BCFG of Helium. This well was planned to be drilled by the HEN Joint Venture in 2008 but an early and prolonged wet season coupled with difficulties faced by other Joint Venture partners precluded this.

4 New studies based on recently shot seismic suggest that a range of exciting new plays in the Magee prospect block may have Undiscovered Gas Initially In Place category (UGIIP) prospect and lead potential to be evaluated further as follows : Magee Prospect (Arumbera/Chandler subsalt -truncation play) Magee Prospect (Heavitree/Gillen subsalt-subthrust play) Magee Prospect (Heavitree/ Gillen subsalt overthrust play) Total for the Magee Prospect Maryvale Lead ( Arumbera /Chandler 4-way dip closure/truncation) Total for the Magee Block to date where examined 548 BCF 245 BCF* 5 BCF* 800 BCFG 563 BCF 1,400 BCFG Of these, the Magee Prospect plays sealed under the Gillen Salt * are likely to contain Helium at up to 6.3% and so a combined UGIIP Helium for these is c. 15 BCFG. In the Magee prospect block, in EP 82, the Magee overthrust prospect has been drilled before and flowed gas, condensate and Helium to surface from a very thin reservoir section with an astoundingly high percentage of Helium at a measured 6.3% putting the flow results in the upper 5% of naturally occurring Helium concentrations in the world known to date. New interpretations indicates a much thicker Heavitree Formation on a sub-thrust play, underneath the Magee prospect overthrust play drilled by Pacific Oil and Gas, Magee 1 in The new play may have potential to host up to 15 BCFG (billions of cubic feet) Helium in UGIIP. A recent published price for wholesale Helium in 2008 of over USD$100/MCFG

5 (thousand cubic feet) is an indication of the potential value of such a resource if it is proved by drilling. There are two main salt horizons pertinent to sub-salt exploration in the Amadeus Basin, the older Gillen Member of the Bitter Springs Group and the slightly younger Chandler Salt. The regionally pervasive Gillen Salt Member is shaping up as a very important sealing system in the Amadeus Basin The Maryvale lead, further north of the Magee prospect shows as a pronounced roll-over in a trough area and is a very exciting play requiring more seismic to define it better prior to drilling. It too is a sub salt play with potential for gas, condensate and possibly Helium. Both the Mt Kitty and Magee targets are sealed by a major salt horizon, the Gillen Salt Member, above the lowermost Amadeus sediments of the Heavitree Formation. A second play type, the Arumbera truncation play evident in the Magee and the Maryvale structures has even bigger potential for UGIIP gas in place.

6 New geoscientific studies in the Magee Farmout Block have expanded the prospectivity of the area. A revamp of Neoproterozoic stratigraphy has resulted from : 1) reinterpretation of sparse well data in the area (viz. Erldunda-1) and 2) new interpretations of seismic data acquired by Central Petroleum in Within the Magee Farmout Block only two exploration wells have been drilled. The most significant was Magee-1 which flowed Helium (6%) and nitrogen rich gas at a stabilized rate of 63.1 Mscfd from a fracture developed in the Heavitree Quartzite. The gas composition was high in C2+ molecules suggesting a potential source of condensate from Gillen Member shales. Thick salt beds immediately above these shales provide a very effective blanket seal. The high Helium content may lead to commercial reserves; a much thickened Heavitree section (160 m) in the Magee Prospect subthrust block (Dr. Henry Askin pers.com.) is an important advance as Helium-in-place could total 15 BCF, which is considerably more than previously envisaged in the overthrust block where the Heavitree is only 4.5 m thick. The most important petroleum systems (ie petroleum source rocks) in the area occur in Neoproterozoic and Early Cambrian geological formations; namely Neoproterozoic carbonaceous shales in the Gillen Member, Aralka Formation, Pertatataka Formation and Middle Cambrian Giles Creek Dolomite (stratigraphic column attached). Target hydrocarbon reservoirs occur in the Heavitree Quartzite and Arumbera Sandstone, the latter being productive to the north in the Dingo field. This second target reservoir unit was recently interpreted in this part of the basin and adds signicantly to it s exploration potential. The sub-salt / multi-commodity Heavitree play is now augmented by a second new sub-salt Arumbera Sandstone gas-?condensate play derived from recent geoscientific interpretations. This play is now believed to be widespread in the southern Amadeus Basin providing a long awaited second hydrocarbon target in this area. To the SE of the farmout block, Central now recognises a 300 m thick Arumbera sequence in Erldunda-1 and similar, substantial sequences have been recognised on seismic over a wide area, including the Magee Farmout Block. The presence below the Arumbera Sandstone of thick Pertatataka Formation shales, which are generative gas source rocks to the north in the Dingo and Orange fields, provides a proven sourcing scenario in the Farmout Block. Thick layers of Chandler Formation salt provide ubiquitous top seal.

7 Both sub-salt plays, ie the vertically juxtaposed Heavitree Qartzite/Gillen sub-salt play and the Arumbera Sandstone/Chandler sub-salt play, are present over a wide area including the Magee Prospect. Assuming the structure is filled to its spillpoint, the following undiscoveredgas initially-in-place (UGIIP) estimates occur below. Magee Prospect (Arumbera/Chandler subsalt -truncation play) Magee Prospect (Heavitree/Gillen subsalt-subthrust play) Magee Prospect (Heavitree/ Chandler subsalt overthrust play) Maryvale Lead ( Arumbera /Chandler 4-way dip closure/truncation) (UGIIP) 548 BCF 245 BCF 5 BCF 563 BCF 1) The Heavitree play could include up to 15 BCF of Helium assuming a He content of 6%. Details of all gas estimates occur in CTP Technical Note ) The truncation play at Magee relates to termination of dipping Arumbera strata beneath Chandler salt ( Seismic Line CM 08-02). Arumbera truncation and 4-way dip closure plays represent new play types in the southern Amadeus Basin. Seismic data suggests the latter are more common and robust than traps at the Heavitree/Gillen level (eg the Maryvale lead UGIIP = 563 BCF). The Maryvale lead is a robust one line rollover (300 ms TWT roll) cored by a Gillen Salt pillow. This lead will probably be detailed by seismic due to be acquired in 2009.

8 In summary, the prospectivity of the Magee Farmout Block, and in particular the Magee Prospect which is mature to drill, are greatly enhanced by two important geoscientific advances: 1) Recognition of a second sub-salt play at the Arumbera /Chandler Salt level (truncation play at Magee Prospect) in addition to the earlier targeted Heavitree/ Gillen sub-salt play. 2) Recognition of a thickened Heavitree sequence in the subthrust block of the Magee Prospect greatly enhances the possible available Helium resource and gives the prospect a higher chance of commerciality.

9 The Arumbera Truncation Play under the Chandler Salt at the Magee Prospect may host up to 548 BCFG in UGIIP The Arumbera Sandstone in the Southern Amadeus may be up to 750m thick