Hi Barry 731,You are right about Shell taking care with drilling...

Hi Barry 731,

You are right about Shell taking care with drilling Palta-1. If they muck it up they risk being banned from drilling in all three of these adjoining blocks.

The following article explains the lengths they are going to ensure they do this drilling without any mishaps.

http://s07.static-shell.com/content/dam/shell/static/aus/downloads/upstream/shell-palta-1-factsheet.pdf

From a Rigzone article:

'Commenting on the Palta prospect, a spokesperson said: "The Palta prospect is considered as one of the largest undiscovered gas fields in Western Australia. It has the potential to supply enough gas for a whole new liquefied natural gas project in the region."

Shell operates Block WA-384-P with a 75 percent interest, with Mitsubishi Corporation holding the remaining stake in the permit.'

Shell have taken on a big commitment with 75% of this drill. The Noble Clyde Boudreaux Drilling Rig is costing them $417,000 per DAY and was originally planned for 75 days from about 16 October. They are now up to about 130 days, give or take a up to 10 days shut down due to cyclones.

So instead of costing about $32 million they could be up for in excess of $60 million, over double that cost. (There is also a maximum 17% performance bonus attached, but I don't know when this is applied) Fortunately OXX don't have to contribute.

Shell have the rig booked for a number of other jobs in WA after Palta (Prelude is next).

This is a nail-biting exercise for both Shell and OXX. If this well is not successful then, with what has been risked on this well, Shell may not continue any further with any of these three exploration blocks. But if there is success then we have to hope for more Government approvals. I mentioned a few weeks ago about another block neighbouring the Ningaloo Heritage Area that had their application to explore rejected by the Federal Government for environmental reasons.

For OXX we wait and hope.