Papua Enjoys Oil Fever: And There

Now You See It, Now You Don't Papua Enjoys Oil Fever: And There Is Still Hope Of The Reel Thing

November opened spectacularly for Papua. In the course of the first week, the Australasian Petroleum Company struck oil at Puri after 20 years of effort and £3O millions in expenditure; the oil share market went wild; hopes were dashed by an announcement that the well had begun producing water; they were raised again with the news that the major Oil Search partners would not, after all, pull out of the search.

BY mid-November — water or not— prospects for a real find were better than they had ever been, as the company prepared for further drilling.

No town was happier at the fateful turn of events—on the last throw of the dice as it were—than Port Moresby whose citizens have always had faith in an oil find in Papua.

Main talk was on the effects oil would have on the Territory.

Oil Search shares—the company has a 10 per cent, holding in APC —fluctuated madly during the crisis period—from a few shillings to 26/-.

In early September, after the two major partners, British Petroleum and Vacuum Oil, had announced that they would withdraw if noth ing encouraging turned up in the next few months, Oil Search shares fell to 1/4.

Highest peak ever reached by these shares was 34/6 during the oil boom in 1954, when there were no encouraging signs of the kind produced by Puri.

Recent history of APC in the Gulf prospecting area is as follows: • prilling at Barikewa and Kuru, in the same area as Puri, in 1956 a £ d revealed an estimated 500,000 million cubic feet of gas. , *. In July this year, APC began testing Puri well which had been drilled to 10,000 feet without having met any shows of oil.

Directors stated, at the time, that tests would be made at three upper porous levels” but that the tests were T s e first test revealed quantities of gas “containing hydro- . The next gave small quantities of “liquid fractions” and London 61 ° f thiS oil Was sent to BP and Vacuum de fnvfJL that ey would not subscribe nTuc. C «< pi H for oil Prospecting wnV • n \ atena l encouragement” was obtained. APC thereupon be in n pfln^ ally curtailing its activities staff t£t SOme °J the European made fy J*n en otl £ e '’ efforts were made to place elsewhere the natives apprenticed to the company; and (Continued on page 153)

World Wide Airservices planned to withdraw their helicopters and air craft. • In late September, Oil Search announced that they would try to form a new company with £5 million capital to carry on after the major partners withdrew. • At October’s end, the third phase of testing at Puri produced a flow of 70 barrels per day of con densate from around the 7,500 ft depth (Condensate is recovered from wet gas after a process of conden sation) . • On November 4 it was reported

from Port Moresby (unofficially)

that, apparently as a result of treat ing the well with acid to burn away the limestone, that the flow had in cr eased to over 1,000 barrels a day (35,000 gallons) and that it was re ported to be crude oil—and not con densate. aiS 1 ® offici al announcement from APC was as follows:

The formation of interest in the Puri veil—between 7,460 feet and 7,508 feet— has been acidised.

Further flow tests have been under taken.

The well flowed a mixture of condensate and oil at the rate of about 1,000 barrels (35,000 gallons) a day.

“The public should treat the initial flow results with caution.” (Officials have estimated that 100,000 gallons a day would be a commercial proposition in Papua). • Also on November 4, it was an nounced that a new company called Papuan Oil Search, had been formed to carry on—if the major partners did not reverse their decision to pull out. In order to do this, the new company would have had to raise a little over £3 million by January 6.

If they succeeded, and if the major partners in APC retired, which now they will not, Vacuum and BP agreed to give the new company a little less than half the shares in

Apc.

• By November 12, the heat was off; water as well as oil was com ing from the well; Oil Search shares were down to a more comfortable 8/6; the Papuan Oil Search prospectus had been withdrawn, but BP and Vacuum had announced they would carry oh —possibly with in creased opportunity for Australian investors to participate.

APC experts are “optimistic”, and more wells will be drilled around Puri to see what Puri means.