Inside This Issue

DISCOVERYVICTORIA’S EARTH RESOURCES JOURNAL MAY 2003

INSIDE THIS ISSUE

• NEW SEARCH STRATEGY

• DEEPWATER DRILLING

• NEW ACREAGE RELEASE An exciting range of new geoscience data at the 15th VIMP data release. 26 MAY 2003 The products to be released include: • new geology and regolith maps and reports; • geophysical data; 15th VIMP • a 3D coal model; • GIS CDs; and • digital open file exploration data. 1.00pm – 5.00pm Thomas Carr Centre 278 Victoria Parade East Melbourne DATA To register, contact: Chandri Nambiar RELEASE Phone (03) 9412 5061 Geological Survey Victoria, Minerals and Petroleum Division DISCOVERYVICTORIA’S EARTH RESOURCES JOURNAL MAY 2003 contents

NEW PLAYER IN GOLD SEARCH 2 Reliance Mining develops new strategies in its search for gold BENDIGO TO DECLARE RESERVES 4 Look for a June quarter announcement OVERVIEW PRESENTS HEALTHY PICTURE 5 Victoria’s petroleum industry is in good shape NEW ACREAGE RELEASE 6 Six new oil and gas exploration areas are up for tender CASTLEMAINE IS THE CENTREPIECE 10 New maps of the central Victorian goldfields are about to be released NEW MAPPING PROJECT 11 GSV plans a major project in north-eastern Victoria DEEP DIVER HAS HIGH HOPES 17 cover picture Santos is hoping to rewrite the history of Victoria’s oil industry The past and the present. Our main cover picture NEXUS JOINS GIPPSLAND BASIN SEARCH 18 shows the interior of the famous Long Tunnel It’s a core area with ‘considerable potential’ says the company mine at Walhalla, which is now a major tourist attraction. (Picture courtesy of the Baw Baw Shire MPI MINES ITS ‘GOLDEN GIFT’ 19 Council). The mine gave access to the world- Trial mining starts at Stawell renowned Cohens Reef, which produced, in total, 47 tonnes of gold, and was one of Australia’s UNDERCOVER WORK AIDS SEARCH 21 principal reef gold producers in the period 1885 New exploration techniques encourage our biggest goldminer to 1908. Our small inset picture is a modern-day geological image of the Walhalla/Woods Point ORIGIN EMERGES AS A FRONT RUNNER 22 area, which is the focus of a major new GSV A ‘reborn’ company emerges in the energy industry mapping project starting later this year. (See our story on page 11). GOVERNMENT BACKS SMELTER STUDY 24 Another boost for a proposed magnesium plant in the Latrobe Valley STRAIT GAS FLOWS STRAIGHT TO SYDNEY 25 OMV brings its Patricia/Baleen gas field into production POINT HENRY SMELTER TURNS 40 27 It’s a happy birthday for Alcoa and Victorian industry COSTERFIELD UNEARTHS MORE SURPRISES 28 Latest results continue to encourage AGD Mining DISCLAIMER: This publication may be of assistance to you, but the State of Victoria and its officers do not guarantee that the publication is without flaw of any kind or is wholly appropriate for your particu- regular features lar purposes and therefore disclaims all liability for any error, loss or other consequence which may arise from you relying on any information in this publication. VIEWPOINT 9 Energy and Minerals Victoria acknowledges contributions made by Minister Theo Theophanous gives his views private enterprise. Acceptance of these contributions, however, does not endorse or imply endorsement by the Department of Natural NEWS BRIEFS 12 Resources and Environment of any product or service offered by the A roundup of Victorian industry news contributors. VICTORIA’S RESOURCES 14 All photographs, maps, charts, tables and written information in this Victoria’s mineral, oil and gas resources publication are copyright under the Copyright Act and may not be reproduced by any process whatsoever without the written permis- MINERAL LICENCE REVIEW 16 sion of the Department of Natural Resources and Environment. Who’s doing what with mineral exploration licences © Minerals and Petroleum Victoria 2003.

Published quarterly on behalf of the Minerals and Petroleum Division, Department of Primary Industries. Editorial and advertising enquiries to Rex Banks, RBA Communications, 86 Cooloongatta Rd, Camberwell Vic 3124 Tel: (03) 9889 1094 Fax: (03) 9889 9997 EMail: [email protected] Editorial: Rex Banks. Distribution and NRE enquires to Chandri Nambiar, Manager Marketing Development, Minerals and Petroleum Division, Department of Primary Industries, Level 7, 240 Victoria Parade, East Melbourne, Vic, 3002, Tel: (03) 9412 5061 Fax: (03) 9412 5155. Website: Australia Post Print Publication PP349472/00128. ISSN Number 13282409.

1 GOLD EXPLORATION New player in gold search

significant new player, with long-term Reliance Mining’s Stephen gold exploration and production Twyerould and Paul Chapman. experience, believes that Victoria has A the potential to return to the glory cash in the near term, or the ability to produce days of the 1850’s when some of the world’s a substantial discovery.” biggest gold fields were discovered Dr Twyerould, Reliance Director of throughout the state. Operations, said two examples of the compa- Reliance Mining Limited, a reconstruction of ny’s approach and focus are the Andean gold Geographe Resources, has become one of belt in Peru and the Victorian gold belt. Victoria’s largest exploration tenement hold- In Victoria, the company has acquired or ers, and is forecasting a major boost in the applied for approximately 7,000 square kilo- search for new orebodies. metres of ground containing targets ranging It will concentrate its search for new from major undercover extensions of known ‘Greenfield’ gold deposits around Rutherglen gold belts like Bendigo, Ballarat and Stawell in the state’s north, Kerang, Ararat South and to ‘Brownfields’ exploration targets over his- St Arnaud. toric high-grade mining camps. The company also will look for extensions to “If you are looking for elephants, you have to “By July this year, Reliance’s teams in both known goldfields or ‘Brownfield’ areas at look in elephant country,” Mr Chapman said, Victoria and Peru will have completed addi- Ballarat West, Lauriston East, Granya and quoting an old mining adage. tional fieldwork to validate anomalies and pri- oritise targets for drilling,” Dr Twyerould said. Reedy Creek. Reliance Mining Limited was established in Reliance Mining recently returned to the November 2001 by former senior executives Reliance believes Victoria has enormous Australian Stock Exchange trading list with a of WMC Ltd to pursue world-class gold and potential for the discovery of multi-million new management team and a new approach to base-metal projects. ounce gold deposits and says the time is right for significant investment in the state. discovering gold deposits. Apart from a large portfolio of projects in Made up of several former senior executives Australia and overseas, it also has a strategic Mr Chapman said that exploration strategy from Western Mining Corporation’s gold and alliance with WMC Resources Ltd, which experience has shown that, “if you’re looking nickel division, Reliance plans to use their provides an ongoing pipeline of mineral to make a significant gold discovery, there are expertise developed and honed within WMC exploration projects. two criteria that have been shown to be in the search for hidden gold deposits, with the extremely effective”: team looking specifically for covered exten- • Go to a province that has produced signifi- sions to Victoria’s major gold fields. RELIANCE BELIEVES VICTORIA HAS cant quantities of gold in the past. This shows all the right processes have been This ‘Brownfield’ strategy is the same focus ENORMOUS POTENTIAL FOR THE operating on an appropriate scale. used by Bendigo Mining which is developing major extensions to the Bendigo goldfield, DISCOVERY OF MULTI-MILLION • Find the under-explored areas of that Ballarat Goldfields which is working on a OUNCE GOLD DEPOSITS AND SAYS province that exhibit the right geological ingredients for gold mineralisation. similar expansion of the Ballarat fields and THE TIME IS RIGHT FOR SIGNIFICANT Perseverance Mining which is rapidly extend- “Victoria certainly meets the first criteria,” ing the known boundaries of the Fosterville INVESTMENT IN THE STATE. Mr Chapman said. “It is the world’s premier sulphide deposit. slate-belt gold province with total production In addition, a Co-operative Research Centre exceeding 80 million oz. project on Predictive Mineral Discoveries is The Reliance management team includes five “Twelve goldfields produced more than 1m oz looking specifically at the science of discover- former WMC executives - Dr Stephen of gold with the largest deposits being ing new mineral deposits where the orebodies Twyerould, the former head of gold geology Bendigo (23m oz), Ballarat (13m oz), are hidden by overlying material. and exploration; Paul Chapman, former com- Castlemaine (5m oz) and Stawell (4m oz),” mercial manager of nickel and gold; Brian To meet the second criteria, Reliance has Up to now, every major Victorian goldfield Kennedy, former general manager of the Mt taken two approaches: has been discovered by the outcropping por- Keith and Kambalda nickel mines; Tim tions, which led miners to the deeper deposits. Craske, the former principal project genera- • Greenfields Strategy: Target the covered But Reliance Mining Director, Paul Chapman, tion geologist in the WMC exploration divi- extensions of known gold-belts, and, says the future for mining in Victoria is to look sion and Craig Reddell, the former exploration • Brownfields Strategy: Acquire under- for the hidden targets. manager for nickel and gold. explored, near-mine extensions to old gold He believes Victoria is still highly prospec- Mr Chapman told Discovery that, “We plan to camps. tive, and almost totally unexplored by modern ‘turn over’ a high number of projects and pick Reliance is also adopting the strategy that has standards. those that have the capability of generating produced large gold discoveries in Western

2 GOLD EXPLORATION

Australia where the modern exploration effort the dating techniques allow some overlap of Above: The area around Stawell-Ararat is one of has been far more intense. ages between gold mineralisation and granite the regions targeted by Reliance Mining in its new This is to explore for targets ‘under cover’. emplacement. search for ‘undercover’ gold. It’s also an area which has long attracted intense geological interest “To explore successfully under cover you “This indicates that in many areas the age dif- – as this picture of a GSV-hosted field trip shows. need a robust exploration model, large ground ference may be insubstantial and hence there may be a closer genetic relationship between Below: Victoria’s gold discoveries in the 19th holding and techniques capable of making a Century laid the foundation for much of the gold mineralisation and I-type granites than significant discovery,” Mr Chapman said. state’s prosperity. generally accepted.” “Reliance has established an exploration model in Victoria based on empirical and con- Mr Chapman also pointed to an analogy “Discoveries include: Sunrise Dam 6m oz, ceptual parameters. between the hidden potential of Victoria with Wallaby 6m oz, Kanowna Bell 5m oz, St Ives the under cover Yilgarn province of Western “In essence, there is a well documented asso- 4m oz, Bronzewing 3m oz, Red October 1m Australia. ciation between the location of large Victorian oz and Norseman 1m oz. gold deposits and; “Victoria has not seen the substantial under- “This success was achieved by companies cover gold exploration experienced in many • the proximal hanging wall position of major undertaking detailed geophysics, reconnaissance of Australia’s other goldfields,” he said. N to NNW trending reverse faults, drilling and sub-surface geochemistry along the “When compared with the number of under- covered extensions of major gold belts, or along • doubly plunging anticlines and anticlinoria cover exploration successes (discoveries) major gold-bearing structural zones. (e.g. Bendigo), realised by a number of modern explorers in “Reliance intends employing a similar explo- • regional WNW, NNE and ENE lineaments, the Yilgarn of WA, it can be appreciated why ration strategy in Victoria, on project areas • the margins of granite domains, Reliance regards the potential of Victoria so already identified and applied for to the north highly. • graphitic pelitic host metasediments, and south of the Ballarat-Wedderburn gold- “In the Yilgarn, exploration and mining com- fields corridor, to the south of the Stawell- • lower crustal mafic lithologies, panies have been systematically exploring Ararat goldfields corridor, northwest along the • periodic spacings between major gold covered terrains since the late 1980’s. major northwest trending Percydale and St camps of 30-36 km along major strike-par- allel faults.” Reliance has used these parameters to select ‘Greenfield’ target areas under cover to the north and south of several major Victorian goldfields where there is a strong spatial association between gold occurrence and I-type granites. Mr Chapman said that many explorers have discounted this as an important targeting para- meter in the belief that the younger age of the granites indicated they could not have influ- enced gold mineralisation. “Reliance does not share this view. In some areas, for example the Melbourne Zone, the granites are virtually synchronous with gold mineralisation and are themselves mineralised,” Mr Chapman said. “In other areas, the granites are not markedly younger and the permissible age ranges from

3 GOLD EXPLORATION

Arnaud structures and beneath the covered terrain along trend from the Rutherglen- Chiltern goldfields near Wangaratta.” But while the company will be looking for BENDIGO TO DECLARE RESERVES new ‘Greenfield’ projects, it also has developed a clear strategy to look for known exten- endigo Mining will post its first ever By posting gold reserves statement, sions of existing goldfields, adopting a gold reserves statement in June for Bendigo Mining will have overcome one of ‘Brownfields’ strategy. B the newly developed New Bendigo the region's traditional difficulties, which is Mr Chapman again pointed to the Western underground mine. the uneven distribution of gold within indi- Australian successes in finding major new Work at Bendigo has extended the mine vidual reefs. gold resources in the vicinity of older gold decline to 830 metres below the surface and But with detailed drilling information, mines, discovered using modern exploration provided direct access to the Deborah and obtained from underground drill sites pro- techniques. Sheepshead reefs which will allow the vided by the decline and development dri- The number of discoveries in WA was spec- reserve calculations to be completed ahead ves into the reef systems, Bendigo Mining tacular, he said, with tens of millions of of a final mining decision due by year end. has dramatically improved the scientific ounces of gold found near well known mines In the company's March quarter report, understanding of the reef systems. like Paddington, Kalgoorlie, Victory- highly encouraging exploration and devel- Several bulk samples were also acquired Defiance, Lancefield, and Hill 50. opment work within the Deborah anticline from the Deborah reef system in the March Reliance believes the time is right for major system allowed Bendigo Mining to clearly quarter and processed in the new Moon extensions of old goldfields to be located in identify the gold bearing resources. gold plant adjacent to the mine. Victoria. “As expected, gold distribution is not “These parcels are from the on-reef explo- “Reliance has embarked on a strategy of entirely coincident with quartz distribution ration development and are 1000 tonnes or acquiring prospective historic mining camps in the reefs at Bendigo and, as a conse- greater in size,” the company added. that have received little modern exploration quence, a detailed understanding of the and intends to apply the skills and experience, structural controls to gold mineralisation “The first parcel of material, comprising gained through extensive and successful within individual reefs is required to suc- about 6000 tonnes, is from development of ‘Brownfields’ exploration within WA, to its cessfully define resources and reserves," the within the D3 ribbon. The gold recovered new project areas in Victoria,” Mr Chapman report said. from these tests will help verify grade esti- mation procedures within the reefs.” added. But it added that, “sufficient exploration has now been completed to identify both the FOR MORE INFORMATION CONTACT: resource envelopes and the structural con- FOR MORE INFORMATION CONTACT: trols to gold mineralisation within the reefs Paul Chapman in the D3 ribbon and the upper S3 reef.” Doug Buerger Director, Reliance Mining Limited “The company is on schedule to delineate Managing Director, Bendigo Mining Tel: (08) 9220 9880 indicated resources and probable reserves Tel: (03) 5447 1834 www.reliancemining.com.au within these reefs in the June quarter.”

4 OIL, GAS NEWS Overview presents healthy picture

The Gippsland Basin still supplies almost 20 per cent of Australia's crude oil requirements with a daily average production rate of 156,000 barrels a day during 2001/02.

an initial 59 Bcf to 36.7 Bcf (including the reserves of the undeveloped fields). The developed gas fields are North Paaratte, Iona, Mylor, Fenton Creek, Skull Creek, Dunbar, Penryn, Mcintee, Tregoney, Naylor, Croft and Wallaby Creek. The undeveloped gas fields are Grumby, Langley, Lavers, and Buttress. The initial recoverable reserves of carbon dioxide gas from Boggy Creek and Buttress fields in the Port Campbell area were 19.7 Bcf but cumulative CO2 production from the Boggy Creek Field of 3.8 Bcf reduced the remaining reserves to 15.9 Bcf.

Underground Gas Storage The Iona gas field, which is located approximately one km northeast of Port Campbell, is the first field in Victoria to be converted ictoria’s petroleum industry is in good Gas production, generally linked to demand for use as an underground gas storage shape according to an overview level, met Victoria’s 2002 winter peak demand facility. presented to the annual conference of of 900 million cubic feet per day compared to the Australian Petroleum Production the average winter demand of about 700 Gas is stored over the low demand summer V months to ensure Victoria's supply during the and Explorers Association in Melbourne Mcfpd. heavy demand in winter. during March. Petroleum development drilling and workover Exploration, development drilling and seismic operations by Esso/BHPBilliton continued Gas injection into the field started in data activity hit record levels in 2001/02 and over several early producing oil fields, notably December 2000, reaching a volume of about the trend looks like continuing, or increasing, at Tuna, West Tuna, Flounder, Halibut, 10.4 Bcf to December 2001. A total of 0.8 Bcf during the current year. Kingfish and West Kingfish. of gas was also injected during the first quarter of 2002. The major oil and condensate producers were Offshore Gippsland Basin Bream, Flounder, Fortescue, Halibut, Kingfish, Exploration During 2001/02, the offshore Gippsland Basin Tuna, West Kingfish and West Tuna fields. produced crude oil at an average rate of A total of 5,272 line km of 2D and 3,795 km These eight fields are now responsible for pro- 156,000 barrels a day. of 3D seismic data was acquired during ducing more than 67 per cent of liquid hydro- 2001/02. The basin still supplies almost 20 per cent of carbons in the Gippsland Basin. Australia's crude oil requirements and virtual- Nineteen wells (including one well in ly all of Victoria’s natural gas needs. Offshore Otway Basin Tasmanian waters) were drilled in both onshore and offshore Victoria, consisting of At June 30 last year, around 3.7 billion barrels The total gas in place in the undeveloped 14 exploration, three appraisal and two strati- of liquid hydrocarbons had been produced Victorian and Tasmanian fields is estimated at graphic wells. from the Bass Strait fields while the estimated 2.53 Tcf. remaining recoverable reserves were 354 mil- Gas reserves from the Victorian Minerva, La lion barrels. Bella, Geographe and Casino fields are esti- FOR MORE INFORMATION CONTACT: The recoverable gas reserve in Bass Strait mated at 1.42 Tcf and from the Tasmanian declined from an initial 9.86 trillion cubic feet to Thylacine and Yolla fields at about 1.1 Tcf. Dr Kourosh Mehin 4.3 Tcf while the total gas in place in the remain- Manager Petroleum Resources ing undeveloped fields is estimated at 4.55 Tcf. Onshore Otway Basin Minerals and Petroleum Division This highlights the strong position Victoria The recoverable gas reserves in the onshore Department of Primary Industries occupies as a long-term supplier to the southeastern gas fields of the Victorian Otway Tel: (03) 9412 5074 east market in Australia. Basin as at June 30, 2002 were reduced from

5 OIL, GAS NEWS NEW ACREAGE RELEASE

enders have been called for six new oil straddling the basin margin faults to the deep- COMMONWEALTH EXPLORATION ACREAGE and gas exploration areas in waters er water areas of the productive Central Deep. offshore from Victoria’s Gippsland In view of the geographic and geologic diver- Area V03-1 region. T sity of the release areas, two separate reports Area V03-1 is located in the basin's northwest, The release highlights Victoria’s emergence under the Victorian Initiative for Minerals approximately 10 km south of the Lakes in recent years as an important exploration and Petroleum have been prepared describing Entrance oil field. destination for a number of major local and the hydrocarbon potential of the release areas. foreign companies and provides an opportu- Water depths are very shallow, ranging nity for new companies to join the latest '3D VICTORIAN EXPLORATION ACREAGE between 20 m to 40 m. Only four exploration seismic driven’ phase of exploration. wells have been drilled in the block, which is geologically diverse. Even long-established producers like Areas 03-1(v) and 03-2(v) The southern section traverses the Rosedale ExxonMobil and BHPBilliton have renewed Area 03-1(v) straddles the northern margin of Fault System across which the hydrocarbon- their search for hydrocarbons through the the Gippsland Basin. Speculative leads in the bearing Latrobe Group thickens southwards widespread application of 3D seismic. Halibut and Golden Beach subgroups have into the Central Deep. Having completed a major regional 3D seismic been mapped by previous operators in the survey along the northern Gippsland Basin southwest of 03-1(v) south of the Rosedale The heavily dissected nature of the Northern margin, the joint venture has recently complet- Fault System. Terrace/Central Deep transition is favorable for structural traps and numerous discoveries ed the Tuskfish 3D survey over the eastern Delineation of these leads will require a have been made along the southern boundary shelf edge. marked improvement in seismic coverage and of Area V03-1. The new acreage release includes two State integration with existing onshore well and water blocks and four large Commonwealth seismic data. The southwest of the block is probably the most prospective. blocks encompassing 6650 square kilometres. This lack of seismic data has hindered explo- Three of the four gazettal areas are close to ration in State waters. This area lies south of the Rosedale Fault known discoveries and producing fields, However, recently acquired aeromagnetic data System between the gas discovery at Golden while one block covers the Pisces sub-basin, a provides some insight into the subsurface Beach and the small Seahorse oil field. true frontier area on the basin’s eastern mar- geology of the area. Two wells have been drilled in this part of the gin. The magnetic data reveal a pronounced anom- block. West Seahorse-1 was drilled by Exploration efforts to date have been aly above the granitic body that underlies the Hudbay Oil in 1981 and flowed 1827 bopd of focussed largely on the uppermost section of Lakes Entrance oil field and extends offshore. 48 degree API oil from Cobia Subgroup sand- the Late Cretaceous (Turonian) to Tertiary stones. Other north-south trending anomalies occur (Early Oligocene) Latrobe Group. throughout 03-2(v) and may indicate the pres- However, the reservoir interval was absent in Most hydrocarbons in the Gippsland Basin ence of eroded granitic basement or Oligocene the follow-up well, West Seahorse-2. are produced from the coarse-grained, often drape plays offshore. A number of poorly defined Latrobe Group highly-permeable, marine sandstone reservoirs below the Marlin and Latrobe unconfor- mities. In he 1980s, the deeper intervals of the Latrobe Group, including the Halibut, Golden Beach and Emperor subgroups, became exploration targets, culminating in the discovery of gas at Kipper in 1986. Sub-commercial gas discoveries also were made at Longtom, Angler, Archer and Anemone. However, it is believed that the overall hydrocarbon potential of the deeper Latrobe Group remains under-explored. The blocks currently on offer cover a wide range of play settings from shallow water areas

Diagram shows the new acreage releases in the Gippsland Basin and their proximity to producing oil and gas fields.

6 OIL, GAS NEWS

New discoveries and offshore pipelines have established Victoria as the major supplier of gas to the southeast Australian market.

It appears likely, therefore, that Kipper-style plays (gas-bearing sandstones sealed by vol- canics and lacustrine shales) could be developed along the Darriman Fault System and Longtom-type plays (gas-bearing sandstones within lacustrine Kipper Shale) may exist on the terrace. Although much of the Southern Platform is unexplored, the fact that the Latrobe Group is pinching out between basement and the Tertiary Seaspray Group, creates the potential for pinchout plays, such as the Avon lead.

Area V03-3 Area V03-3 is located in the southeastern part of the Central Deep south of the Blackback oil field and east of the giant Kingfish field. leads have been mapped by earlier explorers Flying Fish-1, (1971), and Snook-1 (1990) Water depths vary considerably ranging from along the Rosedale Fault System. were drilled to test top-Latrobe anticlinal clo- 160 m in the northwest of the block to over 2400 m in the east. The largest of these is the Triggerfish lead, sures on trend with the Mulloway and which extends into Area 03-2(v). Recognising Whiptail discoveries. Although over 50 per cent of the block lies in the need for better seismic definition, Both wells failed to encounter hydrocarbons water depths greater than 1000 m, the area is Esso/BHP have extended their northern mar- whilst strong shows in the top-Latrobe Group considered to be highly prospective. gin 3D survey to encompass these leads. were recorded in Amberjack (1990) just west Objectives in this gazettal block include Although the Latrobe Group thins rapidly north- of the Dolphin Field. Halibut and Golden Beach subgroup plays as ward and is only about 35 m thick in Albatross- None of these wells penetrated the deeper well as top-Latrobe erosional remnant plays, 1, the Northern Terrace provides a possible set- Halibut and Golden Beach subgroups, which similar to Blackback. ting for structural and stratigraphic plays. comprise the main targets in this part of the Depth conversion and seismic imaging in this gazettal area. Two wells have been drilled on the Northern area of steep bathymetry, canyons and channel- Terrace on the migration pathway from the ing within the carbonates of the Seaspray Group Central Deep to the Lakes Entrance oil field. are critical factors for exploration success. Albatross -1 (drilled by Endeavour Oil in 1970) Four exploration wells have been drilled in the and Cuttlefish-I (drilled by Amity Oil in 1999) block: Selene-I and Athene-1 (both drilled by were both unsuccessful due to a presumed Phillips in 1982/83) failed to reach the Golden absence of an effective trapping mechanism. Beach Subgroup whereas Angler-I (drilled by Petrofina in 1989) and the nearby Archer-1 However, stratigraphic traps within the and Anemone-lA wells intersected hydrocar- Latrobe Group could exist such as the bons within the Golden Beach Subgroup. Nicholson lead, identified by Lasmo/Hudbay as an erosional remnant or a marine barrier bar Billfish-1 (drilled by BHP in 1997) was aimed overlying the coal-bearing lower coastal plain at an erosional remnant play similar to the sediments. Blackback Field. However, depth conversion inaccuracies led Area V03-2 to the well being 170 m deep to prognosis. Post-drill depth mapping of the top-Latrobe Area V03-2 is located in the basin's west. unconformity completed as part of the VIMP Water depths are generally shallow and range initiative suggests that Billfish was probably between 20 m -70 m. not a valid structure. Approximately two-thirds of the area extends across the Southern Platform and Terrace, However, a number of untested top-Latrobe while the northern third lies over the Central Kyarra-1 (1983), Wyrallah-1 (1984), structures exist throughout the block and war- Deep, providing access to the deeper strati- Tommyruff-1 (1990) and Broadbill-1 (1998) rant further detailed study. graphic section that has been identified as were drilled without success on the Southern Seismic mapping also indicates the potential prospective along the northern basin margin. Terrace. for lower Halibut and Golden Beach subgroup Seven wells have been drilled in the block, New data from Perch-1 has revealed the pres- plays analogous to the Angler discovery. primarily targeting top-Latrobe objectives, ence of Turonian sediments immediately Several leads have been identified in the including barrier bar complexes and structural south of the Darriman Fault System, indicat- block, including the Oyster lead and those closures generated during Miocene basin ing that the Emperor Subgroup extends onto below the total depth of the Selene-I and inversion. the Southern Terrace. Athene-1 wells.

7 DEPARTMENT OF PRIMARY INDUSTRIES MINERALS AND PETROLEUM DIVISION CONTACT LIST: MINERALS AND PETROLEUM BUSINESS CENTRE: Level 8, 240 Victoria Parade, East Melbourne Vic 3002 Australia Tel: +613 9412 5020 Fax: +613 9412 5150

Richard Aldous Bob Harms Executive Director Energy and Minerals Manager Petroleum Information Telephone: (03) 9412 4508 Telephone: (03) 9412 5053 Fax: (03) 9412 4183 Geoff Collins Manager Petroleum Projects MINERALS AND PETROLEUM Telephone: (03) 9412 5095 BUSINESS CENTRE: Fax: (03) 9412 5157 MINERALS AND PETROLEUM Kim Ricketts REGULATION: Client Services Officer Fax: (03) 9412 5152 Area V03-4 Telephone: (03) 9412 5103 Rob King Area V03-4 is located in the basin’s southeast and contains a small Manager Minerals and embayment in the Southern Terrace comprising a perched Early GEOLOGICAL SURVEY VICTORIA: Petroleum Regulation Cretaceous rotated half-graben referred to as the Pisces Sub-basin. Fax: (03) 9412 5155 Telephone: (03) 9412 5069 Water depths range from 150 m to 1800 m. Phil Roberts George Buckland Only one well, Pisces-1 (Union Texas, 1982), has been drilled in the Manager Geological Survey Victoria Manager Minerals and block. Pisces-1 targeted a combined structural and stratigraphic objective Telephone: (03) 9412 5035 Petroleum Tenements in the hanging wall of the bounding fault of the Southern Platform. Alan Willocks Telephone: (03) 9412 4778 The top-Latrobe pinchout play failed to encounter hydrocarbons. However, weak shows were encountered in the upper part of the Golden Manager - Geophysics Graeme McLaughlan Beach Subgroup Telephone: (03) 9412 5131 Manager Northern Region Operations Several small leads at the top-Latrobe Group level have been recognised. Chief Mining Inspector Peter O’Shea However, the largest feature is a 43 square km basement/Strzelecki clo- Telephone: (03) 5444 6689 Manager Geological Mapping sure in the northwest comer of the block. Telephone: (03) 9412 5093 John Mitas The main targets of this play would be transgressive sandstones and ero- Manager Southern Region Operations sional sediments from the granitic basement (Emperor and Golden Beach Roger Buckley Telephone: (03) 9412 5083 subgroups) or fluviodeltaic sandstones sealed by either marine or lower Manager Mineral Resources coastal plain mudstones (Golden Beach and Halibut subgroups). Telephone: (03) 9412 5025 Doug Sceney Environmental Manager Seismic data indicates a tentative amplitude anomaly associated with the closure, which is worthy of further investigation. However, submarine Graham Gooding Telephone: (03) 9412 5107 Regional Manager Ballarat canyons distort the true structure. Telephone: (03) 53 336 521 Horacio Haag Overall, the 2003 gazettal round offers a large area of diverse acreage. Manager Petroleum Operations Both inshore blocks are near proven hydrocarbon accumulations and lie Guy Hamilton Safety and Environment in shallow waters. Regional Manager Bendigo Telephone: (03) 9412 5101 The two eastern blocks straddle the modern continental shelf and are Telephone: (03) 5444 6697 located in the middle of renewed exploration activities. MINERALS AND PETROLEUM POLICY: Although all four blocks have been previously explored, many mapped prospects PETROLEUM DEVELOPMENT: John Lambert and leads remain untested. However, the most important keys to future success in Fax: (03) 9412 5156 Manager Minerals and the basin lie in challenging traditional exploration concepts, together with the appli- Kathy Hill Petroleum Policy cation of 3D seismic to concentrate on both subtle structural/stratigraphic plays at Manager Petroleum Development Telephone: (03) 9412 5068 top-Latrobe and on the stratigraphically older successions of the Golden Beach and Emperor subgroups. Telephone: (03) 9412 4208 INFORMATION: The Basin Studies Group of MPV has published two detailed reports on Kourosh Mehin Janne Bonnett - Manager Minerals the hydrocarbon prospectivity of the six gazettal blocks; one on the four Manager Petroleum Resources and Petroleum Reference Centre nearshore blocks in the northwest of the basin and one on the two south- Telephone: (03) 9412 5074 Telephone: (03) 9412 5022 eastern, deeper water blocks. Mike Woollands Fax: (03) 9412 5157 The exploration history is outlined and the prospectivity of each block is Manager Basin Studies discussed, supported by several seismic lines, maps and cross-sections. Chandri Nambiar Telephone: (03) 9412 5135 The reports are available from Petroleum Client Services at MPV, Manager Marketing Development Department of Primary Industries. Maher Megallaa Telephone: (03) 9412 5061 Fax: (03) 9412 5155 Manager Acreage Release FOR MORE INFORMATION CONTACT: Telephone: (03) 9412 5081 Mike Woollands Manager Basin Studies Group Tel: (03) 9412 5135

8 REGULAR FEATURE Digging deep for future recovery

ictoria’s past, as well as its future, is We are pleased with the progress that the min- bound up with the mineral and eral sands industry is making in this regard. petroleum industries. In our drive to The Bracks Government will continue to work V foster economic opportunities and with industry and local communities to long-term jobs and prosperity, the Bracks improve the sustainability of Victoria’s min- Government is committed both to ing sector and its long-term success. supporting local ventures and encouraging international investment. Meeting or exceeding contemporary expectations for social and environmental practices is That is why, when Melbourne recently played critical to the success of industry. host to the 4th Global Mineral Sands And whether you operate in Virginia or Exploration and Investment Conference, it Victoria, critical to that is an understanding of was good to see several international industry the community in which the industry operates. experts and delegates in attendance So far the performance of the mineral sands I was pleased to play my part in showcasing industry in Victoria has been impressive. The the development potential of the Victorian massive show of support by the people of section of the Murray Basin. Hamilton for Iluka Resources’ ore processing Industry has long recognised Victoria’s poten- plant is testimony of the good work that is tial in the development of titanium and zirco- being done. nium mineral sands deposits in the Murray The Bracks Government is strongly support- Basin and has been rewarded with some ive of sustainability and all of the companies excellent discoveries. We already have Murray Basin Titanium’s (MBT) new mine at Wemen, Iluka Resources’ Douglas Project Stage 1 will start later this Industry has long recognised Victoria’s potential year and MBT has just triggered the Government approval process for its next pro- in the development of titanium and zirconium mineral ject in Victoria. sands deposits in the Murray Basin and has been Victoria also has its share of much larger deposits as well. Some, like the massive rewarded with some excellent discoveries. Douglas Project, are world class and will provide profitable production for a number of decades. This will end 120 years of incompatible rail exploring in Victoria’s share of the Murray gauges in Victoria and stimulate regional Basin have shown a willingness to work with The Kulwin Woornack & Rownack project industries by improving access to internation- this Government and their local communities also shows great promise. The fine-grain al, interstate and local markets for our miners, in a sustainable way. WIM deposits (Wimmera Industrial Minerals farmers and manufacturers alike. is a subsidiary of Rio Tinto) are not yet For these reasons the Bracks Government sup- viable and await new technology or market There can be no doubt that in the Murray ports exploration and mining in this State. conditions. Basin, Victoria is the best place to mine and In addition, we hope to attract the develop- process these titanium and zirconium minerals. In the Victorian Murray Basin you cannot be ment of mineral separation plants and sec- more than 60km from a railway line. For Our roads, rail, towns, deep-water bulk- and ondary processing plants to Victoria. more than 85% of the Victorian Murray Basin, container ports, electricity and gas supplies all The mine is only one part of the mineral sands it is only 20km. add up to an enticing atmosphere for industry. story. The upgrading of ore concentrate adds On the world stage, Victoria compares very well. We have a choice of two Panamax-capable value to the mineral production and boosts our bulk ports and Australia’s largest and busiest All of these projects are located in rural exports. container port serviced by 45 container ship- Victoria and will bring new investment, new We have more plans and programmes in place ping lines. All three of these ports have road jobs, new people and new skills to these areas. to attract these to Victoria, and I look forward and rail links. Nevertheless, industry support from to discussing these in future editions of The Bracks Government remains committed Government is tempered by prevailing social Discovery. to standardisation of key rail lines and to com- and environmental expectations. pleting this $96 million investment under the Any new industry- mining, agricultural or Hon Theo Theophanous Government’s Regional Freight Links commercial project must meet those expecta- Minister for Energy Industries Program. tions if it expects to maintain that support. and Resources.

9 VIMP DATA Castlemaine is the centrepiece

ew geological maps of the rich Chewton–Castlemaine goldfields, a part of the rich central Victorian goldfields region, will form the centerpiece of the 15th data release underN the Victorian Initiative for Minerals and Petroleum (VIMP) on May 26. The half-day afternoon seminar will be followed by a field trip on May 27 to key locations highlighting the geology of the Castemaine area and the regolith of the Ballarat-Creswick area. Castlemaine, 80 km northwest of Melbourne, is famous for the richness of its alluvial and quartz reef gold deposits. The new maps and accompanying report document the structure, stratigraphy, intrusive and extrusive history, the geophysical character and the mineral resources of the region. A major objective of the project was to extend existing knowledge of the structure and mineral resources of the Ordovician rocks, previously mapped in detail in the Chewton– Castlemaine goldfield by GSV geologist Clive Willman in the early 1990s. As a result, special emphasis was given to building a structural transect in the well-exposed southern part of the Castlemaine map sheet area while additional work focussed on the nature and timing of deposition of the gold mineralisation at Daylesford, Blackwood and Taradale. This work was done in conjunction with the School of Geosciences, at Monash University. Mapping was aided by VIMP airborne magnet- widespread and cover about 20 per cent of the The most productive goldfields are at ic and radiometric surveys flown at 200 metres map area. Castlemaine and Daylesford. line spacing, at a height of 80 metres and by Alluvial and colluvial Quaternary deposits fill Weathering and erosion has remobilised sub- colour aerial photographs taken in 1996. the present-day valley and gully system stantial amounts of gold into some of the The mapping is published as four 1:50,000- throughout the area. Primary gold occurs in Cainozoic units to form placer deposits that were scale geological maps which also show the Ordovician rocks and secondary gold in late extensively mined in the past. Non-metallic locations of mineral resources captured in the Cainozoic fluvial sedimentary rocks. resources include clay, sand, gravel and basalt. corporate VicMine database. The package Two main periods of Orogenic gold minerali- Groundwater aquifers are well developed in includes a geological interpretation of the geo- sation have been identified. In both events Cainozoic sub-basaltic gravels and mineral physical data at 1:100,000 scale. gold was introduced into the basement rocks water is a significant resource in some parts of The Castlemaine mapsheet area lies within the in structurally controlled quartz reefs. the area. Whitelaw Terrane of the Lachlan Fold Belt The first and most important event was asso- and is part of the Bendigo structural zone. ciated with the late stages of the Benambran FOR MORE INFORMATION CONTACT: Its basement is largely composed of weakly Orogeny. metamorphosed Ordovician sedimentary The second, more minor, event is related to To register for the seminar contact: rocks. Late Devonian I- and S-type granites Middle Devonian mineralisation which affect- Chandri Nambiar Tel: (03) 9412 5061 intrude a small area of basement in the north. ed only a few areas in the Bendigo Zone but Email: [email protected] Permian glacial deposits overlie the basement was the most significant mineralising event in For information on the field trip, contact: the Melbourne structural zone. in the central part and widespread Neogene Peter O’Shea Tel: (03) 9412 5093 fluvial gravels are mostly preserved beneath About 300 tonnes of gold has been mined from Email: Peter.O’[email protected] late Cainozoic volcanic rocks, which are both placer (alluvial) and quartz reef deposits.

10 MAPPING New mapping project

he Geological Survey of Victoria will map the Woods Point-Walhalla goldfields in north-eastern Victoria in a T major new regional geological mapping project starting later this year. The Woods Point mineral domain, at the eastern edge of the geological area known as the Melbourne Zone, is the last major gold province in Victoria to be covered by new- generation geological mapping. Aerial magnetic and radiometric surveys were flown for GSV in 200 metre line spacings in 1999 and 2000 as part of the Victorian Initiative for Minerals and Petroleum. More than 120 tonnes of gold has been produced from the region, principally from the main shoot at Cohen’s Reef at Walhalla, which contributed the bulk of the 47 tonnes of gold mined from Cohens Reef. That reef remains the largest and one of the domain have roughly the same distribution as • Determine the local and regional controls richest gold shoots in Victoria. the Woods Point dyke swarm. on orogenic gold mineralisation, At Woods Point the Morning Star mine pro- Mineralisation is controlled by reverse faults • Determine geochemical and geophysical duced 19.6 tonnes of gold and the A1 mine and mineral assemblages and ore fluid temper- signatures of the various styles of orogenic 12.1 tonnes of gold. atures are similar to Bendigo Zone deposits. gold mineralisation, and All three mines produced ore at an average The mapping project will run over two and a • Identify areas prospective for new gold dis- grade of one ounce or 31 grams to the tonne. half years, with maps and reports due for com- coveries. Gold deposits in the Woods Point mineral pletion by the end of 2006. The project team, managed by GSV’s A moratorium was placed over the region in Manager for Geological Mapping, Peter Above: The Woods Point-Walhalla area is now a September 2002 in anticipation of the project O'Shea, will comprise six mapping geologists, popular tourist area with many local attractions and it is proposed that this will be lifted by based on its rich mining history. two mineral resources geologists and a geo- December 2006. physicist, with back-up support from technical Below: Modern-day geological images of the area The project area was chosen to cover the officers and cartographers. have the potential to help re-establish the area’s strike extent of Palaeozoic sediments of the gold mining industry. The project will also produce: Walhalla synclinorium and felsic to mafic dykes of the Woods Point dyke swarm, from • a GSV report covering the geology and the southern edge of the Strathbogie granite in prospectivity of the project area. the north to where the sediments disappear • 1:50,000 scale geological maps and under Tertiary cover south of Coopers Creek. 1:100,000 scale geophysical interpretation Within this belt of rocks, which are mainly maps covering the area, along with Lower Devonian in age, recorded gold miner- 1:10,000 scale geological maps over select- alisation is mostly confined to a strip of coun- ed goldfield areas, and try between the Enochs Point Fault in the west • An updated Warburton 1:250,000 sheet and the Fiddlers Green Fault in the east. and a geoscientific data CD containing all A project workshop in November 2002 pro- digital data collected during the project. vided input from academia and industry to the scope of the project and established collabora- tive links. Following the workshop a list of targeted, GSV-supported, postgraduate pro- FOR MORE INFORMATION CONTACT: jects for the area was circulated to both Victorian and interstate universities. Peter O’Shea Manager Geological Mapping The main aims of the GSV project are to: Geological Survey of Victoria. • Document and interpret the geology and Tel: (03) 9412 5093 mineralisation of the area,

11 REGULAR FEATURE News Briefs

MELBOURNE EXHIBITION PLANNED For further information contact: Driven by programs such as the Victorian Shaun Smith, managing director, Swan Initiative for Minerals and Petroleum (VIMP), Victoria is an exciting place to do oil and gas Exhibitions at: Tel: +61 8 9443 3400 which has generated a mass of new geological business these days with estimates that $3.5 Fax: +61 8 9242 1811 data, reforms to the state’s mining legislation billion will be spent on the local industry over Email: [email protected] and a growing realization that Victoria can the next three years offer low-cost access to the most prospective Recent developments include the emergence NEW CONVEYOR BELT PLANT regions, the state has become a high priority of the Otway Basin as a world class explo- for many companies. ration area, a rapidly developing local gas Apex Fenner, Australia’s only manufacturer Victoria is also the subject of two major infrastructure, a push to boost oil and gas of fabric-reinforced rubber conveyor belts Cooperative Research Centre programs to exploration and production in the Gippsland which are used primarily in the mining indus- apply modern technologies to the search for Basin and the introduction of a number of new try, opened a new $5 million fabric weaving new mineralisation systems. plant in Melbourne during March. and innovative local and international players. Projects like the Stawell mine, new develop- Swan Exhibitions, AustralAsia’s leading oil Managing Director, David Landgren, said the ments like the underground operation at and gas event organiser, has recognized the new plant would result in shorter lead times Bendigo and a host of potential projects such new ‘buzz’ emanating from Victoria and in and superior product quality. as Fosterville, Costerfield and Ballarat, have response will hold a major new exhibition in Apex Fenner had its origins in Australia in given Victoria’s gold industry a new lease of Melbourne in 2004. Apex Belting over 100 years ago. Apex life, 150 years after the first official discovery. The Inaugural Victoria Oil & Gas Exhibition Belting was purchased by the UK-based Fenner For more information contact: Australian Journal will be staged at the historic Royal Exhibition Dunlop Group in 2001, becoming part of the of Mining conferences on (02) 9080 4307. Centre in the heart of Melbourne’s CBD on world’s largest manufacturer of conveyor belts, March 4 and 5 2004 and will be accompanied changing its name to Apex Fenner in Australia. by a two-day technical conference. Around 75% of the company’s local business NEW COAL TENDER AWARDED With the support of the Victorian Government is aimed at the mining industry, with the HRL Developments Pty Ltd has been granted through the Petroleum Division of the remainder spread across quarrying, grain han- the latest exploration licence awarded under Department of Primary Industries, the event dling, cement, fertiliser and food production. the Victorian Government’s brown coal tender will provide an ideal showcase for local com- process. panies to exhibit their technologies and skills VICTORIAN GOLD CONFERENCE The tender was launched in 2001 to open up in front of a key audience. the vast brown coal resources of the Latrobe The resurgence of interest in the Victorian Valley for commercial exploitation for the The event is expected to attract strong interest gold fields will be the main topic of discussion first time in many decades after the region was from throughout Australia with large groups when the major players in the Victorian gold originally locked up for the exclusive use of from all states among the 100 plus exhibitors. exploration and production industry gather in the then State Government-owned electricity Swan Exhibitions has been the leading oil and Ballarat on June 16-17 for the annual industry. gas exhibition organiser in this region since Victorian Gold Conference. 1981, staging internationally recognised Speakers will include the Victorian Minister HRL Developments also plans to investigate events such as the AustralAsian Oil & Gas for Energy Industries and Resources, Theo the use of brown coal as a fuel for electricity (AOG) Expo, the New Zealand Oil & Gas Theophanous, the Executive Director of the generation, but the company is aiming at envi- Expo and the Offshore Northern Territory Oil Victorian Chamber of Minerals and Energy, ronmentally friendly coal gasification technol- & Gas Expo. Chris Fraser and the industry’s major produc- ogy to dramatically increase the efficiency of It is a sister company to the region’s leading ers and explorers. the fuel usage to increase the power generation capacity. oil and gas journal, Oil & Gas Australia. Organised by the Australian Journal of Mining, the conference has become the land- Burning brown coal in traditional furnaces is mark event for the local gold industry, which is thermally inefficient, a problem the Latrobe starting to show major signs of life after being Valley generators are working hard to over- almost dormant for the past few decades. come. HRL plans to build a 100 megawatt demonstration power plant as an intermediate The rise in exploration activity has resulted in step ahead of a full scale 800 Mw plant cost- one of the largest coverages of Victoria being ing around $A1.5 billion. held under exploration or mining licence in recent years. Victorian Energy Industries and resources Minister, Theo Theophanous, said the award of the tender to HRL Developments represent- Company executives explain the ed a world first and created the opportunity to workings of Apex Fenner’s new $5m conveyor plant to VIP guests. reduce greenhouse gas emissions by 30% over present emission levels.

12 REGULAR FEATURE News Briefs

ANGLO AMERICAN JOINS FORCES South African mining giant, Anglo American has joined forces with the Australia Power Energy Ltd group to investigate the viability of a brown coal liquefaction project generating low sulphur diesel fuel and electricity in the Latrobe Valley. APEL won access to the Latrobe Valley’s brown coal leases through the Victorian brown coal tender process. APEL’s proposal, dubbed the Victorian Power and Liquids Project, has the potential to create Australia’s first ever zero-emissions base-load power station. Carbon dioxide produced during the power generation phase would be captured and inserted into deep underground rock forma- tions in a process known as geosequestration. He said that the state’s roads, rail, towns, Victoria’s only operating mineral sands mine at deep-water bulk and container ports, electrici- Wemen continues to show the way for other larger VICTORIA TOP STATE ty and gas supplies provided a package diffi- developments planned for the state. FOR MINERAL SANDS cult for other states to match. “So far the performance of the mineral sands Victorian mineral sands developments in the fields in the Otway Basin while the industry in Victoria has been impressive. The Murray Basin are way ahead of those in New Patricia/Baleen and Yolla fields in Bass Strait massive show of support by the people of South Wales and South Australia, the 4th are also under development. Hamilton for Iluka Resources’ ore processing Global Mineral Sands Exploration and plant is testimony of the good work that is Investment Conference in Melbourne was told being done,” Mr Theophanous added. in April. GAS MARKET REVIEW “As well, Victoria hopes to attract the devel- The operator and market manager of Victoria’s Already the state boasts one operating mine, opment of mineral separation plants and sec- wholesale natural gas market, VENCorp, is with a second major project due to start later ondary processing plants.” reviewing options aimed at making the market this year. more responsive to rising demand. Murray Basin Titanium’s mine at Wemen is Rapid growth and Victoria’s emergence as a the first mineral sands operation in the state MINERVA PROJECT ON SCHEDULE major gas trading hub and supplier to the major- but Iluka Resources’ Douglas Project Stage 1 BHP Billiton's Minerva gas field off the coast ity of Australian states, has placed unprecedent- is on track to make Victoria a significant play- of Port Campbell in Western Victoria is near- ed demands on the gas market system. er in the global titanium industry, an industry ing completion, with the first gas expected to in which Australia is already the world's lead- flow early next year. A number of major new gas fields are about to be added to the system and a major pipeline ing supplier. The project, in which BHP Billiton holds a linking the Victorian system into the South 90% equity share, is progressing quickly with Approvals have also been sought from the Australian grid is nearing completion. Victorian Government for a third mineral the offshore drilling and the two new sub-sea sands project. wells completed. Victorian Energy Industries and Resources Minister, Theo Theophanous, said the Civil engineering works have started on the Victoria’s Minister for Energy Industries and VENCorp review would “reexamine the gas plant site near Port Campbell. Resources, Theo Theophanous said: workings of the wholesale market to ensure it “Industry has recognised the prospectivity of Work is also continuing on the onshore flow- continues to be best placed to meet the chang- Victoria’s section of the Murray Basin and line and the horizontally directionally-drilled ing requirements of a rapidly emerging has been rewarded with some excellent dis- flowline shore crossing. national energy market.” coveries. The $US136 million project is one of several The review will investigate the move from “There can be no doubt that in the Murray new offshore gas fields currently being devel- daily price setting to hourly pricing and other Basin, Victoria is the best place to mine oped off the Victorian coast. matters raised in a recent study by the and process these titanium and zirconium Woodside Petroleum and Origin Energy are Australian Competition and Consumer minerals.” developing the Thylacine and Geographe Commission.

13 REGULAR FEATURE Victoria’s

L E G E N D

Gold field: 0.5 - 1.0 million oz Gold field: 1.0 - 5.0 million oz

Gold field: >5.0 million oz - Values include production and reserves

Brown coal resource: < 100 million tonnes Brown coal resource: > 100 million tonnes

Base metals deposit - Resource / Reserve

14 s ) rock y abbro g s s s rock rock REGULAR FEATURE y s y s s rock y s rock rock y y lexe p s s s k lacial sedimentar s s s s oc rock and volcanic rock g k lexe ranites and tonalites, minor diorite and y y r p g t oc l s r rock rock rock k e c au e y y y t t cs y y ni oc n f ni r a ca c l ca ni l o ni o o v l v v ca e l t ta o n v rif e n-D e e a in ri t rin rin u n a a il Marine sedimentar Marine sedimentar M Palaeozoic intrusives ( Continental and minor marine sedimentar Continental and minor marine Marine and continental sedimentar Co Continental sedimentar Continental trach Granite and trach Continental and marine Continental sedimentar Cauldron volcanic com Marine sedimentar Rift and cauldron volcanic com S sedimentar Silurian to Mid. Devonian marine and minor continental Marine and continental rift sedimentar M Marine and continental sedimentar

Silurian Ord. Camb. Cainozoic Mesozoic Devonian Palaeozoic 15 e ce r esou r d mineral; R-rutile; Z-zircon; I-Ilmenit mineral; R-rutile; Z-zircon; n y

sa d l d l l e a e r

fi e y il fi Cit O Gas Min

- HM-heav mineral, oil and gas resources oil and mineral, LICENCE REVIEW Mineral Licences January/March 2003

EXPLORATION LICENCE APPLICATIONS TENEMENT NO. STATUS MAP SHEET PRIMARY OWNER EVENT DATE AREA SIZE EL4735 APPLICATION BAIRNSDALE RIO RINTO EXPLORATION PTY LTD 14/01/2003 158 GRATS EL4736 APPLICATION CRESWICK MOUNT ROMMEL MINING PTY LTD 23/01/2003 47 GRATS EL4737 APPLICATION HORSHAM NEWCREST OPERATIONS LIMITED 21/02/2003 130 GRATS EL4738 APPLICATION HORSHAM MPI GOLD PTY LTD 21/02/2003 91 GRATS EL4739 APPLICATION BACCHUS MARSH HIGHLAKE RESOURCES NL 12/03/2003 255 GRATS

EXPLORATION LICENCES GRANTED TENEMENT NO. STATUS EVENT MAP PRIMARY OWNER EVENT DATE EXPIRY DATE EL4704 CURRENT GRANT HEATHCOTE AGD OPERATIONS PTY LTD 10/01/2003 09/01/2008 EL4687 CURRENT GRANT WOODEND RELIANCE MINERALS LIMITED 10/01/2003 09/01/2008 EL4694 CURRENT GRANT WANGARATTA RELIANCE MINERALS LIMITED 10/01/2003 09/01/2008 EL4692 CURRENT GRANT YEA RELIANCE MINERALS LIMITED 10/01/2003 09/01/2008 EL4696 CURRENT GRANT BALLARAT RELIANCE MINERALS LIMITED 10/01/2003 09/01/2008 EL4720 CURRENT GRANT RUPANYUP RANGE RIVER GOLD NL 23/01/2003 22/01/2008 EL4656 CURRENT GRANT EUROA GOLDSTAR RESOURCES LIMITED 06/02/2003 05/02/2008 EL4710 CURRENT GRANT CASTERTON PURUS ENERGY LIMITED 06/02/2003 05/02/2003 EL4721 CURRENT GRANT ST ARNAUD SIERRA MINERALS LIMITED 06/02/2003 05/02/2003 EL4722 CURRENT GRANT CASTLEMAINE SIERRA MINERALS LIMITED 06/02/2003 05/02/2003 EL4718 CURRENT GRANT NAGAMBIE SIERRA MINERALS LIMITED 19/02/2003 18/02/2008 EL4719 CURRENT GRANT NAGAMBIE SIERRA MINERALS LIMITED 19/02/2003 18/02/2008 EL4665 CURRENT GRANT BAIRNSDALE RIO TINTO EXPLORATION PTY LTD 20/02/2003 19/02/2008 EL4676 CURRENT GRANT MURRUNGOWAR RIO TINTO EXPLORATION PTY LTD 20/02/2003 19/02/2008 EL4537 CURRENT GRANT WARRAGUL NEXUS ENERGY AUSTRALIA NL 06/03/2003 05/03/2008 EL4685 CURRENT GRANT MOE HRL DEVELOPMENTS PTY LTD 06/03/2003 05/03/2008

EXPLORATION LICENCES SURRENDERED, CANCELLED OR EXPIRED TENEMENT NO. STATUS MAP PRIMARY OWNER EVENT DATE EXPIRY DATE EL4354 SURRENDERED DUNOLLY DUNOLLY GOLD DEVELOPMENTS PTY LTD 10/01/2003 10/01/2003 EL4563 SURRENDERED ROBINVALE TAMAS KAPITANY 23/01/2003 23/01/2003 EL4485 SURRENDERED NAGAMBIE JOHNSON’S WELL MINING NL 19/02/2003 19/02/2003 EL4486 SURRENDERED EUROA JOHNSON’S WELL MINING NL 19/02/2003 19/02/2003 EL4487 SURRENDERED EUROA JOHNSON’S WELL MINING NL 19/02/2003 19/02/2003 EL4488 SURRENDERED EUROA JOHNSON’S WELL MINING NL 19/02/2003 19/02/2003 EL4451 SURRENDERED CORANGAMITE BIOGREEN LIMITED 06/03/2003 06/03/2003 EL4387 SURRENDERED PORTLAND BIOGREEN LIMITED 06/03/2003 06/03/2003 EL4206 SURRENDERED CASTLEMAINE RANGE RIVER GOLD NL 06/03/2003 06/03/2003 EL4700 SURRENDERED WEDDERBURN AURIONGOLD EXPLORATION LIMITED 19/03/2003 19/03/2003

MINING LICENCE APPLICATIONS TENEMENT NO. STATUS MAP SHEET PRIMARY OWNER EVENT DATE AREA SIZE MIN5388 APPLICATION HEATHCOTE FLITEGOLD PTY LTD 15/01/2003 2.6HA

MINING LICENCES GRANTED TENEMENT NO. STATUS EVENT MAP PRIMARY OWNER EVENT DATE EXPIRY DATE NIL

MINING LICENCES SURRENDERED, CANCELLED OR EXPIRED TENEMENT NO. STATUS MAP PRIMARY OWNER EVENT DATE EXPIRY DATE MIN5136 SURRENDERED HOPETOUN DENNIS A HUF 10/01/2003 10/01/2003 MIN5221 CANCELLATION DUNOLLY HERBERT C BRADLEY 20/02/2003 20/02/2003 MIN5345 SURRENDERED DUNOLLY HEATHER FORD 20/02/2003 20/02/2003 MIN5040 SURRENDERED WEDDERBURN LESLIE R STYLES 20/02/2003 20/02/2003 MIN5281 SURRENDERED HOPETOUN GYPSUM AUSTRALIA PTY LTD 20/02/2003 20/02/2003

ABBREVIATIONS: SURR - SURRENDERED, CANC - CANCELLATION CAN/AM - CANCELLED/AMALGAMATED

16 OIL SEARCH Deep diver has high hopes

relative newcomer to the high-stakes, ultra- deep-water exploration game will soon sink three of the biggest exploration wells to be drilled in A Victorian waters since the 1960’s. Later this year, Santos Ltd will drill a wildcat well in around 1,400 metres of water in the offshore Otway Basin about 200 kilometres south of Warrnambool. Two others, closer to the coast, will follow soon afterwards. Santos is hoping the well will find “several hundred million barrels of recoverable oil”. While a discovery of this size is necessary to be commercial in this high-cost environment, it could also rewrite the history of Victoria’s oil industry. Santos’ Manager of New Ventures, Trevor Brown, hopes the pioneering, deep-water effort by Santos, will produce a change of fortune for the company which is itself one of the pioneers of Australia’s onshore oil and gas industry. Santos will drill three new wells in the VIC/P 51 As Santos’ onshore fields dry up the company shelf in the Otway Basin, may hold the key to major oil accumulations. and VIC/p 52 areas offshore from Portland later is seeking a major new source of crude oil pro- this year. duction to bolster its reserves. The concept is relatively simple. Below left: Santos’ Manager of New Ventures, Santos believes it has the expertise, the scien- As Australia and continental Antarctica sepa- Trevor Brown. tific data and the money required to open a rated about 60 million years ago, a massive val- major new chapter in the petroleum industry’s ley was opened, allowing the sea to flood in. significant reserves of oil and gas, which, until history in Australia. This rift valley, with steep edges resembling a recently, have been beyond the reach of off- Like Lewis Weeks, the American geologist cliff almost 2000 metres high, but lying under shore drilling technology. who pointed BHP towards the offshore the sea, gradually widened as Antarctica drift- Gippsland Basin in the 1960’s, Santos has a ed southwards. The occurrence of deepwater continental margin oil and gas fields has already been proven geological team which believes the ultra- Over time, sands eroding off the southern along the west coast of Africa and the east deep-water, over the edge of the continental edge of Australia, were deposited into this coast of South America where many ultra- narrow seaway from river systems, building deep-water fields have been found and brought up sand deposits close to shore. into production. These sands were deposited further outboard Santos is so interested in the deep-water than the reservoirs which hold the offshore prospectivity of Victoria and Tasmania that it petroleum fields discovered in the Otway has already secured four new offshore explo- Basin to date, notably the Minerva, La Bella, ration leases in the deep-water zone stretch- Thylacine, Geographe and Casino discoveries ing from the Victoria/South Australia border in a sedimentary sequence known as the eastwards to the edge of Bass Strait and south Waarre formation. to the bottom of Tasmania. Sands, initially deposited close to shore, were Trevor Brown told Discovery that when Santos transported further out to sea and the river sys- won control of the offshore permits VicP51 and tems continued to dump sediment into the VicP52, it made record work program bids. ocean. In time, massive volumes of sand were transported out to the edge of the continental The VicP52 permit, containing the ultra deep- shelf where it tipped over the edge to fall to water prospect, was awarded just a year ago. the bottom of the cliff, spreading out into vast, “We’ve come with a mission to be fast, flexi- multiple layers on the deep seabed. ble and efficient,” Mr Brown said. Santos and many other geological teams “To acquire a permit, acquire seismic data, believe that these younger sediments may host and get a drill target ready in 12 months is

17 OIL SEARCH remarkable. Welcome to the new Santos,” he Santos is hoping its onshore successes in said. the Otways will be repeated in its deep water drilling off the Victorian coast. “If the well is successful, we will move straight into appraisal drilling,” he added, with The field, which contains up to 20 trillion cubic up to two more wells possible. feet of gas, was discovered by drilling three Two wells will be also drilled in the shallower wells over the past two years in around 1,300 Vic P51 permit area, which has a water depth metres of water at a cost of about $50m per well. of generally less than 200 metres. The massive costs put such exploration Just before Santos drills its wildcat in the beyond the reach of all but the biggest players Deep Otway Basin region, Woodside in the global petroleum industry. Petroleum aims to test a similar concept by Now the ultra-deep-water exploration effort is drilling a wildcat well in about 1,300 metres moving eastwards, where explorers hope oil of water in the Great Australian Bight. will be found in preference to large gas fields. The Gnarlyknots 1 well, 1300 km south of The ultra-deep-water exploration concept is Ceduna in the Bight in 1400 metres of water, taking off around the world. will test the similar deepwater sands being tar- Santos’ well is expected to utilise Unocal geted by Santos further to the east. deep-water expertise to reduce the cost but a In the Gulf of Mexico, BP, Chevron, figure of $20m to $30m is still in the ballpark. ExxonMobil and others have recently made a Shortly after the Gnarlyknots well is complet- string of major discoveries and BHP Billiton ed, Santos and its partners, Unocal of the US The advance of drilling technology, engineer- is involved in three separate ultra-deep-water and Inpex of Japan, will drill Prospect R, ing and remote sensing techniques and the oil field developments in the same region at a about 150 km south of Portland in western lure of very big oil fields is driving the indus- cost of several billion dollars. Victoria in approximately 1500metres of try into deep water. water in the ultra-deep part of the offshore At the Australian Petroleum Production and Otway Basin. Exploration Association conference in FOR MORE INFORMATION CONTACT: Similarly exposed to the weather, Prospect R, Melbourne in March, ExxonMobil and its Graeme Bethune which is expected to be renamed, will test a partner Chevron Texaco, revealed the discov- General Manager, Business Development ery of Australia’s biggest ever gas discovery similar geological theory used by Woodside Santos Limited which suggests that oil fields may have in the Jansz field, which is about 200 km off Tel: (08) 8218 5157 formed in these hard-to-find areas. the West Australian coast. NEXUS JOINS GIPPSLAND BASIN SEARCH

exus Energy Ltd has joined the hunt three years of its permit tenure which could “For such a prolific basin, the Gippsland Basin for new oil and gas reserves in the throw up additional drilling targets. is relatively unexplored and Nexus believes Gippsland Basin through a deal with Nexus said it was “strongly attracted” to the there is still considerable potential for signifi- N Liberty Petroleum Corp in which permit because of the existing Longtom gas cant discoveries in this acreage and future Nexus will acquire a 100% equity interest in discovery, the proven prospectivity and a vari- gazettal.” the newly awarded Vic/P54 exploration ety of play types, with several leads already “Securing 100% of the VIC/P54 permit rep- permit. identified. resents significant progress in Nexus’ strate- In exchange Nexus has granted Liberty a 3% The company said the proximity to existing gy of securing high quality exploration royalty over the first 50 million barrels of any infrastructure as well as relatively shallow drill opportunities in prospective areas proximal oil production and a 4% royalty over any crude depths (700 - 2700m) and water depths of just to developed infrastructure and markets,” the oil production over the 50m barrel threshold. 36 to 60m would enhance the economics of company said. The new permit lies close to the existing any discoveries. “The high equity level which Nexus holds in Turrum, Marlin, Tuna, Sunfish and the block provides the opportunity for the “The permit is relatively unexplored with only Patricia/Baleen discoveries company to gain leverage from its technical two wells having been drilled to date,” the com- and commercial skills by attracting joint ven- A 410 metre gross hydrocarbon intersection in pany statement said. “Work over the next two ture participants via a farmin or as part of an the previously drilled Longtom prospect, but years will focus on the potential viability of exploration joint venture fund across a which has never been fully evaluated, is one of Longtom and the utilisation of 3D seismic data to broader portfolio of exploration assets. Nexus Energy’s highest priorities. mature prospects in the permit area for drilling in Nexus is continuing to focus on the The company said in a recent statement that the third year of the permit work program.” Gippsland Basin as a core area of exploration the Longtom discovery, “warrants further “Several leads in the permit have already been portfolio development.” technical study to determine its reserves poten- identified on the existing 2-D seismic data tial and scope for possible commerciality with coverage and Nexus believes that with the FOR MORE INFORMATION CONTACT: further appraisal.” application of new technology through the A 3D seismic survey over a large part of the utilisation of 3D seismic data further new Ian Tchacos, Nexus Energy Nexus permit, acquired by ExxonMobil will structures will be delineated for drilling,” the Tel: (03) 9620 0320 be made available to Nexus during the first company said.

18 GOLD MINING MPI mines its ‘Golden Gift’

The Stawell gold mine continues to be Victoria’s largest, with annual production expected to remain at approximately 90,000 oz until 2004. Below left: MPI Chairman, John Geraghty.

The Stawell gold mine produced 100,602 oz of gold at a total cash cost of A$407 per oz in 2002. Mill throughput was a record for the year due to higher than forecast ore production and a higher mill feed grade. Gold was first discovered at Stawell in 1853, and production from both alluvial sources and high-grade quartz reefs totaled 2,670,000 oz in the 73 years until the last mine closed in 1926. Production resumed in 1984 when a WMC/Central Norseman Gold joint venture reopened the Stawell gold mine. The mine produced 336,000 oz of gold in its first nine years. Since MPI and Pittston acquired the mine in 1992, production has increased dramatically, generating 915,000 oz of gold in the past four years. PI Mines Ltd has begun trial the project as well as completion issues and Total field production, together with the estimat- mining at its ‘Golden Gift’ the price of gold. ed mineral inventory at June 2002 of 1.6m oz, orebody beneath the existing In the meantime, MPI is extracting a small gives the field a total endowment of 5.5m oz. workings at the Stawell gold mine volume of ore from the ‘Golden Gift’ orebody Since 1992, MPI has discovered and added ahead of a plan to formally commit to gauge its processing characteristics and its over 2.1m oz to the mineral inventory at Mto the full-scale development of the project. metallurgy. Stawell. But a final investment decision remains MPI Mines owns 50% of the Stawell mine and dependent on MPI achieving full ownership of exploration tenements along the Stawell regional structural corridor. SINCE MPI AND PITTSTON ACQUIRED It also has an agreement in principle to acquire THE MINE IN 1992, PRODUCTION the other half of the venture from US-based Pittston Minerals Inc as well as Pittston’s 25% HAS INCREASED DRAMATICALLY, stake in the Coolgardie gold operations. GENERATING 915,000 OZ OF GOLD Once the deal is complete, MPI will own 100% of Stawell and 50% of Coolgardie. IN THE PAST FOUR YEARS. However, MPI Chairman, John Geraghty said in the group’s annual report, released in late Current reserves support a mine life at March, that, “Documentation of this transac- Stawell to the end of 2004, but with a total tion is proceeding at a slower pace than envis- gold inventory (reserves plus resources) of aged, principally due to Pittston needing to 1.6 million oz and a history of the steady restructure the entities owning the gold assets conversion of resources to reserves, MPI prior to completion. believes there is good potential for the mine “Whilst it is hoped that completion of this pur- life to be extended, subject to feasibility and chase can be achieved during the second quar- gold price. ter of 2003, resolving the detailed terms and The current mine plan is designed to take the conditions relating to the transaction may operation to a depth of 966 metres and, based result in further delays with the possibility that on the historic level of conversion from no final agreement can be reached.” resources to reserves, MPI expects to maintain

19 GOLD MINING

Below: MPI’s Managing Director Brian Phillips. The company believes there is good potential to extend the life of the present Stawell mine beyond 2004.

Mr Geraghty said that as stoping activity in the Magdala mine runs down, increasing mining rates in the Golden Gift orebody would be ALL MINE WATER AND PLANT expected to maintain production rates. TAILINGS ARE STORED ON SITE. production at around 90,000 oz of gold a year “Initial indications are that higher grades that could LAND IS PROGRESSIVELY until 2004. be mined from the Golden Gift may compensate for MPI’s evaluation of the ‘Golden Gift’ the higher mining costs due to the longer trucking REHABILITATED AND RESEARCH INTO resource and a conceptual mining study is due distances and increased depth. NEW USES FOR TAILINGS IS BEING to be completed soon. “Total cash cost is expected to be maintained The company said that depending on the study at approximately $A420 per ounce,” he said. CONDUCTED IN CONJUNCTION WITH outcome, the gold price and government Testing by MPI on the use of the Victorian THE UNIVERSITY OF MELBOURNE. approvals, a decision to commit to deepening designed and made In-Line Pressure jigs to the mine and extending the mine life may then recover gold from the Stawell mine have also be made. shown that they can enhance gold recoveries. MPI said in its annual report that test work had shown that the jigs “can increase gold recoveries in the mill by several percentage points.” The Stawell mine is also maintaining a high standard of environmental management. “Operations are managed in accordance with MPI’s commitment to the Australian Minerals Industry Code for Environmental Management,” Mr Geraghty said. “The mine operates on the basis of zero dis- charge of water or solutions from site. “All mine water and plant tailings are stored on site. Land is progressively rehabilitated and research into new uses for tailings is being conducted in conjunction with the University of Melbourne.”

FOR MORE INFORMATION CONTACT: Brian Phillips Managing Director MPI Mines Ltd Tel: (03) 9628 2222 email: [email protected]

20 GOLD EXPLORATION Undercover work aids search

ictoria’s biggest goldminer, the Mining Project Investors (MPI) group, is making significant progress in its search for new gold resources V hidden by overlying material. A major exploration program on locating ‘under cover’ gold deposits is now being conducted through a national research project, the Cooperative Research Centre for Predictive Mineral Discovery of which MPI Mines is a major sponsor. The project aims to “generate a fundamental shift in exploration practice by developing a vastly improved understanding of mineralising processes and a four dimensional understanding of the evolution of the geology of mineralised terrains.” MPI Mines controls a 140 kilometre corridor of exploration tenements northwest from Stawell, into the Murray Basin in which ten major magnetic dome structures, lying under cover, have been identified through interpretation of similar magnetic and gravity pat- terns to the Magdala dome at Stawell. The company believes that the potential for extensions of the 5.5 million-oz endowment MPI says that drilling in the area northwest of of the Ararat-Stawell goldfield setting has the existing Stawell mine have confirmed THE COMPANY BELIEVES THAT THE been confirmed through aircore and diamond extensive zones of mineralisation. drilling of several of the ten magnetic dome POTENTIAL FOR EXTENSIONS OF THE targets. 5.5 MILLION-OZ ENDOWMENT OF At Wildwood, a zone of mineralisation has cover, has partially defined a dome of 5km been confirmed by 200 metre spaced aircore strike length with mineralised volcanogenics THE ARARAT-STAWELL GOLDFIELD geochemical drilling traverses on the north- rocks on both flanks. SETTING HAS BEEN CONFIRMED eastern shoulder of the dome. Trialling of detailed ground-based gravity sur- THROUGH AIRCORE AND DIAMOND Highly anomalous, mineralised volcanogen- veys during 2002 effectively discriminated the ics have been defined over an 800m strike magnetic Wildwood, Kewell and Wallup DRILLING OF SEVERAL OF THE TEN length, associated with a bedrock high that domes from other, less prospective, magnetic MAGNETIC DOME TARGETS. lies within 7m of the surface. features. Aircore drilling assays of up to 3.5g Au/t and Extension surveys highlighted other conceptu- averaging greater than 0.5g Au/t have been al dome targets at Byrneville, Wallup North • geochemical ranking and mineralisation recorded from the zone. and Willenabrina (Peppers Plains). modeling of the Wildwood, Kewell and The Kewell dome is 100km northwest at Further gravity surveys are required to define Wallup domes to define reverse circulation Stawell under 110m of Murray Basin cover. targets at Ashens, Wal Wal, Lubeck and and diamond drilling targets; Aircore geochemical drilling on 200m spaced Caledonian. • additional detailed gravity surveys to fur- traverses has defined a 3km- long dome with The Stawell regional exploration budget for ther define conceptual targets. highly anomalous, mineralised, volcanogenic 2003 is $300,000, which will provide for: rocks on both flanks. • prospect scale mineralisation targeting and On the southwestern flank of the dome an initial construction of a Stawell Belt scale anomalous zone of 1.6k strike length with geology model for future prospect genera- FOR MORE INFORMATION CONTACT: peak assays of up to 5.4g Au/t and averaging tion; John Dugdale MPI greater than 0.5g Au/t has been defined. • aircore drilling at Wallup to complete geo- Tel (03) 5358 9243 Aircore drilling of the Wallup dome, located chemical ranking and define the extent of Email: [email protected] 2km along strike from Kewell below 130m of anomalous mineralisation;

21 INDUSTRY NEWS Origin emerges as a front runner

rigin Energy, one of Australia’s Left: Origin Energy’s Chief Executive Grant King. fastest growing utility groups, has Facing page: Work on the $500m SEA Gas come a long way in a short time but pipeline is progressing rapidly with the gas its rapid evolution belies the group’s scheduled to start flowing next January. 140-year history as a significant Oplayer in the oil and gas industry. Mid 2001, Origin made its first major move, In the few years since its rebirth, Origin buying the Powercor electricity retail business Energy has joined the rapidly changing for $315 million. This was followed by the Australian energy market and quickly cement- acquisition of Citipower’s Victorian electrici- ed a place alongside its peers such as AGL Ltd ty retail business for $137 million. Over the and TXU Australia. same time it was increasing its interests in gas Origin’s name and focus might be relatively fired power generation by buying Fletcher new but its roots go back a long way. Challenge’s 50 per cent stake in the South West power project in Western Australia for The company was born from within the old $68.5 million. Boral building products conglomerate in 2000, when the parent group hived off its con- The project supplies steam and power to the struction and building products operations, Worsley alumina refinery and electricity to and left the energy division, renamed Origin, Western Power Corp. free to pursue its own fate. Origin built the Quarantine power station in Under the guidance of Chief Executive Grant Adelaide and, in December last year, the com- King, Origin Energy set out to create and pany bought the Mt Stuart Power Station, a develop a vertically integrated structure with- 288mW gas turbine peaking plant in north in the energy industry, incorporating both gas Queensland, from AES Corp. But it was also keen to stake a claim in the and electricity. Since then, it has also committed to building emerging retail end of the market. It was a strategy that has baffled many initial- the SEA Gas pipeline from Victoria to While energy sector deregulation still has a ly, but two years on it is proving its worth as a Adelaide as a conduit for its offshore Otway long way to go, Origin Energy realised that a string of oil and gas discoveries work their Basin gas in the Geographe and Thylacine gas spate of asset sales could inflate prices for way into the Origin retail network. fields, and to developing the Yolla gas field in many former state-owned assets, in particular, Bass Strait at a cost of $450 million. Grant King says Origin has not fundamentally assets such as gas and electricity distribution “There was quite a bit of caution and consid- changed anything since being demerged from networks and retail energy sales networks. eration about what we did in the early days of Boral in 2000. So it waited while the first round of electrici- deregulation, but that in fact left us in quite a “I think we’ve been extremely consistent ty generation assets in Victoria were sold, but strong position when the asset cycle turned about what we said we would do, and we’ve now is moving to secure assets in the second and more people began leaving [the industry] kept on doing it,” he said. round of sales. and more opportunities arose,” Mr King said. Origin’s success in discovering large-scale gas Origin has been active in the Otway Basin for reserves in Victoria’s offshore Otway Basin 10-15 years, but its strategy now is to find gas will quickly feed gas into its own retail mar- WHILE ENERGY SECTOR reserves that it can quickly bring into produc- ket, and it explores on the basis of seeking gas DEREGULATION STILL HAS A LONG tion. If you include the pre-Origin days of where there are markets. SAGASCO, it was also involved in the Bass “Holding gas in inventory for 30 years while WAY TO GO, ORIGIN ENERGY Basin and the Gippsland Basin to the east you look for a market makes no sense to us,” REALISED THAT A SPATE OF ASSET from even earlier days. Mr King said. “Esso-BHP has always had its foot on the “What we always had [internally] were skills. SALES COULD INFLATE PRICES FOR Gippsland Basin so the Bass and Otway were The asset position was disparate. We applied MANY FORMER STATE-OWNED ASSETS the two geological basins that had most inter- those skills to the assets ... and I think we have est for us,” Mr King told Discovery. ended up growing as quickly, if not more “We had the position in the Bass Basin, in quickly, than we had hoped.’ The strategy is similar in the gas and electric- Yolla, which we now call BassGas, which is “We didn’t make too many bad decisions and ity distribution sector, where a second round being developed at a cost of $A450 million we’ve benefited from our awareness of the of industry consolidation is under way. and should be on-line in the third quarter of risks associated with the business.” “We were cautious in the early days and we’ve next year. Origin has always planned to grow into a sub- been able to make some acquisitions in more “That puts the physical infrastructure into the stantial, vertically integrated oil and gas pro- recent times that I think have been made on Bass Basin and that will drive subsequent ducer. quite favorable terms,’” Mr King said. rounds of exploration there,” Mr King said.

22 “Another piece in the puzzle is the Otway “But whether it was good luck or good man- is that the next step in the development of Basin. Historically, the interest has been agement, the gas was there and I think that these provinces is to get the infrastructure in onshore where a lot of companies had been whole area has now become a bit of a frontier and that will then drive subsequent rounds of picking the terrain over. province,” Mr King said. exploration because the … commercial “Through those early years, the geological “There is a lot of exploration ahead of us in threshold falls significantly,” Mr King said. understanding had built up and when we the Thylacine/Geographe permits and I would Already BHP’s Minerva field is being devel- began, in the mid 90’s, to look ahead at what think the offshore Otway has a lot ahead of it.” oped, as is Yolla along with Thylacine/ deregulation meant, it became clear that is was On the exploration front, Origin has now Geographe. worth looking for gas again near markets. acquired more seismic data. Discovery asked whether Grant King was sur- “Strategically, it made much more sense to “We believe there are a number of significant prised at the pace of natural gas development look for gas where it was easy to sell it than to targets that will warrant drilling. The priority is in Victoria. look where it was easy to find it. For gas you to get the gas we have found into production.” “I would like to think that we felt that this was really have to explore where it is easier to sell.” But, as time goes by and demand continues to the way the market would develop and that Mr King said that, “For a company our size, grow for Otway gas, Mr King is confident the there would be real opportunities. I’d say the we couldn’t afford to find a lot of gas and hold demand will drive additional exploration. evidence for that is the positions that we it in inventory for 30 years waiting for an took,” he replied. “Our explorationists say that they still see sig- LNG project. That doesn’t create any value nificant remaining potential. “We bought the retail positions in Victoria, we for us. acquired the exploration acreage, we risked “Experience tells us that when an area opens “In the offshore Otway, we had the geological the exploration capital and now we have got up and you find a trillion cubic feet or so of gas understanding from the onshore experience, the BassGas project in development. with your first wells, you generally find more.” we had the adjacent Bass Basin experience “I think the very positive thing is that deregu- Traditionally, exploration tends to find the big then, through the mid-90’s, we built a lot of lation of the market has worked. market knowledge that made us confident that field first so has Origin found the best the there was going to be a significant demand for Otway has to offer? “One of the long-held catch cries of the upstream industry was that we need more gas opening up. “That is difficult. No one knows until you drill. resources and more competition and that has I think a better way of thinking about Otway “The trick was to find it somewhere near those come about, perhaps much more quickly than and Bass is that for the first time infrastructure markets. At the end of the day you had to ask people thought.” where are the best opportunities and the off- is going in - first in the BassGas project then in shore Otway was fundamentally the best spot the Thylacine and Geographe project. you could target the effort.” “What infrastructure will do is make econom- FOR MORE INFORMATION CONTACT: For Origin, it was a big call. The company had ic a whole lot of targets that would never have Yvette Reade otherwise been drilled in the absence of infra- a large exposure, amounting to almost $A50 Public Relations Manager, Origin Energy million, in the first round of exploration that led structure. So, whether there is another TCF Tel: (08) 8217 5376 to the Thylacine and Geographe discoveries. field to find or whatever, I think a better view

23 GOVT SUPPORT Government backs smelter study

he Victorian Government has pledged The proposed smelter will use magnesium-rich $A1.4 million towards a feasibility ash waste (top) from the Latrobe Valley’s study into the creation of a power generating stations (below). T magnesium smelter in the Latrobe Valley. char, precipitated calcium carbonate and The smelter, which could produce at a rate of sodium sulphate. up to 100,000 tonnes a year, is expected to cost close to $A1 billion to complete. “Precipitated calcium carbonate is used in paper manufacture and could be pumped to a The smelter will utilise magnesium-rich ash nearby paper mill in the Latrobe Valley,” he waste from the Latrobe Valley power gener- said. ators as its feedstock. “The ash is a valuable resource for the pro- Its promoters, the Latrobe Valley duction of bricks and has already attracted Magnesium joint venture, say the project interest in building a brick plant adjacent to will be the world’s only magnesium smelter the smelter.” to utilise a waste product as its feedstock. Mr Sylvester said the plant could also attract That would also help the smelter achieve the a magnesium die-casting facility adjacent to world’s lowest cost metal production. the smelter. The company has already been granted Magnesium production is growing world- another $1.4m from the Commonwealth wide, driven primarily by the demand for Government towards the cost of the feasibil- lighter and more fuel efficient cars in the ity study. drive to reduce waste emissions. Victorian State and Regional Development In Europe, new regulations require the car- Minister, John Brumby, said the proposed bon dioxide emissions of cars to be reduced smelter had the potential to generate 1100 dramatically and that 85% of an entire car be jobs in the Latrobe Valley and up to 4000 recyclable by 2006, with heavy tax imposi- jobs during the construction phase. tions for cars which don’t comply. “If the planned smelter proceeds, it will have These regulations are likely to extend world- a maximum annual output of 100,000 tonnes wide. of magnesium with an estimated value of $A400m,” Mr Brumby said.’ Magnesium is 33% lighter than aluminium and has many advantages over plastics, steel and aluminium in car manufacture. It is also easy to recycle. ITS PROMOTERS, THE LATROBE VALLEY “Following completion of the bankable fea- MAGNESIUM JOINT VENTURE, SAY THE sibility study, the design and construction of the facility is scheduled for commencement PROJECT WILL BE THE WORLD’S ONLY in the last quarter of 2005 and completion towards the end of September 2007,” Mr MAGNESIUM SMELTER TO UTILISE A Sylvester said. “The project allows decade old waste to be WASTE PRODUCT AS ITS FEEDSTOCK. turned into valuable products. “The plant will be wet commissioned by January 2008 and magnesium will be pro- “It creates and strengthens existing links duced and sold at that date. between a number of industries in Latrobe Magnesium chief executive, Chris Gippsland; it creates employment and has “Allowing for a slow ramp up, the full pro- Sylvester, said the feasibility study would the potential to build up cooperation duction rate of 100,000 tonnes a year will be take two years. between industries and research facilities achieved by the end of 2008 or early 2009,” like the Monash University campus in he added. “The proposed plant site is located within Churchill and the planned Australian the boundary of the Hazelwood Power sta- Sustainable Industry Research Centre in tion in the Latrobe Valley. The site offers FOR MORE INFORMATION CONTACT: Traralgon.” sufficient land to establish further industries Chris Sylvester Mr Sylvester added that there were possible including magnesium alloy die-casting facil- Chief executive, Latrobe Magnesium Ltd ities and brick making from the residual ash benefits from the sale of other by-products, Tel: (02) 9940 3707 waste,” he said. including some to local industries such as

24 GAS PRODUCTION Strait gas flows straight to Sydney

uropean-based oil and gas company, OMV Australia, has crowned a remarkable few years for the company E by bringing the Patricia/Baleen gas field in Bass Strait into production. And, in a reflection of the rapid changes in south-east Australia’s natural gas market, Patricia/Baleen gas is being piped directly into the Sydney market. The $120 million project, the first Bass Strait hydrocarbon production not controlled by the Esso/BHP Billiton partnership, is at the leading edge of several major new offshore gas projects to be developed in Victoria over the next few years. Victoria will quickly move from having one major supplier, the Esso/BHP Billiton joint venture, which supplies at least 91% of the market, to having five separate offshore gas suppliers and a number of smaller onshore gas producers as well. The new projects include Minerva and the Yolla – BassGas project, which are now being developed, and the Geographe/Thylacine project, which is undergoing environmental assessment. the Duke Energy Eastern Gas Pipeline and the Gas from the Patricia/Baleen field is processed at OMV came to Australia in December, 1998 rapid deregulation of the natural gas market, a newly constructred plan onshore near Orbost. and quickly launched a hostile takeover bid OMV quickly found it had backed a winner. for Cultus Petroleum, giving it control of the Gas began to flow from the Patricia/Baleen pipeline to a newly constructed gas processing offshore Patricia/Baleen gas field. field in March this year as the project began its plant onshore near Orbost. A successful appraisal well gave the company commercial life. The Patricia/Baleen field is The 12-inch diameter sub-sea gas pipeline is, the confidence to commit to the project’s located 24km offshore in Bass Strait south of “sized to accommodate much larger quantities development. Coupled with the construction of Orbost. The gas flows through a sub-sea of gas,” said OMV operations manager, Graham Dwyer, “and the plant configuration is capable of expansion.” The raw gas from the field, which lies in production license VIC-L21, contains 98% methane (natural gas) and no harmful compo- nents such as hydrogen sulphide. It also has a low carbon dioxide component, allowing it to be piped directly from the field to the gas processing plant onshore. OMV Australia is the project’s operator with a 40% stake, while Trinity Gas Resources also has 40% and Santos Ltd the remaining 20%.

GAS BEGAN TO FLOW FROM THE PATRICIA/BALEEN FIELD IN MARCH THIS YEAR AS THE PROJECT BEGAN ITS COMMERCIAL LIFE.

25 GAS PRODUCTION

Onshore pipeline and plant construction provided a major boost to local employment in the Orbost area of East Gippsland.

Mr Dwyer said OMV aimed to keep the offshore wells as simple and as economical as possible and to minimise the amount of hard- ware in the well by using proven and com- mercially available technology. The Patricia and Baleen fields contain gas reserves within the variable-quality Gurnard formation. The Gurnard overlies the Latrobe group sandstones which have yielded the majority of hydrocarbon production from Bass Strait over the past 35 years. The fields are adjacent but separate structures Proven recoverable reserves in the Patricia/ and were discovered through the drilling of Baleen field stand at 77 billion cubic feet from the Baleen-I (1981) and Patricia-I (1987) a total in-place resource of 108.4 bcf. exploration wells. The gas is reservoired in the Gurnard The offshore development consists of two sub- Formation, which flowed in the initial discov- sea development wells with a gas pipeline and ery well at a rate of 6.3m standard cubic feet a umbilical cable connecting them to the onshore day. facilities from where the wellheads are controlled by an electro-hydraulic control system. The Gurnard Formation is younger and less widespread than the Latrobe Group, which has The only physical presence of the fields at sea produced the bulk of the hydrocarbons in Bass level is a navigation buoy. Strait to date. The shore crossings were also designed to OMV was largely unknown in Australia until minimise disturbance of the natural environ- its 1999 takeover of Cultus Petroleum, but the ment and used a new technique to get the group is well known in Europe. pipelines ashore and to the gas plant. It is Austria’s biggest listed industrial compa- A hole was drilled directionally under the ny with consolidated sales of EUR7.7 billion beach zone and the pipeline was guided into it in 2001,and is one of central and eastern from onshore with a similar operation used to Europe’s leading oil and gas groups, operating push the pipe containing the umbilical control oil refining and marketing, gas distribution, cable under the coastal dunes and out to sea. chemicals and plastics businesses. Previous techniques for crossing the sensitive It also has oil and gas producing interests in shore area involved more intrusive open trench- Austria, the UK, Libya, Pakistan, Australia ing and subsequent rehabilitation of the area. and New Zealand and is exploring in Albania, Initially the gas processing plant will process Iran, Ireland, Sudan, Tunisia, and Yemen. 50 terajoules a day (TJ/D) but it has been designed to cope with up to 75 TJ/D while the gas sales pipeline can handle 200 TJ/D. THE SMALL SCALE OF THE PROJECT The excess capacity is designed to allow the MEANT THAT OMV HAD TO BE Later the same month OMV completed a gas plant to process gas from other suppliers in the sales agreement with the Queensland region. INNOVATIVE ABOUT HOW IT Government’s wholly-owned gas retailer, The gas plant is located near the small com- EXECUTED ITS DEVELOPMENT PLAN. Energex, for 60 petajoules (PJ) of gas over munities of Newmerella and Orbost in East eight years allowing the partners to approve Gippsland and the overall project is the first the Patricia/Baleen development in July significant industrial development in the area, The group’s main focus in Australia has been 2001. following the dramatic decline of the local the Patricia/Baleen development. The small scale of the project meant that timber logging industry. Once pre-feasibility studies were completed in OMV had to be innovative about how it exe- 1999, OMV was keen to proceed with the pro- cuted its development plan. ject, but it wanted to reduce its equity from So OMV used the regional experience of local FOR MORE INFORMATION CONTACT: 100%, as a risk reduction strategy. industry for engineering and installation capa- Graham Dwyer In May 2001, Trinity Gas Resources (a part- bilities. The same philosophy extended to the OMV Australia Pty Ltd nership of Mitsubishi and Tokyo Gas) farmed necessary work of well drilling and offshore Tel: (08) 9223 5000 in for a 40% interest. installation.

26 ALUMINIUM INDUSTRY Point Henry smelter turns 40

lcoa of Australia’s Point Henry aluminium smelter celebrated its 40th year of operations during April and A looks set to remain an important component of the state’s industrial landscape for many years to come. Located on the shores of Corio Bay at Geelong and operating in conjunction with the Angelsea brown coal-fired power station, Point Henry and its newer and bigger counter- part at Portland, are two of Victoria’s biggest and most successful industrial enterprises. They form part of a wider, global system which forms the Alcoa alumina and aluminium business spanning more than a dozen countries. Alcoa was first incorporated in Australia in 1958 when it was granted a mineral lease to mine bauxite in Western Australia 1961. Construction of both the Kwinana alumina refinery, south of Fremantle, and the Point Henry smelter, started that year. The decision to build the smelter in Victoria came only after much deliberation and search- reserves and an investment-hungry govern- Above: The potline at Alcoa’s Point Henry smelter. ing. Neither cheap coal nor cheap electricity ment, which clinched the project. The Below left: an aerial view of the facility. were available in WA at the time so the Geelong development site quickly became a smelter had to be located elsewhere. tourist attraction as people flocked to see this While New South Wales or Tasmania seemed ‘industrial revolution’. investment by the whole of Australia’s manu- the most likely choices for cheap power, it was The smelter was an immense project at the facturing industries in 1960 and 1961. ultimately Victoria, with its vast brown coal time, representing one sixth of the annual Aluminium metal is produced from bauxite which is refined into alumina and then smelt- ed into aluminium metal. It takes two tonnes of alumina and the addition of enormous quantities of electricity to produce one tonne of aluminium metal, hence the need for a large-scale supply of low-cost electricity. Initially, the alumina produced at Kwinana was too fine for the Point Henry smelter to use but by February 1964 the initial teething prob- lems were solved and the first alumina was ready for shipping on board the bulk carrier, Lake Sorrel, which departed Western Australia on February 22, 1964. Although the alumina shipment was bound for the Point Henry smelter, the smelter had been in operation, using imported alumina. The first molten metal was poured at Point Henry on April 17, 1963 Alcoa’s Victorian aluminium production of 530,000 tonnes a year is equivalent to 30 per cent of Australia’s total aluminium production. A total of 5735 people contribute to, and rely on, Alcoa’s businesses.

27 ALUMINIUM INDUSTRY

Alcoa produces 530,000 tonnes of aluminium a year – or 30 per cent of Australia’s total aluminium production.

The two smelters, rolling mill, power station and Alcoa’s Melbourne sales and marketing office pump over $476 million into the Victorian economy annually. The aluminium rolling mill at Point Henry, given approval for the end product - synthetic exports 58% of its production, mainly to Asia. sand – to be used in applications such as road- This includes wages and employee benefits base material and concrete. ($143m), goods and services and supplies The Anglesea power station produces 41% of the from State-owned enterprises ($134m) and the power needed by the Point Henry smelter, with private sector ($188m) plus payments to State the rest coming from the State electricity grid. FOR MORE INFORMATION CONTACT: and local governments ($11m). Alcoa recently developed world-first technology Paula Benson to treat smelting waste (Spent Pot Lining) and to Alcoa is Victoria’s largest exporter with annu- Manager, Corporate Affairs, Victoria capture the fluoride contained in the material. al overseas sales worth $1.6b, equivalent to Tel: (03) 9270 6387 7% of the State’s total exports and 0.6% of The process, developed at Portland, attracted Email: [email protected] Victoria’s gross state product (GSP). global interest and the EPA of Victoria has COSTERFIELD UNEARTHS MORE SURPRISES

rilling on the Costerfield gold and MH 46 was drilled to test C reef 7m up dip assaying 46g/t (1.5ozs) gold and 36.5% anti- antimony deposit near Bendigo has from a previously-drilled diamond hole, MH mony and 22cm assaying 60.4g/t (1.9ozs) gold thrown up more high-grade results, 15, which intersected 144cm averaging and 7.8% antimony. D lending weight to the likelihood of a 134.3g/t (4.3ozs) gold and 18.5% antimony One infill hole, MH 45, intersected the West commercial mine being developed. from a depth of 22.4m. Reef over a width of 110cm and averaged Reserves and resources containing 197,700 oz AGD Mining plans to investigate this hole fur- 10.9g/t gold and 4.7% antimony, including a of gold and 29,770 tonnes of antimony have ther as part of its ongoing exploration pro- 29cm section assaying 40.6g/t (1.3 oz.) gold been established. gram. and 17.7% antimony. A new discovery of high-grade gold and anti- The recent drill intercepts have extended the Drilling is presently underway north of MH 49 mony, the Augusta Zone, was made in 2001. East Reef resource by a further 80m to the and MH 50. The rig will then be moved to Recent drilling of this system increased its north increasing the known strike length of the explore southern extensions of the three reefs reserves by 20% to 290,000 tonnes at 12g/t East Reef to more than 400m and open to the outlined in the Augusta deposit. gold and 6.2% antimony, or 112,000 oz of gold north.south and at depth. The Augusta gold project is 100 % owned by and 18,000 tonnes of antimony. The deposit Two holes, MH 49 and MH 50, were drilled AGD Mining and is located in the southern remains open at depth. beyond the previous northern limits of the parts of AGD’s ground position at Costerfield. The best result from the recent drilling pro- reserve and both intersected broad widths of Augusta is 1.2km from the company’s treat- gram was found in hole MH 46 which aver- mineralisation. ment plant. aged 41.6g/t gold and 2.95% antimony over a MH 49 intersected 242cm averaging 7.2g/t recovered width of 547cm from a drill depth of gold and 7.7% antimony including 52cm 14.3m. assaying 20.2g/t gold and 13.2% antimony and FOR MORE INFORMATION CONTACT: The intersection included a 70cm intercept 21cm assaying 21.1g/t gold and 49.6% anti- AGD Mining mony. assaying 318g/t (10.2ozs) gold and 19.8% Tel: (03) 9663 5355 antimony and 9cm assaying 44.3g/t (1.4ozs) MH 50 recovered 170cm averaging 19.8g/t Email: [email protected] gold and 13.4% antimony. gold and 10.4% antimony including 44cm

28 BASIN STUDIES GROUP PETROLEUM DEVELOPMENT BRANCH MINERALS AND PETROLEUM VICTORIA

VICTORIAPETROLEUM ATLAS OF AUSTRALIA

november 2001

TO ORDER CONTACT: THE PETROLEUM ATLAS OF VICTORIA Dee Ninis, Petroleum Development Branch, Level 7, 250 Victoria Parade, This publication summarises the results of regional geological

FROM DPI’S PETROLEUM DEVELOPMENT BRANCH East Melbourne, Victoria 3002 work carried out by the Basin Studies Group of the Petroleum Tel (03) 9412 5169. Fax (03) 9412 5156. Development Branch. It contains a compilation of new maps and Email: [email protected] digital images that provide an overview of the geological controls or Minerals and Petroleum Business Centre, on hydrocarbon occurrences in the Otway and Gippsland basins. Level 8, 240 Victoria Parade, East Melbourne, Victoria 3002 The Atlas costs $150 (for hard copy and CD-ROM) Tel (03) 9412 5020. Fax (03) 9412 5157. or $100 (for CD-ROM only) Email: [email protected]