Developing an offshore petroleum resource

The following information has been developed as a guide for petroleum production licence applicants and licensees preparing to submit a field development plan (FDP) under Part 5.4 of the Victorian Offshore Petroleum and Greenhouse Gas Storage Regulations 2021 (the Regulations) for the purpose of commencing offshore petroleum recovery within Victorian waters. Please read it in conjunction with the legislation and regulations.

This document is intended as a guide only and should not be relied on as legal advice or regarded as a substitute for legal advice in individual cases.

What approvals are required?

Once a production licence is obtained, development of a resource involves two elements with associated approvals:

1. Construction and operation of all the infrastructure required to develop the resource.
   Requires an environment plan, safety case (if necessary), and well operation management plan.
2. A strategic management plan that describes how the resource will be managed.
   Requires a field development plan and a rate of recovery approved by Earth Resources Regulator.

For the first element, please refer to the Regulations: Part 2.2 for the environment plan, Part 3.2 for the safety case and Part 5.5A for the well operation management plan. The safety case and well operation management plan are submitted to the National Offshore Petroleum Safety and Environmental Management Authority for acceptance.

The second element is the focus of this guidance note. Please note that conditions may be applied to an accepted field development plan.

A petroleum production licensee should consider if the following licences are required for the development:

• a pipeline and/or infrastructure licence
• a licence to operate in the adjacent Victorian onshore and/or Commonwealth offshore areas.

Which legislation applies?

The petroleum production licence applicant or licensee may submit a field development plan under Part 5.4 of the Offshore Petroleum and Greenhouse Gas Storage Regulations 2021 (Vic).

When do I apply?

Acceptance of a field development plan

A production licence application must be accompanied by a field development plan.

A petroleum production licensee must not undertake the recovery of petroleum from a petroleum pool in the licence area unless:

• the recovery is on an appraisal basis, or
• a field development plan has been accepted for the field that includes the petroleum pool.
  (A field development plan is not required if the licensee has approval to undertake recovery of petroleum without one under regulation 204(b)(ii) or if the licensee has an exemption under the transitional provisions of regulation 218 (Reg 204(b)(iii)).

A petroleum production licensee can apply at any time for a variation to an existing field development plan, or for a new field development plan that will describe the development of an additional field within the production licence area.

A petroleum production licensee should allow up to three months for a field development plan application (or variation) to be determined. The time taken will depend on the quality of the submission.

Approval of rate of recovery

A petroleum production licensee can apply at any time for approval of the rate of recovery of petroleum under regulation 220.

The decision-maker must ensure that the rate of recovery is consistent with the details of the accepted field development plan. If the rate of recovery proposed is inconsistent with the accepted field development plan, it is recommended that petroleum production licensees consider applying for a variation of the field development plan.

What is the process?

Before a petroleum production licensee submits a field development plan or variation of field development plan and rate of recovery application, it is recommended that they discuss key aspects of their plan, including timeframes and processes with Earth Resources Regulator. The field development plan and rate of recovery application need to be aligned with the environment plan, safety case and well operation management plan.

Field development plans are to be submitted via Earth Resources Regulator RRAM portal. Rate of recovery applications are to be submitted via email to workplan.approvals@deeca.vic.gov.au

If further information is required, the applicant or licensee will be notified of the further information that is to be included in the field development plan and the date that further assessment of the field development plan will commence. If the required further information is not provided, a decision will be made based on the information originally submitted.

What do I need to include in my development plan application?

The applications should include details that meet the minimum requirements as set out in the Regulations, and identify the risks associated with the field development plan activities and the actions to be taken to mitigate them.

Section 1 outlines the requirements for a field development plan for offshore petroleum production; Section 2 outlines the requirements for rate of recovery applications.

Further information or questions

If you have any questions about this guidance note, please contact Earth Resources Regulator via workplan.approvals@deeca.vic.gov.au

Section 1: Field Development Plan

This section provides guidance on how to meet the requirements of the Regulations when preparing a field development plan.

Description of petroleum discovery

Regulation 209(1)(a) of the Regulations requires ‘evidence and data showing that the field contains petroleum, including details of the structure, extent and location of discovered petroleum pools’. Information that is recommended for inclusion is:

• Activity that discovered petroleum
  • summary of discovery evaluation report
  • well drilled
  • well test(s), including sampling carried out and findings
• Geographical location of discovery well and lateral extent of entire field, including any portion of the field that is outside the boundary of the production licence area
• Structure details that include reservoir characteristics - trap(s) including spill point and any chimney, seal(s), fault(s), compartment(s)
• Discovered petroleum pool(s)
  • stratigraphic column at key locations
  • structural mapping of top reservoir – low, mid, high realisations
  • reservoir stratigraphy and geology – low, mid, high realisations.

Estimate of petroleum volume

Regulation 209(1)(b) of the Regulations requires ‘estimates of the volume of petroleum in place and recoverable petroleum, including data supporting the estimates’. Information that is recommended for inclusion is:

• Principal producing formation(s)
• Initial pressure and temperature
• Fluid contacts (oil-water-contact, gas-oil-contact, as applicable) – low, mid, high realisations
• Average porosity, permeability, net-to-gross
• PVT properties (American Petroleum Institute gravity, condensate-gas-ratio, gas-oil-ratio, variable gas-oil-ratio etc.)
• Drive mechanism(s)
• Recovery factor(s)
• Estimate volume of petroleum in place with sensitivity analysis (e.g. tornado plot showing impact of key variables). Refer example Table 1.
• Estimate of volume of petroleum to be recovered from the reservoir (EUR), with sensitivity analysis (e.g. tornado plot showing impact of key variables such as structural mapping of top reservoir, fluid contacts, reservoir stratigraphy and geology). Refer Table 1.
• Details of petroleum that has been produced (if applicable)
• Estimate of the remaining petroleum to be recovered from the reservoir, with sensitivity analysis (e.g. tornado plot showing impact of key variables such as structural mapping of top reservoir, fluid contacts, reservoir stratigraphy and geology). Refer Table 1.
• Estimated time to depletion.

Description of petroleum pools and their development

Regulation 209(1)(c) of the Regulations requires ‘a description of —

1. the possible petroleum pools in the field; and
2. the person’s plans (if any) to explore for petroleum pools; and
3. how any petroleum pools of commercial quantity can be incorporated into the development of the licence area’.

Information that is recommended for inclusion is:

• Possible pools of petroleum present in the field, in addition to the pool that was discovered
• Exploration activities (desktop or operational) for areas above or below the field, and laterally beyond the field, within the licence area
• Possible development activities to access other commercially viable petroleum pools within the licence area, including triggers (e.g. economic, facility capacity), necessary facilities and schedule.

Description of field development

Regulation 209(1)(d) of the Regulations requires ‘a description of —

1. an appropriate strategy for the development of the field, management of the petroleum pool and optimum long-term recovery; and
2. any proposed alternative development scenarios’.

Information that is recommended for inclusion is:

• Brief description of development scenarios considered
• Brief description of screening process
• Description of selected development scenario, including:
  • facilities – description and specifications
  • wells – type, schematic of each well showing location of perforations within formations
  • map/drawing showing relative positions of wells (top hole and bottom hole), facilities, petroleum pool(s) and licence boundary
• Summary of reasons for selecting the development scenario and reasons for not selecting the others
• Features of field development
  • technical and operational constraints
  • reservoir modelling, including updates due to new data
  • strategies to avoid stranded petroleum
  • key uncertainties affecting optimum long-term recovery
  • estimated time to depletion.

Reservoir management plan

Regulation 209(1)(e) of the Regulations requires ‘a description of how the person intends to extract the petroleum over time, including the following information —

1. the estimated positions of wells; and
2. the potential timing of workovers; and
3. possible tie-ins’.

Information that is recommended for inclusion is:

• Description of how the reservoir will be produced
  • sequencing of wells
  • timing of workovers and anticipated effect on production profile
• Technical and operational constraints
• Management of produced water
• Enhanced recovery methodologies – proposals and adoption
• Map/drawing showing positions of wells (top hole and bottom hole) relative to field extent and licence boundary
• Current or future petroleum developments in the region that could be tied-in to this development
  • clarify whether this field development will tie-in to an existing development
  • limitations regarding possible tie-ins.

Development schedule

Regulation 209(1)(f) of the Regulations requires ‘the project schedule, including an estimated development timetable of production facilities such as wells, platforms and petroleum pipelines’. Information that is recommended for inclusion is:

• Construction stage to include timelines for:
  • well(s) – drilling, completions, commissioning
  • pipeline – installation including shore crossing, tie-in, commissioning
  • platform – installation, commissioning
• Operational stage to include timelines for:
  • well(s) – production, shut-in, suspension, workovers
  • pipeline – operation, non-operational activities (e.g. care and maintenance)
  • platform – operation, non-operational activities (e.g. care and maintenance)
• Decommissioning – triggers, scope and timeline.

Petroleum management

Regulation 209(1)(g) of the Regulations requires ‘the person's operations or proposals for —

1. The enhanced recovery or recycling of petroleum; and
2. The processing, storage or disposal of petroleum; and
3. The injection of petroleum or water into an underground formation’.

Information that is recommended for inclusion is:

• Methodologies or technologies to be used to enhance recovery of petroleum
  • justifications for methodologies or technologies that cannot be used
• Processing activities to occur by facilities within licence area
  • processing facility to be used outside of licence area
• Incidental storage of petroleum within licence area
• Planned and possible disposal of petroleum
• Incidental injection of petroleum into subsurface formation
• Injection of water into subsurface formation
  • if water will not be injected, provide justifications
• Risk assessment of all above activities for impact on other resources (e.g. aquifers, other petroleum in the vicinity, potential greenhouse gas storage sites).

Record management

Regulation 209(1)(h) of the Regulations requires ‘arrangements for —

1. monitoring, recording in writing and reporting on the person's conduct of pool management; and
2. keeping records and other documents about the person's conduct of pool management’.

Information that is recommended for inclusion is:

• Details of the methods and equipment used for monitoring pool performance
• Details of the methods used for recording in writing and reporting on pool management.

Regulation 209(1)(k) of the Regulations requires ‘arrangements for the maintenance of an accurate quantitative record of events, measurements and actions to which the plan relates’.

Information that is recommended for inclusion is:

• Features/values/data related to pool management, such as reservoir model updates, that will be monitored/measured and frequency
• Details of relevant aspects of information management system.

Details of facilities

Regulation 209(1)(i) of the Regulations requires ‘details of —

1. the surface connections and equipment used by the person; and
2. any production by a well that is from more than one petroleum pool; and
3. any production from a petroleum pool that is through more than one well’.

Information that is recommended for inclusion is:

• Surface connections to include well heads, platforms and pipelines
• All wells – schematic of each well showing location of perforations within formations
• Map/drawing showing relative positions of wells (top hole and bottom hole) to the field extent and licence boundary.

Greenhouse gas considerations

Regulation 209(1)(j) of the Regulations requires ‘the arrangements (if any) for the transport, injection and storage of greenhouse gas substances that have been obtained from a third party or other external source’. Information that is recommended for inclusion is:

• Potential for reservoir to store greenhouse gas substances
• Commercial arrangements (prospective or confirmed) for reservoir to become greenhouse gas storage facility post depletion of petroleum
• Facility (wells, pipeline, compressor) requirements to convert petroleum reservoir to a greenhouse gas storage facility.

Other

Regulation 209(2) of the Regulations sets out that the ‘field development plan may include any other information that the person believes is relevant’.

Regulation 208(1)(b) of the Regulations sets out that the Minister must accept a field development plan if ‘the plan demonstrates that the person will conduct pool management in the field in a manner that is —

1. consistent with good oilfield practice; and
2. compatible with optimum long-term recovery of the petroleum’.

Information that is recommended for inclusion is:

• An approach that is aligned with industry best practice or better (e.g. no flaring, reinjection of produced water)
• An approach that takes into account climate change impacts
  • an approach that minimises impacts to climate change
  • an approach that mitigates climate change impacts on the development scenario
• An approach that considers community interests.

Section 2: Rate of Recovery

This section provides guidance on how to meet the requirements of the Regulations when preparing a rate of recovery application.

Proposed rate of recovery

Regulation 220(2)(a) of the Regulations requires ‘the proposed rate of recovery of petroleum from the pool’. Information that is recommended for inclusion is:

• Breakdown of pools and wells (refer example Table 2a and Table 2b) with sensitivity analyses (e.g. tornado plots showing impact of key variables)
• Technical justification for the proposed rates (e.g. production strategies, reservoir quality, assumed depletion mechanism and reservoir drive, expected deliverability).

Performance of wells

Regulation 220(2)(b) of the Regulations requires ‘the past performance (if any) and a prediction of future performance of the production wells in the licence area’. Information that is recommended for inclusion is:

• Well unloading and clean-up results, if available
• If no historical production data is available, provide details of regional analogues (and how the proposed performance compares)
• Individual well (production and injection) profiles – low, mid, high cases
• Hydrocarbon and water rates – initial, plateau (refer example Table 2a and Table 2b) and anticipated maximum rates
  • other fluids produced or injected incidental to this, such as for facilitating secondary recovery, are to be described
• Pool profiles (low, mid, high cases), including cumulative production over time
• Details of latest static and dynamic modelling used to predict performance (discuss assumptions and uncertainties)
• Production well modelling, including (where applicable):
  • positions of wells within pool(s)
  • perforated intervals and target reservoirs
  • stand-off distance(s) from underlying fluid contacts
• Details of sand/inflow control
• Impacts of project schedule on production, including possible tie-ins, compression/water handling timing, deployment of enhanced recovery technology, etc.
• Other technical and operational constraints.

Petroleum to be recovered

Regulation 220(2)(c) of the Regulations requires ‘an estimate of the ultimate recovery from the pool’. Information that is recommended for inclusion is:

• Estimate of volume of petroleum in place with sensitivity analysis (e.g. tornado plot showing impact of key variables). Refer example Table 1.
• Estimate of volume of petroleum to be recovered from the reservoir (EUR), with sensitivity analysis (e.g. tornado plot showing impact of key variables such as structural mapping of top reservoir, fluid contacts, reservoir stratigraphy and geology). Refer Table 1.
• Details of petroleum that has been produced (if applicable).
• Estimate of the remaining petroleum to be recovered from the reservoir, with sensitivity analysis (e.g. tornado plot showing impact of key variables such as structural mapping of top reservoir, fluid contacts, reservoir stratigraphy and geology). Refer Table 1.
• Estimated time to depletion.

Other

Regulation 220(3) of the Regulations sets out that ‘In making a decision about the rate of recovery of petroleum from the pool, the Minister must ensure that the rate is consistent with the accepted field development plan for the field that includes the pool’. Information that is recommended for inclusion is:

• Reference to details in accepted field development plan that are consistent with details in the rate of recovery application, OR
• Statement that an application to vary the accepted field development plan has been or will be made.

Attachments

Proposed rates of recovery

Example reporting for proposed rate of recovery of petroleum for pools A and B. Proposed pool totals should indicate anticipated pool offtake rates (as determined by reservoir deliverability, production capacity, facility constraints and production forecasts considerations) and are not expected to be summations of individual well rates.

Page last updated: 12 Apr 2024