Developing an onshore petroleum resource

The following information has been developed as a guide for production licence holders preparing to submit a petroleum production or storage development plan under Part 5 Division 6 (or Division 7) of the Petroleum Act 1998 (the Act) and Part 4 Division 2 of the Petroleum Regulations 2021 (the regulations) for the purpose of commencing onshore petroleum recovery or storage. Please read it in conjunction with the relevant 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 operation plan accepted by Earth Resources Regulation.
2. A strategic management plan that describes how the resource will be managed.
   Requires a development plan (production or storage) approved by Earth Resources Regulation.

For the first element, refer to Preparing operation plans – Guideline for authority holders under the Petroleum Act 1998. The second element is the focus of this guidance note. Approvals pertaining to safety and environmental management will also be required from WorkSafe Victoria and the Environment Protection Authority (EPA).

Which legislation applies?

The holder of a production licence may submit a development plan under Part 5 Division 6 (or Division 7) of the Act.

When do I apply?

A production licence holder can submit a development plan at any time but must not:

• carry out petroleum production in the licence area unless Earth Resources Regulation has approved the Petroleum Production Development Plan for the licence area, or
• inject any petroleum into a reservoir in the licence area for the purposes of storage unless Earth Resources Regulation has approved the Petroleum Storage Development Plan for the licence area.

A production licence holder should allow up to three months for a development plan application to be determined. The time taken will depend on the quality of the submission. A development plan is required for each reservoir within a production licence.

What is the process?

Before a production licence holder submits a development plan or variation of development plan application, it is recommended that they discuss key aspects of their plan, including timeframes and processes, with Earth Resources Regulation. The development plan needs to be aligned with the operation plan(s).

Development plan applications are to be submitted via Earth Resources Regulation’s RRAM portal. If further information is required, the licensee will be notified of the further information that is to be included in the development plan.

Development plans must be reviewed within 12 months of initial petroleum production or storage operations, then at intervals not exceeding one year.

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

The application should include a detailed development plan that meets the minimum requirements under regulation 13 or 14 of the Regulations. The development plan must include a reservoir management plan setting out how the reservoir will be managed.

The Petroleum Production Development Plan outlines the development plan requirements for petroleum production and the Petroleum Storage Development Plan the requirements for petroleum storage.

Further information or questions

If you have any questions about this guidance note, please contact Earth Resources Regulation via petroleum.licensing@ecodev.vic.gov.au

Petroleum Production Development Plan

This section provides guidance on how to meet the requirements of the Act when preparing a Petroleum Production Development Plan.

Description of petroleum operation

Regulation 13(1)(a) of the Regulations requires the plan to include ‘a description of each stage of the petroleum operation, including equipment or facilities to be used’. Information that is recommended for inclusion is:

• Construction stage to include description of:
  • wells – geographic locations, type, schematic of each well showing location of perforations within formations
  • pipeline/gathering line – brief specifications and geographic locations
  • gas plant – brief specifications and geographic location
  • timeline for each.
• Operational stage to include description of:
  • facilities involved – specifications and geographic locations
  • initial production
  • workovers
  • non-operational activities (e.g. care and maintenance)
  • timeline for each activity.
• Decommissioning – triggers, scope and timeline.
• Rehabilitation – scope and timeline.

Description of reservoir

Regulation 13(1)(b) of the Regulations requires the plan to include ‘a description of the relevant existing geological and reservoir data and interpretations of that data’. Information that is recommended for inclusion is:

General details

• Geographical location
• Field area
• Location and extent of petroleum pools
• Depositional environment
• Stratigraphic column at key locations
• Reservoir characteristics (static and dynamic) – trap(s) including spill point and chimney, seal(s), fault(s), compartment(s)
• Key depths – datum depth, top structure depth

Reservoir parameters

• Initial pressure and temperature
• Fluid contacts (oil-water-contact, gas-oil-contact, gas-water-contact)
• 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)
• Geohazards:
  • shallow subsurface – faults, gas-charged sediments, buried channels, abnormal pressure zones
  • synthetic – pipelines, wellheads, debris from oil and gas operations

Data sources

• Seismic survey(s)
• Formation evaluation
• Well tests
• Sampling
  • core – whole, side wall (routine and special core analyses)
  • fluids (composition of fluids at surface, reservoir conditions)
  • contaminants present and how they may affect facility design

Details of data acquisition

Regulation 13(1)(c) of the Regulations requires the plan to include ‘details of proposed further data acquisition and studies to enhance geological and reservoir understanding’. Information that is recommended for inclusions is:

• Description and scope of proposed studies and/or data acquisition
• Objectives
• Timetable for acquisition and interpretation
• Process to integrate information into geological and reservoir modelling

Reservoir management plan

Regulation 13(1)(d) of the Regulations requires the plan to include ‘a reservoir management plan that —

1. describes how the reservoir will be produced; and
2. provides the reasons for adopting the proposed approach; and
3. estimates the future petroleum to be recovered from the reservoir; and
4. specifies the proposed rate of recovery of petroleum.’

The following information is recommended for inclusion.

How the reservoir will be produced

• 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

Reasons for adopting proposed approach

• Brief description of development scenarios considered
• Description of screening process
• Description of selected development scenario
• Summary of reasons for selecting the development scenario and reasons for not selecting the others

Estimates of future petroleum recovery

• Estimate volume of petroleum in place with sensitivity analysis (e.g. tornado plot showing impact of key variables). Refer example Table 1a.
• 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 1a.
• 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 1a.
• Estimated time to depletion.

Proposed rate of petroleum recovery

• Proposed rate of recovery of petroleum (may be expressed as a range), with a breakdown of pools and wells (refer Table 2a and Table 2b) with sensitivity analyses (e.g. tornado plots showing impact of key variables).
• Impacts of proposed rate on EUR and proposed reservoir management strategies.

Petroleum Storage Development Plan

This section provides guidance on how to meet the requirements of the Act when preparing a Petroleum Storage Development Plan.

Recovery here refers to the production of the original petroleum reserve, owned by the Crown.

Description of petroleum operation

Regulation 14(1)(a) of the Regulations requires the plan to include ‘a description of each stage of the petroleum operation, including equipment or facilities to be used’. Information that is recommended for inclusion is:

• Construction stage to include description of:
  • wells – geographic locations, type, schematic of each well showing location of perforations within formations
  • pipeline/gathering line – brief specifications and geographic locations
  • gas plant – brief specifications and geographic location
  • timeline for each
• Operational stage to include description of:
  • facilities involved – specifications and geographic locations
  • initial production
  • workovers
  • non-operational activities (e.g. care and maintenance)
  • timeline for each activity
• Decommissioning – triggers, scope and timeline
• Rehabilitation – scope and timeline

Description of reservoir

Regulation 14(1)(b) of the Regulations requires the plan to include ‘a description of the reservoir using geological data and interpretations of that data’. Information that is recommended for inclusion is:

General details

• Geographical location
• Field area
• Location and extent of petroleum pools
• Depositional environment
• Stratigraphic column at key locations
• Reservoir characteristics (static and dynamic) – trap(s) including spill point and chimney, seal(s), fault(s), compartment(s)
• Key depths – datum depth, top structure depth

Reservoir parameters

• Initial pressure and temperature
• Fluid contacts (oil-water-contact, gas-oil-contact, gas-water-contact)
• 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)
• Geohazards:
  • shallow subsurface – faults, gas-charged sediments, buried channels, abnormal pressure zones
  • synthetic – pipelines, wellheads, debris from oil and gas operations

Data sources

• Seismic survey(s)
• Formation evaluation
• Well tests
• Sampling
  • core – whole, side wall (routine and special core analyses)
  • fluids (composition of fluids at surface, reservoir conditions)
  • contaminants present and how they may affect facility design

Reservoir management plan

Regulation 14(1)(c) of the Regulations requires the plan to include ‘a reservoir management plan that —

1. estimates the recoverable petroleum reserve, owned by the Crown pursuant to section 13 of the Act located in the reservoir before the commencement of underground petroleum storage activities; and
2. evaluates the suitability of the reservoir and seal for storage purposes; and
3. specifies the proposed storage operating volume; and
4. specifies the proposed rates of injection and recovery of petroleum; and
5. details the methods to monitor and verify containment of injected gas and the petroleum-water contact; and
6. provides information about how storage operations interact with storage operations at nearby petroleum fields.’

The following information is recommended for inclusion.

Estimates of future petroleum recovery

• Estimate volume of petroleum originally in place with sensitivity analysis (e.g. tornado plot showing impact of key variables). Refer example Table 1b.
• Estimate of volume of petroleum to be recovered from the reservoir (EUR) before the commencement of underground petroleum storage activities, 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 1b.
• 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 1b.
• Estimated time to depletion.

Evaluation of the reservoir for storage requirements

• Containment – suitability of seal(s) and structure to contain injected petroleum
  • pressure to fracture seal
  • pressure in reservoir
  • injection pressure
• Capacity – maximum capacity (in PJ and bscf) and proposed storage operating volume
• Injectivity – injectivity indices and injectivity profile over time including with respect to planned workovers

Proposed rates of petroleum injection and recovery

• Proposed rate of recovery (refer Table 2a and Table 2b), injection and withdrawal (refer Table 3a, Table 3b, Table 3c and Table 3d) of petroleum (may be expressed as a range), with a breakdown of pools and wells with sensitivity analyses (e.g. tornado plots showing impact of key variables).
• Impacts of proposed rate on EUR or storage and proposed reservoir management strategies.

Monitor containment

• Features monitored (e.g. pressure, gas inventory, petroleum-water contact)

Interactions with storage at other fields

• Identify nearby storage fields – within licence area and outside licence area
• Facilities (gas plant, pipeline/gathering line) connections
• Strategies for injection and withdrawal of fields that have linked connections

Petroleum containment

Regulation 14(1)(d) of the Regulations requires the plan to include ‘a description of the measures to be used to ensure containment of the stored petroleum’. Information that is recommended for inclusion is:

• Description of techniques used to measure and monitor stored petroleum, including:
  • details of equipment
  • frequency of measurement
  • method of reporting
  • triggers (indicating containment not as expected) and action plan in response to triggers

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.

Proposed rates of injection and withdrawal

Page last updated: 16 Feb 2024