Triangle Energy (Global) Ltd and Pilot Energy (ASX:PGY) have formalised a deal to reset the joint venture (JV) ownership structure linked to the Cliff Head JV Project and the Cliff Head Carbon Capture and Storage (CCS) Project in Western Australia.
Both parties have shaken hands on a sale and purchase deed, which will come into effect once the national oil and gas administrator grants a key declaration tied to the CCS project.
From there, Pilot will assume a 60% interest in the Cliff Head oil field and the CCS asset, while Triangle will take up the remaining 40%.
Setting the course
Triangle managing director Conrad Todd said: “We are pleased to have concluded this restructure of the JV arrangements, which clearly sets the course for a CCS project with Pilot.
“It provides an exciting and profitable use for the Cliff Head facilities once the oil field reaches the end of its economic life.
“Our co-operative joint venture will both re-arrange Triangle’s abandonment liability and re-task the existing facilities for at least the next 10-20 years.
“We are especially pleased that the CHJV will be making a significant contribution to the reduction of carbon dioxide emissions in Western Australia.”
CCS development step
Pilot's executive chair Brad Lingo said: “Formalising the restructure of the CHJV interest between Pilot and Triangle is a significant step in the development pathway for the first offshore CCS project in the Mid-West WA and for the future re-tasking of the Cliff Head infrastructure.
“Declaration of the CCS resource is an important near-term milestone for the development of the CCS project and will provide sufficient confidence to unlock further investment in the development project.
“Pilot is extremely excited to proceed with its clean energy development pathway and this arrangement with Triangle is a significant step in that direction.”
The story so far
When the CCS project was first announced back in April, Triangle and Pilot had already inked a deal to re-structure ownership stakes in the Cliff Head JV.
Since then, however, Pilot has launched a feasibility study investigating the potential for carbon capture and storage centred around the Cliff Head oil field.
Ultimately, the study confirmed the viability and suitability of the proposed CCS development, as well as a significant CCS resource in the area of that licence.
As a result, Triangle and Pilot are applying to the National Offshore Petroleum Titles Administrator (NOTPA) to declare a greenhouse gas storage formation and to pursue the CCS project once they’ve closed the books on economic oil production in the Cliff Head field.
Once the storage formation is declared, the Cliff Head JV hopes to make another application to NOPTA — this time to secure a greenhouse gas injection licence.
Essentially, this would allow both parties to inject and permanently sequester at least 500,000 tonnes of carbon dioxide every year.
Ultimately, for Triangle and Pilot to complete the sale and purchase deed, they need NOPTA to grant the storage formation declaration.
The road from here
Once the declaration is granted, Pilot and Triangle will restructure their interests in the WA-31-L Cliff Head project.
This means Pilot will hold a 60% direct participating interest in both the CHJV oil project and the CH CCS Project, while Triangle will pick up a direct 40% participating interest in both projects.
Pilot will also increase its interest in the CH JV Operator, Triangle Energy (Operations) Pty Ltd, to 100% and will become the operator of both the CHJV and the CH CCS Project.
From there, Pilot and Triangle will co-operate and jointly participate in an application to NOPTA for a greenhouse gas injection licence under the OPGGSA.
After the declaration is granted, TEG will have the option to participate in the CH CCS Project to the extent of its 40% participating interest or to withdraw.
If it withdraws, TEG will surrender its 40% participating interest in the CH JV to Pilot, which will then hold 100% of the interests in the CH CCS Project.
Finally, if the injection licence is approved and granted, TEG will pay Pilot $1 million.