strike energy limited annual licence 2009...

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Strike Energy Limited

Annual Report

Licence Year 1

13 May 2009 – 12 May 2010

PEL 96

Cooper & Eromanga Basin South Australia

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Table of Contents 1 Introduction .................................................................................................................................... 3

2 Permit Summary ............................................................................................................................. 4

3 Regulated Activities ........................................................................................................................ 4

3.1 Drilling and Related Activities ................................................................................................. 4

3.2 Seismic Data acquisition ......................................................................................................... 7

3.3 Seismic Data Processing and Reprocessing ............................................................................ 7

3.4 Geochemical, Gravity, Magnetic and other Surveys ............................................................... 7

3.5 Preliminary Survey Activities .................................................................................................. 7

4 Compliance Issues ........................................................................................................................... 7

4.1 Licence Non‐Compliance ......................................................................................................... 8

4.2 Regulatory Non‐Compliance ................................................................................................... 8

4.3 Compliance with Statement of Environmental Objectives ..................................................... 9

4.4 Report and Data Submission ................................................................................................. 21

4.5 Incidents ................................................................................................................................ 21

4.6 Management System Audits ................................................................................................. 22

4.7 Threat Prevention ................................................................................................................. 22

4.8 Future Work Program ........................................................................................................... 22

5 Expenditure ................................................................................................................................... 22

List of Appendices Appendix 1 Expenditure Statement ...................................................................................................... 23

List of Tables Table 1 Original licence work commitments by licence year. ................................................................ 4 Table 2 Final work program and work completed (as of end of current reporting period) by licence year ......................................................................................................................................................... 4 Table 3 List of licence non‐compliances for reporting year .................................................................... 8 Table 4 List of regulatory non‐compliances for current reporting year ................................................. 8 Table 5 Environmental Objectives and Management Strategies. .......................................................... 9 Table 6 List of report and data submissions during current licence reporting year ............................. 21 Table 7 List of incidents during current licence reporting year ............................................................ 21 Table 8 Future Work Program. ............................................................................................................. 22

List of Figures Figure 1 Tenement Location Map ........................................................................................................... 3 Figure 2 PEL 96 Infrastructure and Work Activity Map. ......................................................................... 6

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1 Introduction Petroleum Exploration Licence 96 (PEL 96) was granted on 13th May, 2009. The licence is located on the southern margin of the Cooper Basin, South Australia (Figure 1).

This report details the work conducted during Licence Year 1 of the first licence term (13th May 2009 – 12th May 2010 inclusive), in accordance with Regulation 33 of the Petroleum and Geothermal Energy Act 2000.

Figure 1 Tenement Location Map

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2 Permit Summary For the duration of the licence year, licensees for Petroleum Exploration PEL 96 were:

• Strike Energy Limited* (Operator) 66.667% • Australian Gasfields Limited 33.333%

(*Strike Oil Limited changed its name to Strike Energy Limited on 4th December 2009)

The original work commitments associated with PEL 96 are listed in Table 1. On the 11th May 2010 an application was made to the Director Petroleum and Geothermal to vary the licence work commitment by swapping the Year 2 and 3 minimum work commitments, this variation was granted on the 18th May 2010.

Table 1 Original licence work commitments by licence year.

Licence Year Licence Dates Minimum Work Program

Year 1 13/5/09 – 12/05/10 Geological and Geophysical studies

Year 2 13/5/10 – 12/05/11 100 km 2D seismic acquisition

Year 3 13/5/11 – 12/05/12 Drill one well

Year 4 13/5/12 – 12/05/13 Geological and Geophysical studies

Year 5 13/5/13 – 12/05/14 Drill one well

Licence Year 1 concluded on 12th May 2010. The following table displays the revised minimum work program (after all variations) and the actual work completed up until the end of the current licence period.

Table 2 Final work program and work completed (as of end of current reporting period) by licence year

Licence Year Minimum Work Program Actual Work

Year 1 Geological and Geophysical studies Geological and Geophysical studies, 157km 2D seismic reprocessing, 41km drill access track construction.

Year 2 Drill one well

Year 3 100 km 2D seismic acquisition

Year 4 Geological and Geophysical studies

Year 5 Drill one well

3 Regulated Activities Pursuant to Regulation 33(2)(a) under the Act,:

This information is detailed below in designated sections.

3.1 Drilling and Related Activities No wells were drilled in the licence reporting period.

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Related drilling activities included:

• Work Area Clearance survey to clear 11 potential well sites and associated accesses.

• Preparation and submission of Activity Notifications for 5 coal seam gas wells (Anvil 1, Bellows 1, Forge 1, Mallet 1 and Pritchel 1).

• Construction of well access tracks: o Bellows 1 – 5km new track and 5 borrow pits o Forge 1 – 13km track upgrade, 23km new track, 28 borrow pits

Access tracks, proposed well locations plus remaining potential well sites are shown in Figure 2.

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Figure 2 PEL 96 Infrastructure and Work Activity Map.

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3.2 Seismic Data acquisition No regulated activities undertaken in the licence reporting period.

3.3 Seismic Data Processing and Reprocessing Eight seismic lines within PEL 96 from three different vintages (1982‐1985) were reprocessed from Sept’08 to Nov’08. The work was carried out prior to grant of the licence but is being claimed as a Year 1 regulated activity. A copy of the report and data was submitted on 28th May 2010. The lines, reprocessed by Fugro Seismic Imaging in Perth, were follows:

Line Shot Point’s Common Depth Point’s 82‐MCB 822‐102 1‐1435 82‐MCD 102‐726 1‐1243 82‐MCH 102‐954 2‐1700 82‐MFA 480‐100 4‐756 82‐MFC 387‐102 1‐546 84‐TJH 1111‐200 2‐1822 85‐YNS 200‐500 2‐595 85‐YNX 200‐500 2‐850

A total of 157km was reprocessed.

The reprocessed seismic lines tie the key petroleum wells within PEL 96. The reprocessing resulted in a better tie to the wells than the original data and has enabled the coal seams targeted for coal seam gas to be mapped with more confidence. Interpretation of lateral continuity of the coal has been completed. Further calibration of the seismic will be addressed in the upcoming drilling programme.

3.4 Geochemical, Gravity, Magnetic and other Surveys No regulated activities undertaken in the licence reporting period.

3.5 Preliminary Survey Activities A work area clearance, cultural heritage survey and archaeological assessment of the areas to be affected by the proposed exploration activities at the eleven potential well sites was carried out from 13/9/2009 – 18/9/2009. The survey was undertaken with the Yandruwandha / Yawarrawarrka Native Title Claimant Group.

In preparation for planned field activities consultation as per Part 10 of the Act was undertaken with the following stakeholders:

• Yandruwandha / Yawarrawarrka Native Title Claimant Group.

• South Australian Native Title Services.

• Lindon Station – Tinga Tingana Pastoral Lease Holders.

• Uranium Equities Limited – Holders of co‐incident mineral exploration licences.

• Department of Environment and Heritage – Strzelecki Regional Reserve Managers.

4 Compliance Issues Pursuant to Regulations 33(2) (b) & (c):

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No instances of licence or regulatory non‐compliance were identified for PEL 96.

Detailed information on the individual instances of non‐compliance are provided below in designated sections.

4.1 Licence Non‐Compliance Table 3 List of licence non‐compliances for reporting year

No. Stated Commitment Reason for Non‐Compliance Rectification of Non‐Compliance

‐ ‐ ‐ ‐

4.2 Regulatory Non‐Compliance Table 4 List of regulatory non‐compliances for current reporting year

No. Date Activity Details of Non‐Compliance

Rectification of Non‐Compliance

‐ ‐ ‐ ‐ ‐

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4.3 Compliance with Statement of Environmental Objectives No SEO non‐compliances identified. The Joint Venture is satisfied that at this early stage of its exploration program it has met all the relevant objectives.

Relevant SEO is South Australia Cooper Basin Operators Drilling and Well Operations: Statement of Environmental Objectives – November 2003

Table 5 Environmental Objectives and Management Strategies.

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Environmental Objective

Guide to How Objectives Can Be Achieved Assessment Criteria Strike Energy Management Measures

1. Minimise the risk to public and other third parties.

All employees and contractor personnel complete a safety induction prior to commencement of work in the field.

All employees and contractor personnel undertake a refresher induction every 2 years.

Signage in place to warn third parties of access restrictions to operational areas, with particular warnings when potentially dangerous operations are being undertaken.

Permit to work systems in place for staff and contractors in dangerous situations.

All appropriate PPE (personnel protective equipment) is issued and available as required in accordance with company operating requirements and applicable standards.

Effective Emergency Response Plan (ERP) and procedures are in place in the event of a fire or explosion.

Annual exercise of ERP.

Communication of rig moves and other potential hazards to safety associated with drilling and well operations to potentially affected parties prior to commencement of operations.

Reporting systems for recording injuries and accidents in place, and annual; (at minimum) review of records to determine injury trends. Implementation of appropriate corrective actions.

Ensuring safety management plans are updated and reviewed.

Reasonable measures implemented to ensure no injuries to the public or third parties.

Health and Safety plans, Drilling Program, Emergency Response Plan etc. will be developed and implemented by Strike Energy and its contractors in accordance with legislative requirements, SEO and industry standards.

All employees will undertake a safety induction prior to commencing work in the field and will undertake a refresher course if/when required.

Warning signage will be erected to deter unauthorised third party access.

Rig moves and significant transportation events will be communicated to the pastoralist and other affected parties.

The sump and any other hazards will be fenced following drilling to minimise public safety risks.

To date compliant – warning signage erected, Health Safety and Environment Management System revised and updated, Emergency Response Plan developed.

HSE induction prepared for ‘Drill Well On Paper Exercise” and in filed prior to spud.

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2. Minimise disturbance and avoid contamination to soil.

Well Site and Access Track Construction

Consider alternate routes during planning phase to minimise environmental impacts

Gibber mantle on access tracks and well sites (excluding sumps) has not been removed, only rolled, during construction and restoration on gibber and tableland land systems.

Topsoil stockpiled (including gibber mantle) from sump construction and respread on abandonment.

The need to traverse sensitive land systems and the methods of managing the impacts should be justified in accordance with company procedures, recorded and available for auditing.

Well Site and Access Track Construction

0, +1 or +2 GAS criteria are attained for “Minimise visual impacts of abandoned well sites and access tracks” objective for well lease and access track construction.

No unauthorised off‐road driving or creation of shortcuts.

No construction activities are carried out on salt lakes, steep tableland land systems or wetlands land systems (as defined in EIR).

Borrow pit construction and restoration

0, +1 or +2 GAS criteria are attained for “Minimise Visual Impacts for constructing borrow pits” objective and “Minimise visual impacts” and “Minimise impact on soil” objectives.

Unnecessary/unauthorised off‐road driving or creation of shortcuts will be avoided.

Specific instructions contained in prepared HSE Induction.

No gibber or sensitive land systems (salt lakes, steep tableland land systems or wetlands land systems) are present.

To date ‐ compliant.

Borrow pits, where required, will be constructed and restored in accordance with these SEO requirements.

The drill sites, access and borrow pits (if required) will be rehabilitated according to industry standards (e.g. SEO, PIRSA Field Guide for the Environmental Assessment of Abandoned Petroleum Wellsites in the Cooper Basin).

Drill access tracks / borrow pits constructed will be in use for foreseeable future, no restoration planned at this stage.

Production Testing / Well Blowdowns

If appropriate use:

impermeable flare pit

flare tanks.

Production Testing/Well Blowdowns

No soil contamination as a result of production testing or well blowdown operations.

Not applicable.

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2. Minimise disturbance and avoid contamination to soil. ‐ continued

Fuel and Chemical Storage and Handling

All fuel, oil and chemical storages bunded in accordance with the appropriate standards

Records of spill events and corrective actions maintained in accordance with company procedures.

Spills or leaks are immediately reported and clean up actions initiated.

Logged incidents are reviewed annually to determine areas that may require corrective action in order to reduce spill volumes in subsequent years (and drive continual improvement).

Chemical and fuel storage procedures, including signage, are reviewed and monitored in audit process.


No spills/leaks outside of areas designed to contain them.

Level of hydrocarbon continually decreasing for in situ remediation of spills.

Soils remediated to a level as determined by the SHI process.

The drill rig is fitted with a double skinned fuel tank and drip trays will be utilised during refuelling operations. Dangerous/toxic chemicals will be placed within bunds of sufficient capacity to contain spills and meet legislative requirements (e.g. EPA guidelines).

Strike Energy and/or contractor procedures will cover spill response.

Material Safety Data Sheet (MSDS) information will be readily available at the drill site.

Appropriate spill response equipment will be maintained on site.

To date no spills ‐ Compliant.

Spill Response / Contingency Planning

Results of emergency response procedures carried out in accord with Regulation 31 show that oil spill contingency plan in place in the event of a spill is adequate and any necessary remedial action needed to the plan is undertaken promptly.

Oil spill contingency plan (reviewed annually) is up to date with specific scenarios relating to spills to creeks and floodplain areas.

Spill response equipment is audited annually.

Annual spill response training exercise is undertaken.

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2. Minimise disturbance and avoid contamination to soil. ‐ continued

Waste Disposal (domestic, sewage and sludges)

Covered bins are provided for the collection and storage of wastes.

All loads of rubbish are covered during transport to the central waste facility.

Pits are not established in locations, which pose an unacceptable hazard to stock or wildlife.

Waste Disposal (domestic, sewage and sludges)

All domestic wastes are disposed of in accordance with EPA licensing requirements.

0, +1 or +2 GAS criteria for ‘Waste material’ objective is attained.

No spills or leaks from sewage treatment process and sludge pits.

Strike Oil will ensure that covered bins are available on site for the capture of all solid waste materials and that waste is securely transported to Moomba.

Temporary sewage treatment units will be correctly installed and maintained so as to avoid spills and leaks.

Not applicable at this stage

3. Avoid the introduction or spread of pest plants and animals and implement control measures as necessary

Where appropriate a weed and feral animal management strategy is in place (avoidance and control strategies).

Rig and vehicle wash downs are initiated in accordance with the management strategy.

No weeds or feral animals are introduced to operational areas.

Equipment brought to site will be free of soil or weed material

Any equipment that has been operating outside the Cooper Basin or in an area of weed infestation will be thoroughly inspected and washed down before going to site.

Good housekeeping practices will be followed to discourage pest animal species.

No evidence of introduction of weeds or feral animals. Road and camp construction equipment sourced locally from Cooper Basin contractors.

4. Minimise disturbance to drainage patterns and avoid contamination of surface waters and shallow ground water resources.

Well Lease and Access Track Construction

Well leases and access tracks are located and constructed to maintain pre‐existing water flows (i.e. channel contours are maintained on floodplains and at creek crossings).

New access tracks will be constructed in a manner which minimises disturbance to surface drainage patterns. Pre‐existing drainage lines will not be obstructed. Minor local drainage depressions at drill sites (e.g. Bellows‐1) will be diverted around sites where necessary.

Compliant

Transport activities comply with legislative requirements and SEO requirements.

Drilling Mud Sumps and Flare Pits

All drill cuttings, muds and non toxic drill fluids are contained within the designated mud sumps with adequate freeboard at the completion of operations to allow for a 1m cover of clean fill at remediation.

Drilling Mud Sumps and Flare Pits

No overflow of drill cuttings, muds and other drilling fluids from mud sumps.

No waste material disposal to sumps and flare pits.

Drill sumps will be adequately sized to prevent overflow. Surface water flow to be directed away from sump. Yet to be constructed.

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4. Minimise disturbance to drainage patterns and avoid contamination of surface waters and shallow ground water resources. ‐ continued

Well Heads (Oil and Gas Systems)

Where appropriate, imperviously lined well cellars are installed on oil wells.

Chemical containment devices are installed on gas well skids.

Well heads shut in and chemicals removed prior to flood events.

Jet pumps are installed within containment device with an adequately sized containment sump.

Well Heads (Oil and Gas Systems)

No leaks/spills outside of areas designed to contain them.

Well head and blowout prevention equipment will be installed on the well head. Where required, chemical containment devices will be installed on gas well skids.

Not applicable at this stage.

Well Blowdown/Production Testing

Activity is conducted in accordance with accepted industry standards / good oilfield practice.

If appropriate use:

impermeable flare pit

flare tanks

separators

supervision

Well Blowdown/Production Testing

No water (surface or groundwater) contamination as a result of production testing or well blowdown operations.



All fuel, oil and chemical storages bunded in accordance with the appropriate standards

Records of spill events and corrective actions maintained in accordance with company procedures.

Spills or leaks are immediately reported and clean up actions initiated.

Logged incidents are reviewed annually to determine areas that may require corrective action in order to reduce spill volumes in subsequent years (and drive continual improvement).

Chemical and fuel storage procedures, including signage, are reviewed and monitored in audit process.

Fuel/Chemical Storage and Handling

No leaks/spills outside of areas designed to contain them.

The drill rig is fitted with a double skinned fuel tank and drip trays will be utilised during refuelling operations. Dangerous/toxic chemicals will be placed within bunds of sufficient capacity to contain spills and meet legislative requirements (e.g. EPA guidelines).

Camp and drill rig generators and fuel tanks to be located in polythene lined bunded areas to contain any oil spills.

Fuel tanks and delivery systems are to be regularly inspected by Strike Energy Well Site Manager and rejected if found unsuitable.

The storage, use and disposal of hazardous material will be undertaken in accordance with legislative requirements.

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4. Minimise disturbance to drainage patterns and avoid contamination of surface waters and shallow ground water resources. ‐ continued

Spill Response / Contingency Planning

Results of emergency response procedures carried out in accord with Regulation 31 show that oil spill contingency plan in place in the event of a spill is adequate and any necessary remedial action needed to the plan is undertaken promptly.

Oil spill contingency plan (reviewed annually) is up to date with specific scenarios relating to spills to creeks and floodplain areas.

Spill response equipment is audited annually.

Annual spill response training exercise is undertaken.

Emergency response procedures for spill response

in place.

5. Avoid disturbance to sites of cultural and heritage significance

Consultation with stakeholders (i.e. government agencies, landholders etc) in relation to the possible existence of heritage sites, as necessary.

Heritage report forms completed for any sites or artefacts identified, and report forms forward to the Department of State Aboriginal Affairs (DOSAA).

Survey records are kept and are available for auditing.

Areas requiring remediation which lie outside previously surveyed sites should be surveyed in accordance with company heritage clearance procedures.

Note: Where a negotiated agreement or determination for heritage clearance is in place, compliance with the negotiated agreement or determination takes precedence over the above criteria.

Proposed well sites and access tracks have been surveyed and any sites of Aboriginal and non‐Aboriginal heritage identified.

Any identified cultural and heritage sites have been avoided.

A Work Area Clearance with the Yandruwandha/Yawarrawarrka Native Title Claimant Group has been carried out. Activities will be confined to the areas cleared by these WACs.

All employees at the site to be informed on the cultural and heritage significance.

Compliant – Work Area Clearance conducted. Identified sites are avoided.

6. Minimise loss of aquifer pressures and avoid aquifer contamination.

Drilling & Completion Activities

A competent cement bond between aquifer and hydrocarbon reservoirs is demonstrated.

For cases where isolation of these formations is not established, a risk assessment incorporating the use of pressure / permeability / salinity data is undertaken in consultation with DWLBC & AAWCMB to determine if lack of cement or poor bond will cause or has caused damaging crossflow which needs to be remediated.

Drilling & Completion Activities

There is no uncontrolled flow to surface (Blow out).

Sufficient barriers exist in casing annulus to prevent crossflow between separate aquifers or hydrocarbon reservoirs.

Relevant government approval obtained for abandonment of any radioactive tool left downhole.

Well casing, cementing and abandonment will be in accordance with SEO requirements. A drilling fluids program based on previous drilling in the area will be used. A properly balanced mud system will be utilised and monitored.

Abandonment will involve placing cement plugs across all aquifers and at the casing shoe to completely isolate all formations. Volumes of fluid returned to surface will be matched with calculations. Refer to Drilling Program.

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6. Minimise loss of aquifer pressures and avoid aquifer contamination. ‐ continued

Producing, Injection and Inactive Wells

Monitoring programs implemented (eg. Through well logs, pressure measurements, casing integrity measurements and corrosion monitoring programs) to assess condition of casing and cross‐flow behind casing.

Casing annulus pressures are monitored every 2 years.

The condition of the primary casing barrier is adequate.

For cases where crossflow is detected, a risk assessment incorporating the use of pressure / permeability / salinity data is undertaken in consultation with DWLBC & AAWCMB to determine if lack of cement or poor bond will cause or has caused damaging crossflow which needs to be remediated.

Producing, Injection, Inactive and Abandoned Wells

No cross‐flow behind casing between aquifers, and between aquifers and hydrocarbon reservoirs unless approved by DWLBC.

Casing / tubing to be cemented across the shoe in accordance with PIRSA regulations.


Well Abandonment Activities

Isolation barriers are set in place to ensure that crossflow, contamination or pressure reduction will not occur.

Barriers will be set to meet or exceed the requirements of applicable standards for the decommissioning and abandonment of water bores and abandonment of petroleum wells.

The placement of isolation barriers will in general be to isolate the groups of formations as listed under comments. The number and placement of barriers may be varied from this standard approach on a case‐by‐case basis by SACB Operator personnel using relevant available data and the SA Cooper Basin Water Pressure and Salinity Module Report (2002), and in consultation with DWLBC.

Abandonment will involve placing cement plugs across all aquifers and at the casing shoe to completely isolate all formations. Volumes of fluid returned to surface will be matched with calculations. Refer to Drilling Program.

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7. Minimise disturbance to native vegetation and native fauna

Well Lease and Access Track Construction and Restoration

Proposed well sites, camp sites, access tracks and borrow pit sites have been assessed for rare, vulnerable and endangered flora and fauna species before the commencement of construction.

Consider alternate routes during planning phase to minimise environmental impacts

Facilities (e.g. borrow pits, well cellars) are designed and constructed as far as practicable to minimise fauna entrapment.

Sumps and mud pits are fenced as appropriate to minimise wildlife access

Assessment records are kept and are available for auditing.

In recognised conservation reserves (i.e. Innamincka Regional Reserve) excavations are left in a state as agreed with the responsible statutory body

Borrow pits are restored to minimise water holding capacity, where agreements are not in place with stakeholders.

Well Lease and Access Track Construction and Restoration

Any sites with rare, vulnerable and endangered flora and fauna have been identified and avoided.

0, +1 or +2 GAS criteria are attained for “Minimise impacts on vegetation” objective, during well lease and access track site selection and construction and for “Re‐establish natural vegetation on abandoned well sites and access track” objective.

Some vegetation clearance will be required for access and drill site construction, however the vegetation is generally sparse, open and will readily regenerate, provided that irreversible soil changes (e.g. clay over sand) do not occur.

Vegetation clearance will be minimised and the clearance of long‐lived/significant species will generally be avoided, in accordance with standard procedures. Previously disturbed areas will be utilised as far as possible.

Compliant ‐ Vegetation, species impacts minimised

Low possibility of impact to individuals of threatened mammal species (Dusky Hopping‐mouse) during access track and drill site construction as they would be expected to be at depth in burrows if present. Very small fraction of available habitat impacted so overall impact on the species would be negligible.

Access tracks and drill sites will be rehabilitated and remediated according to industry standards (e.g. SEO, PIRSA Field Guide for the Environmental Assessment of Abandoned Petroleum Wellsites in the Cooper Basin). Tracks still in use.

Borrow pits, where required, will be constructed and restored in accordance with these SEO requirements. Borrow pits still in use

The storage, use and disposal of hazardous material will be undertaken in accordance with legislative requirements.

Bunding for fuel and chemical storage, refuelling etc will be adequate to contain spills and meet legislative requirements (e.g. EPA guidelines).

Borrow Pits Construction and Restoration

0, +1 or +2 GAS criteria are attained for “Minimise impacts on vegetation” objective during borrow pit site selection and construction, and “Minimise Impact on Vegetation” objective for borrow pit restoration.

Waste Management

Covered bins are provided for the collection and storage of wastes.

All loads of rubbish are covered during transport to the central waste facility.

Pits are not established in locations, which pose an unacceptable hazard to stock or wildlife.

Waste Management

Refer to assessment criteria for Objective 11.

Fuel and Chemical Storage and Management

Refer to assessment criteria for Objectives 2 and 4.

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8. Minimise air pollution and greenhouse gas emissions.

Well Testing

Conduct well testing in accordance with appropriate industry accepted standards.

Continually review and improve operations.

Appropriate emergency response procedures are in place for the case of a gas leak.

Compliance with EPA requirements. Vehicles will be required to adhere to speed limits on unsealed roads to minimise the generation of dust.

Speed limit restrictions erected on private dirt roads. Contractors engaged to water roads during operations.

A Drill Stem Test is planned for each of the programmed wells. See Drilling Programme for details. Note: There are no plans to flow the well to surface.

Well Blowdown

Blowdown carried out in accordance with industry accepted standards / good production practice.

Not applicable.

9. Maintain and enhance partnerships with the Cooper Basin community.

Relevant affected parties are notified and consulted on proposed activities.

Forward development plans are presented to the local community.

Local community projects and events are sponsored and supported where appropriate.

Industry membership of appropriate regional land management committees and boards i.e. the Lake Eyre Basin Consultative Council, Marree Soil Conservation Board, and Catchment Committees.

No unresolved reasonable complaints from the community.

Regular contact will be maintained with the relevant landholders and associated stakeholders prior to and while undertaking drilling operations.

Relevant parties have been notified and consulted on proposed activities.

10. Avoid or minimise disturbance to stakeholders and/or associated infrastructure.

Induction for all employees and contractors covers pastoral, conservation, legislation and infrastructure issues.

Relevant stakeholders are notified prior to survey and construction of well sites, camp sites and access tracks and undertaking of operations (pursuant to Petroleum Regulations). Borrow pits left open (unrestored) if requested by landholder and upon receipt of letter of transfer of responsibility to landholder.

Gates or cattle grids are installed to a standard, consistent with pastoral infrastructure in fences where crossings are required for access.

No reasonable stakeholder complaints left unresolved.

The landholder / DEH and any associated stakeholders will be notified regarding the proposal. Strike Energy shall undertake liaison regarding drilling and transport activities.

Close consultation will be undertaken with the landholder regarding issues such as stock management, use of tracks and water bores, and to ensure that drilling activities are undertaken in a way that minimises disruption.

Consultation undertaken as required, no complaints received.

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10. Avoid or minimise disturbance to stakeholders and/or associated infrastructure. ‐ continued

All gates left in the condition in which they were found (ie. open/closed).

Potential sources of contamination are fenced as appropriate to prevent stock access.

System is in place for logging landholder complaints to ensure that issues are addressed as appropriate.

Requirements of the Cattle Care and Organic Beef accreditation programs are complied with.

In recognised conservation reserves (i.e. Innamincka Regional Reserve) excavations are left in a state as agreed with the responsible statutory body.

When the initial site restoration is conducted following completion of drilling operations, suitable fencing will be erected to isolate the sump and any pits or plant installed on site.

Access tracks and drill sites will be rehabilitated and remediated according to industry standards (e.g. SEO, PIRSA Field Guide for the Environmental Assessment of Abandoned Petroleum Wellsites in the Cooper Basin).

Any damage to station tracks as a result of drilling traffic will be repaired.

Not applicable at this stage

11. Optimise waste reduction and recovery.

Bulk chemical and oil purchasing and use of “bulki bins” or other storage tanks in place for large volume items.

With the exception of drilling fluids, drill cuttings and other fluids disposed during well clean‐up, and sewage wastes, all wastes to be disposed of at an EPA licensed facility in accordance with EPA Licence conditions.

Attainment of GAS criteria for “Site left in clean, tidy and safe condition after final clean‐up” objective during well site restoration.

Attainment of GAS criteria for “Site left in clean, tidy and safe condition” objective during borrow pit restoration.

Covered bins (i.e. which cannot be accessed by birds and animals) will be available on site for the collection of all solid waste materials for off‐site disposal.

Waste will be segregated for recycling where practicable.

Handling and disposal of wastes will be undertaken in accordance with legislative requirements and the SEO.

12. Remediate and rehabilitate operational areas to agreed standards.

Rehabilitation/ abandonment plans for surface activities will be developed in consultation with relevant stakeholders

No unresolved reasonable stakeholder complaints.

Access tracks and drill sites will be rehabilitated and remediated according to industry standards (e.g. SEO, PIRSA Field Guide for the Environmental Assessment of Abandoned Petroleum Wellsites in the Cooper Basin).

Contaminated Site Remediation

Contaminated sites are remediated in accordance with criteria developed with the principles of the National Environment Protection Measure for Contaminated sites and in consultation with the EPA.

Borrow pits, where required, will be constructed and restored in accordance with these SEO requirements.

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12. Remediate and rehabilitate operational areas to agreed standards. ‐ continued

Well Site and Access Track Restoration

Compacted soil areas have been ripped (except on gibber and tablelands) and soil profile and contours are reinstated following completion of operations.

Well Site and Access Track Restoration

The attainment of 0, +1 or +2 GAS criteria for:

“minimise visual impact of abandoned well sites”

“minimise visual impact of abandoned access tracks”

“re‐establish natural vegetation on abandoned well sites and access tracks”

Drill access tracks / borrow pits constructed will be in use for foreseeable future, no restoration planned at this stage.

Borrow Pit Restoration

The attainment of 0, +1 or +2 GAS criteria for:

“minimise impact on vegetation”

“minimise impact on soil”

“Minimise visual impacts”

Note: Well abandonment issues addressed under objective 6.

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4.4 Report and Data Submission Pursuant to Regulation 33(2) (e) under the Act:

A list of all reports and data relevant to the operation generated by Strike Energy during the current licence year are tabulated below.

Table 6 List of report and data submissions during current licence reporting year

Description of Report / Data Date Due Date Submitted Compliant / Non‐Compliant

Activity Notification – Anvil 1, Bellows 1, Forge 1, Pritchel 1 and supporting document (Original and 3 revisions submitted as additional information became available)

18/12/2009 13/11/09, 18/11/09, 3/12/09, 10/12/09

Compliant. No activity undertaken within 35 days of submission

Activity Notification – Mallett 1 16/1/2010 12/1/10 Compliant. No activity undertaken within 35 days of submission

Seismic Data Processing Report For Strike Oil, Cooper Basin, PELA 96, 2008 Reprocessing and CD of reprocessed data.

N/A 28/5/2010 Work carried out prior to licence grant – expenditure claimed Yr 1.

4.5 Incidents Pursuant to Regulation 33(2) (f) under the Act:

No incidents occurred during the current reporting year.

Table 7 List of incidents during current licence reporting year

Date of Incident

Activity Incident Description Type of Loss Action to Rectify & Effectiveness of Actions Date Reported / Reported to Whom

‐ ‐ ‐ ‐ ‐ ‐

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4.6 Management System Audits Pursuant to Regulation 33(2) (d) under the Act:

No management system audits were undertaken during the licence year in relation to exploration activities on PEL 96

4.7 Threat Prevention Pursuant to Regulation 33(2) (g) under the Act:

There were no serious threats identified due to the activities conducted in during the reportable period

4.8 Future Work Program Pursuant to Regulation 33(2) (h) under the Act:

The proposed work program for Licence Year 2 will focus on drilling and related activities as tabulated below.

Table 8 Future Work Program.

Area of Activity Planned Activity Start Date Duration

Drilling & Related Activities

Drill Forge 1 – 1,505m June 2010 20 days

Contingent ‐ Drill Bellows 1‐ 1,700m July 2010 26 days

Contingent ‐ Drill Anvil 1 – 1,706m August 2010 26 days

Drilling & Related Activities

Shallow Coal Seam Gas Evaluation Drilling. 2nd quarter 2010/11

3 months

Geological and Geophysical studies

Desktop evaluation of the unconventional resource potential, mainly CSG but also UCG, tight gas and shale gas.

July 2010 Ongoing

5 Expenditure Pursuant to Regulation 33(3) under the Act:

Commercial in Confidence.

Please refer to Appendix 1 for the expenditure statement for the current reporting period.

strike energy limited annual licence 2009...

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