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Empire Oil And Gas Ready To Commence Red Gully Facility Earthworks Pending Final Approval

Empire Oil & Gas (ASX: EGO) continues to make progress on its Red Gully Gas and Condensate Processing Facility in the Perth Basin and farm out negotiations for two onshore Carnarvon Basin permits.

The company is currently waiting on final approval from the Western Australia Department of Mines and Petroleum of the Environmental Management Plan to start earthworks for the facility.

Empire has already secured access to the Dampier to Bunbury Natural Gas Pipeline, which the export pipeline from the Red Gully plant will connect to, and has received DMP approval for the facilities Construction Safety Case.

The Red Gully Gas and Condensate Processing Facility is capable of processing 10 million cubic feet of gas and associated condensate from the Red Gully-1 and Gingin West-1.

Gas produced will be sold to Alcoa (NYSE: AA) under the existing gas sales agreement that was reached in October last year while condensate will be sold to the BP Refinery at Kwinana, Western Australia.

Gingin West-1 flowed 7.5 million cubic feet (MMcf) of gas and 375 barrels of condensate per day during testing while Red Gully-1 flowed 12MMcf of gas and 832 barrels of condensate.

Partners in EP 389 are Empire (68.75%), ERM Power (21.25%) and Wharf Resources (10%).

Carnarvon Basin

Empire has advanced negotiations with newcomer UIL Energy, which has agreed to drill the Leon-1 shale gas well upon renewal of EP 359 to earn a 50% interest in the permit.

UIL has the option to drill another unconventional well to earn a 75% interest in the shale/unconventional oil and gas rights within the permit.

Within EP 435, UIL Energy has an option to drill a well to earn a 50% in the permit and to also drill an unconventional well to earn a 75% interest in the shale/unconventional oil and gas rights within the permit.

Empire is also progressing plans to drill the conventional Bee Eater-1 and Rainbow-1 prospects in EP 359 and EP 435 respectively.

Bee Eater-1 is a ready to drill prospect that is well defined by seismic and targets 5 million barrels of oil while Rainbow-1 targets an extension of the Bee Eater structure in EP 435.

UIL's is led by former Bow Energy chief executive officer John De Stefani.

Other exploration

Empire is also participating in a 3D seismic survey to be shot over EP 325 in the offshore Exmouth Sub-basin that is operated by Strike Oil (ASX: STX).

This survey will be carried out in 2013 to define the Big Horn Prospect, which targets 70 billion cubic feet (Bcf) of gas, and the Rivoli gas field that has proven gas reserves of 10Bcf.

The company has also successfully completed the experimental shot hole test survey in the Perth Basin for the upcoming Wannamal 3D seismic survey.

This test survey was carried out to determine what the required explosive charge and their depth within drill shot holes are to provide high quality data for the 3D survey, ensuring that it will be recorded with the best data quality.

The 100 square kilometre Wannamal 3D seismic survey will be shot over the Gingin gas field and the Wannamal prospect with the use of helicopters to transport the equipment to minimise its environmental impact.

Data from this survey will be used to decide if an exploration well is drilled on each of the Wannamal, Wannamal Deep, and Gingin gas field prospects Gingin-4, Gingin-4 Deep and Gingin-5.

Empire and its partners will also decide on whether to deepen the existing Gingin West-1 well to test the Gingin West-1 Deep prospect.

Re-entering and deviating from the Gingin-3 well to test the Gingin-5 prospect is also on the agenda.

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