Australia’s Origin Energy could be sitting on a multi-billion dollar gas resource in the country’s Northern Territory, several times the size of the North West Shelf and with the potential to keep the energy-short eastern states market well supplied for years.
All it needs now is the green light to get gas flowing.
Speaking at the site of Origin’s successful Amungee well, drilled last year, chief geologist David Close likened the resource to an “elephant” and said it was hard to argue that the unconventional well is not the country’s most successful.
“It’s undoubtedly met and exceeded expectations, and there has been a lot of disappointing results from shale,” Dr Close told reporters.
Chief executive Frank Calabria said that in the early stages of work, the resource “looks very exciting”.
And while it would take at least five years to develop, even if an NT fracking moratorium is eased, it could play a big part in balancing east coast gas supplies that are expected to struggle to meet demand over the next 20 years after the construction of export plants at Gladstone.
Known as the Beetaloo joint venture, Origin Energy estimates it has 6.6 trillion cubic feet (tcf) of contingent gas resources over 2000sq km of ground. This follows the hydraulic fracturing, or fracking, and testing of Australia’s most successful shale well to date — the Amungee horizontal well. It was fracked just before the NT’s Labor government took power in September and, at least temporarily, banned the practice.
That is a lot of gas in itself. But the shale play that was tested, known as the Velkerri formation and holding the world’s oldest gas source rocks, extends over 17,000sq km on Origin’s ground. This means the resources could be expanded to eight times its current size, or about 50 trillion cubic feet of gas.
And it gets better. Slightly shallower than the 2.4km deep, 1.4 billion year-old Velkerri, sits another, younger play, known as the Kyalla formation, at just 1.2 billion years old. It has not been horizontally drilled but recent testing of samples have given the surprise indication the liquids-shale has properties that can be fracked.
So Beetaloo could have some valuable liquids and “stacked” plays, which is the property that has made the Permian basin in West Texas the hottest ticket in US onshore oil of late, to the extent that extra expected production is weighing down oil prices.
To put the amount of potential gas at Beetaloo in perspective, the nation’s biggest domestic gas provider — the Bass Strait operations owned by Exxon Mobil and BHP Billiton — has produced about 8 trillion cubic feet of gas and could have about 7 trillion cubic feet left, according to Exxon. If the resource quality in the initial well extends throughout the Origin acreage, Citi analyst Dale Koenders, who has done the most extensive external market analysis to date on Beetaloo, says there could be more than 100 trillion cubic feet of gas resource,
Last week, the Labor-commissioned Scientific Inquiry into Hydraulic Fracturing in the NT handed down an interim report that indicated it could recommend significant regulatory and legislative framework changes before fracking would be allowed.
It also said there was a high likelihood Beetaloo would be productive. Mr Calabria said he was impressed by the interim report.
“I think it was an appropriate interim report,” he said. “The process looks to be a robust one.”
Despite its reputation as remote, the Beetaloo Basin lies close to the Stuart Highway and just north of Tennant Creek, where an $800 million pipeline is being built to take NT gas to the east coast. Beetaloo gas could also be piped up to Darwin for LNG.