advantages for alliance with bpt, page-13

Rex comments 14/10/11

Nelson affirms shale will figure prominently in the company's exploration activities, 'We found a very considerable gas resource in Shale and in sandstones in the Cooper Basin, a play that covers a very large area and one in which Beach has a high equity interest. The shales and the sandstones are gas saturated and over pressured and sit very close to pipeline infrastructure and processing facilities. They are a prime asset.'

Nelson forecasts unconventional oil and gas plays playing a key role in changing world markets in the coming years. 'Unconventional oil plays in North Dakota in North America have revolutionised the US industry,' he says. According to him, unconventional resource opportunities will deliver a step-change in the global energy supply and demand for oil and gas in the future.

Closer home, Australia is well positioned with the resources it has, however the key to unlocking the potential of these unconventional plays is the absence of conflicting land use problems, he points out, 'Australia has gas potential, but much of it is located in prime agricultural land which is creating tensions between people who want to produce gas and people who want to farm the land. Beach does not have these issues as our acreage is located in semi-desert areas with a small population. The Cooper Basin in that regard presents a win-win situation, especially because the industry has been established there for over forty years.'

The immediate challenges for Beach according to Nelson are to develop the shale and unconventional gas plays in the Cooper Basin and to get the necessary equipment to service the scale of the project. Beach intends to rapidly develop this opportunity while delivering the cost structure that will make it an economic success. 'We certainly know the markets well and the pricing will be good. Australian gas markets will be looking at substantially higher prices than the US market, with Australian gas prices likely to double in the next two years,' Nelson observes.