500klm, 150m and 9.5% organics means what?, page-35

Jake,

I think Cottee's upbeat because he's a salesman. I don't know enough about the deeper areas of Surprise to comment but I'm watching for any info on the production data - not expecting any though. As long as Surprise isn't showing significant depletion though, it should be a goer.

Rafish,

As doodlebugger said we're talking about the HVS which is the shale gas target. You're talking about Surprise which is a Stairway Sst target. Different things.

defplayer,

I don't agree that CTP's new data is more reliable than the earlier data when it comes to core samples. Even if Surprise yielded TOC 9% and 150m of HVS, it doesn't invalidate the earlier dataset which was built up over decades of drilling in the Amadeus across a wide area. All CTP has done is add TWO data points to the set - Surprise and JW, and those two wells are right next door to each other.

Improved seismic does not enable you to tell that TOC has gone from 3% to 9%. Only core samples can tell you that. 3D seismic helps a lot with depth and thickness over a small area but they'd have to shoot a basin-wide seismic to really map the HVS at high resolution. CTP only shot it around Surprise.

stoops,

Cost is the killer for shale. My comment about remoteness was not so much about getting the O&G to market but about the effect it has on costs - these multistage shale fracs require dozens of semi trainers and megalitres of water. They can afford to do that in the Barnett and Marcellus in the US because the infrastructure exists. In Australia they will struggle to do it even in the Cooper, never mind the frontier Amadeus.

I've heard estimates that laterals that cost $3-5M to drill in the US would cost $10-15M to drill in Australia. That's probably not far off the mark. Another interesting fact I've heard (but can't verify) is that there is currently not enough frac capacity in the entire of Australia to equal a US shale gas frac spread. This is because the CSG fracs that we do in Qld are tiny compared to the massive shale fracs.

This is what is going to keep Australia from shale production for a while yet. As doodlebugger said, the only thing that might tip the scales is an extremely rich liquids yield. Over time, as more equipment becomes available, I have no doubt Australian shale will become a reality, but in the meantime as doodlebugger also said, there will be more tears than successes.

None of this means CTP shale is a bad investment. Because the supermajors will be looking for these few success stories and willing to take a punt on the frontrunners, even if that means they have to sit on it for 10 years until the economics improve. If RC is as canny as his reputation suggests there could be some more good deals ahead for CTP - not DESPITE what I've said here about the timeframe but precisely BECAUSE of it.