Article, page-59

This is of interest re out tenements in the McArthur Basin.
From today's The Australian.
Of particular relevance I note the 2nd last paragraph. Mr.Gunner has stated that if he allows unconventional exploration it will be in tightly prescribed areas. Ben Wilson believes that McArthur Basin (not just the Beetaloo sub basin) will be given permission. Anyway, have a read, and a good weekend.

Origin’s Beetaloo bonanza just in time
As the Northern Territory Labor Party was campaigning on an anti-fracking platform in last year’s August election, Origin Energy was urgently testing in the Beetaloo Basin, between Tennant Creek and Katherine, to beat a looming ban.

At some of the world’s oldest geological oil and gas source rocks, Origin was trying to break a dismal Australian industry track record of testing shale resources before another jurisdiction banned the controversial extraction process.

It appears it succeeded.

Testing of the fracking, the results of which were released last month, revealed the best shale gas or oil results in the nation.

It has led to the estimate that the Beetaloo holds the biggest contingent gas resource of any type in the three east coast states and territories that now restrict or ban onshore gas production.

The fracking at the Amungee horizontal well was done just in time to beat a moratorium the victorious Labor Party put in place in September. News of the gas flow tests were released last month just in time to make it into the issues paper released by the NT’s scientific inquiry into fracking run by NSW Land and Environment judge Justice Rachel Pepper.

“This (Amungee testing) indicates that there is a high likelihood that the Beetaloo sub-basin may be comparable to some of the most productive unconventional shale gas basins in the United States,” the inquiry issues paper says.

“To date, notwithstanding ongoing exploration, only the Beetaloo sub-basin of the Greater McArthur Basin has demonstrated any potential economic viability for shale gas extraction and production.”

Development of shale in the US turned gas markets on their head about 10 years ago. It flipped a shortage there into a surplus and now proposed LNG import terminals are being converted to export plants. It then did the same with US oil, making the nation the world’s biggest oil producer and denting OPEC’s dominance.

Origin, which owns 35 per cent of Beetaloo, is excited by the resource, but says it will take a long time to develop, even if the fracking ban is overturned.

“Beetaloo is also a potentially very large, but also very long-dated resource base that could well meet domestic short positions in the eastern seaboard,” Origin gas and LNG chief David Baldwin said last month after the company reported first-half profit.

“But it could also well suit LNG supply either through Darwin or Queensland.”

Origin’s 30 per cent partner in the field, the Toronto-listed Falcon Oil and Gas, is also excited.

“Origin’s opinion is this is a very good analog to the Barnett and Marcellus shales, which are the two big gas shales in the US … that is a massive statement from a company like Origin,” Falcon chief Philip O’Quigley said in the wake of the testing results.

Despite the fracking ban and the NT inquiry, which is due to report recommendations this year, Falcon’s shares have risen fourfold since the Beetaloo test results were revealed, giving the company a market value of $C330 million ($324m).

Origin farmed into the Beetaloo ground in May 2014, committing to spend up to $60m on the basis of results from about 12 wells drilled between 1988 and 1993.

The past drilling showed potential but the company needed to test whether things such as gas saturation and whether the 1.5 billion-year-old shale rocks — older than the
In the three years since, the Origin exploration team, led by chief geologist David Close, has achieved outcomes that had been expected to take five years.

In 2015, two vertical wells found a thick section of shales with high hydrocarbon contact and gas saturation, which led Origin to accelerate the plan for a horizontal well, enabling more gas-rich rock to be accessed.

The decision to drill Amungee in 2015 turned out to be prescient, because it gave Origin the chance to frack in 2016, ahead of the NT ban.

A month before the August 27 election and with Labor looking increasingly like it would be a winner, Origin announced “re-entry” of the Amungee well.

The fracking ban started in September with no news from the Beetaloo. But the fracking was complete by then and on October 12 a gas discovery was announced at Amungee.

The Amungee NW-1H well, which was drilled into the “B shale” of the Velkerri Formation, was tested over a 1.1 kilometre section with 11 fracture stages on a 57-day production test. It flowed at an average rate of 1.1 million cubic feet a day and a final rate of 1.07 million, indicating sustained strong production.

The result led to an estimate that the field contains 6.6 trillion cubic feet of contingent gas.

By comparison, Woodside Petroleum’s Pluto gas field off Western Australia, which underpinned a $15 billion single-train LNG project, held 4.4 trillion cubic feet of gas reserves.

(A contingent resource is one that is potentially recoverable, but which needs more drilling to convert it into reserves, meaning it is economic to produce.)

“The Marcellus Shale (in Pennsylvania) and Barnett Shale (in Texas) are analogous, commercially productive fields that are similar to the Velkerri B Shale reservoir,” Origin said when announcing its resource.

RBC analyst Ben Wilson said the testing was positive and there were avenues to market through the North East Gas Interconnector Jemena is building between Tennant Creek and Mount Isa.

“We consider the Beetaloo to be a highly prospective basin due to thickness of shale packages, extent of the basin, overpressuring, good liquids content, and marine depositional setting rather than lacustrine (lake),” Mr Wilson said.

“The current fracking moratorium is of course the sizeable elephant in the room, although we think that over time the moratorium will be diluted to preclude fracking around residential areas and other areas of significance, allowing fracking to resume in the Beetaloo and McArthur Basins,” he said.

Origin is the operator of the Beetaloo and 35 per cent owner. Falcon owns 30 per cent and South African oil company Sasol owns 35 per cent.