bhp ponders canning shale gas push

Interesting article:

http://au.news.yahoo.com/thewest/business/a/-/business/15365610/bhp-ponders-canning-shale-gas-push/

BHP Billiton says it is in talks with land and permit holders in the Canning Basin as it works out whether to extend its $US20 billion Texas shale push into WA.

The mining giant's petroleum boss, Mike Yeager, said Australia's "preferential location" to Asian LNG customers meant BHP had to look at unconventional opportunities here, and he singled out the onshore Canning Basin in the Kimberley as a key target.

But Mr Yeager also warned of the logistical challenges in WA, and costs, and said any gas discovered was likely to have to be exported.

During a wide-ranging discussion with media in his Houston head office late last week, Mr Yeager stressed that key ingredients of his US shale push were a huge domestic gas market and existing pipeline infrastructure - two obvious challenges in WA.

"We have looked at every basin there (in Australia) in great detail," Mr Yeager said. "What we are trying to figure out (is) if we got a bunch more gas there in the Canning Basin, something in the shale there, it looks like we have to get it out of the country in order to make it work, so you have got that kind of economics. In the Canning Basin there are some things there that look pretty good but the transportation . . . is a long, long way away.

"But we are studying this very hard. We owe it to our shareholders to be good (in the shale game) and it is something we should be focused on.

"We are having conversations with the landowners and the people with the different leases and we continue to progress that. (But) it is going to take time."

The comments are Mr Yeager's first about Australia's shale potential and BHP's interest. The Canning Basin and South Australia's Cooper Basin loom as the key shale-prospective regions. The US Energy Information Agency has referred to the Canning as the biggest potential shale region in Australia, containing as much as 229 trillion cubic feet of gas.

In comparison, the Chevron-led Gorgon LNG project is based on about 20tcf of conventional gas.

Already ConocoPhillips and Hess Corp, along with Japanese trading house Mitsubishi, have established big positions in the Canning Basin. Mitsubishi is farming into acreage operated by Buru Energy, which has told investors its landholding south-east of Broome could contain up to 66tcf and four billion barrels of oil.
Buru has excited the industry with significant discoveries - oil at Ungani and gas at Valhalla - although neither are in shales.BHP's $US20 billion splurge on shale in the US, through the acquisition of permits owned by Chesapeake Energy (February 2011) and the takeover of Petrohawk Energy (July 2011) has repositioned a global petroleum business hitherto dominated by conventional oil and gas production off the Pilbara coast and in the Gulf of Mexico. The transformation has been so substantial that Mr Yeager hinted BHP may offload smaller assets in Pakistan and Trinidad and Tobago.