Courtesy of etherazer (cheers mate) on the DLS thread.
There you go gassed.
A seriously good read of the state of play for the Cooper Basin players.
You can download a copy of the document brief (but not the full report).
"Australian Coal Seam Gas 2013: All Aboard the LNG Train."
Recently in London, BG Group chief executive officer Chris Finlayson raised the possibility of a third train at Queensland Curtis LNG that relied in part on gas from the Cooper Basin.
The idea of conventional gas from the Cooper Basin being exported through Gladstone is not new.
Santos, as operator of Gladstone LNG, has already locked in a supply of 750 petajoules over 15 years from the South Australian Cooper Basin Joint Venture (Santos 66.6%, Beach Energy, 20.21% and Origin Energy 13.19%) under a deal with an oil-linked pricing formula.
The contract equates to an annual volume of 50PJ, or slightly more than half of all the gas produced by the Cooper Basin in recent years.
It would be enough feedstock for about 1 million tonnes per annum of LNG.
It does not seem to leave much gas for BG but the global gas giant has clearly become one of the believers of the Cooper Basin’s growth story.
The basin still has its share of sceptics, who believe that after 40-plus years and cumulative output of almost 5Tcf, we have seen the best of what the Cooper Basin has to offer.
Gas production peaked in the early 1990s at about 200PJ per annum before going into long-term decline.
The low point in annual production was 91.8PJ in 2011.
Production increased to 94.4PJ in 2012, in what looks like the start of a major revival.
EnergyQuest CEO Graeme Bethune is bullish about the potential of the Cooper Basin to supply much larger volumes of gas.
“We expect conventional gas projects will be producing a total of about 170 petajoules per annum later this decade,” he said.
“That increase will be led by the Cooper Basin Joint Venture’s infill drilling program, along with new gas developments by Beach Energy and others.
“By the end of the decade, we see unconventional gas taking over and boosting total output from the Cooper to about 200 petajoules per annum by 2020, despite a decline in conventional sources by that time.”
EnergyQuest’s Cooper Basin forecasts are part of a report called Australian Coal Seam Gas 2013: All Aboard the LNG Train.
The analysis reflects the Cooper Basin’s increasingly important role in the east coast domestic gas market and as a supply source for LNG projects at Gladstone.
Bethune said none of the additional gas from the Cooper Basin was going to be cheap but at prices of between $8 and $10 per gigajoule it would be economic to develop and bring to domestic and international markets.
A third train at QCLNG will be competing against increasingly desperate domestic gas buyers for increased supply from the Cooper Basin.
New South Wales consumers are in a particularly parlous position.
The state is forced to import 95% of its gas from Queensland, South Australia and Victoria and state government policies continue to frustrate development of NSW coal seam gas reserves.
The crunch for NSW will come in 2015 and 2016, when long-term supply contracts expire.
Santos is planning to meet about 25% of NSW’s needs by developing its Narrabri CSG project but that still leaves a large gap between east coast supply and demand from 2016.
Production from the Gippsland Basin JV’s Turrum and Kipper projects will ease supply pressures, with annual production of 80PJ and 30PJ respectively from 2016 and onwards.
However, this will be offset by declining production in the neighbouring Otway Basin.
Gas production climbed 10% in 2012 to 110PJ but is headed into decline because of the failure to find significant new reserves over the past decade.
So how much potential does the Cooper Basin have?
The known projects have good numbers around them.
The SACB JV’s infill drilling program is designed to increase gas production by 30% by 2015, which is about an additional 30PJpa.
To handle the increased volumes, the Santos-operated JV is expanding the capacity of the Moomba gas plant from 430 terajoules per day to up to 600TJ/d over 2014 to mid-2017 at a cost of up to $800 million gross. This includes an extra 1MMtpa CO2 removal train.
The upgrade provides enough processing capacity for an additional 60PJpa, which is an indication of the JV’s longer-term view about how much more gas can be produced from the Cooper Basin.
Another known project is the wet gas fields of Beach Energy and Drillsearch in PEL 106B and PEL 107, which were brought onto the Moomba system last year.
Under a sales agreement with the SACB JV, the partners can supply up to 35 million standard cubic feet per day, or about 15PJpa.
Then there are the unknowns.
In conventional gas, the biggest news is Senex’s Hornet field, a relatively shallow stratigraphic trap.
The company has booked a contingent resource of 141 billion cubic feet. This is part of a prospective, net recoverable resource of up to 2.9Tcf, with a best estimate of 771Bcf.
Senex has described Hornet as tight gas but also points out the field has the same reservoir characteristics as many Santos-operated conventional gas producers.
The first appraisal well spuds early in the September quarter.
In terms of unconventional gas, there seem to be almost no boundaries in the Cooper Basin.
BG’s attention is focused on its central unconventional JV with Drillsearch in ATP 940, where BG is earning a 60% stake by spending $130 million.
Drillsearch has other unconventional gas plays in the Cooper Basin and has a prospective gas resource figure of between 13Tcf and 32Tcf across all its unconventional permits. That puts it in the same ballpark as the North West Shelf.
Beach Energy operates the most advanced shale gas project in the Cooper Basin and plans to book a significant 2C contingent resource later this year.
Chevron talks less these days about prospective resource figures but has done plenty of talking by farming into Beach’s project.
The supermajor prefers projects even bigger than the NWS and is certainly thinking beyond the east coast gas market.
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