from iress: dj newswire on shale gas, page-8

The thrust of my post was about the risk of relying just on CSG to feed their LNG plants - and IMO this explains why BG did the deal with DLS.

Origin was the first domestic major to book CSG in their reserves - back before CSG became fashionable. On 10 TCFs so far is enough gas for 2 trains for 20 years. Their Internal Rate of Return numbers do not look that compelling to me and would definitely look very sick if there is cost blowout. A logical thing to do is to increase the number of trains - assuming ome can sell the LNG - after bedding down.

If I should be correct in my assessment of the value of being able to access shale gas supply in addition to the CSG, then I think the APLNG Consortium of Origin/Conoco/Sinopec will want to ensure that that they have their feet on a supply of shale gas.

The conventional gas/oil (and shale gas) parts of SA and SW Queensland parts of Cooper Basin ownership looks like this;

SA side: Santos 66.6%, BPT 20.2%, Origin 13.19%
SW Queensland: Santos 60.06%, BPT 23.2%, Origin 16.7%

Origin is not the operator which is a big negative and what they have is in low value shale areas - meaning much higher production cost per GJ. Double negatives!

IMHO - the APLNG's Origin/Conoco/Sinopec consortium would be the first ones to make a call to BPT re a farm-in and a long term shale gas supply agreement. The Nappermerri tough is where it's all happening in the CB - it's the premium shale gas area - read lower cost of extraction.

BPT is sitting pretty - we have the funds to drill test wells and go to the pilot stage. If all should go as planned, and we have much of the risk taken out, we will be farming out at much much larger dollar numbers than what you are seeing in the BG/DLS deal.

IMO, this time next year BPT will be a very different animal. Lets hope its a good animal - to us!

Good luck all ...... GB