nt land rush

The Northern Territory is suddenly wall-to-wall with permits either granted or under application.

Permits cover almost 90% of the Territory, up from just less than 50% only 18 months ago.

It is not just areas under application. Granted permits have increased by 30% over the past three years, according to NT Department of Resources director of energy Alan Holland.

What is striking about the stampede for acreage in the NT is the way permits are jammed up against every state border.

Permits are even sitting over areas where some geologists would swear there is nothing but granites and basement rocks. What is going on?

Three big factors are at work, beginning with the rush for shale gas.

Holland said the main push had been for unconventional gas targets but most applications were also made with conventional oil and/or gas in mind.

“The focus of applications has been in the southern Georgina Basin, Amadeus Basin, McArthur Basin [Beetaloo Sub-basin] and Pedirka Basin,” he said.

“These basins all have confirmed shale targets and now being actively explored.

“We have also seen explorers apply for large areas over greenfields basins on the basis that they might host the types of shales in the proven areas.”

These greenfields basins include the Victoria-Birrindudu Basin, Wiso Basin and Ngalia Basin.

The second factor is the NT’s “first-in, first-served” approach to granting acreage.

Unlike South Australia and Western Australia, the NT does not have annual rounds for the release of selected onshore areas.

In the NT, any area not already tied up can be applied for at any time.

Select an area and it can be yours to explore for five years if you pay the application fee of a few thousand dollars, submit a reasonable work program and pass muster as a capable (and funded) energy explorer.

Amid a worldwide scramble for any ground that looks like it has the potential to replicate the US shale gas boom, it is little wonder the Northern Territory is suddenly under a blanket of permits.

The third factor in this heady mix is the underexplored and, in some places, unknown geology of the Northern Territory.

Holland said some of these greenfields areas were not even recognised as sedimentary basins, but explorers were having a go on the basis that knowledge had been limited by a historical focus on minerals potential.

“Although some applications are in areas not previously considered to have significant petroleum potential, if someone is willing to drill, we’re happy to take their application,” Holland said.

“Any exploration that tests these greenfields areas is good for the Territory.”

Holland said unconventional gas targets already identified by explorers in the NT totalled about 250 trilling cubic feet, based on company reports to the ASX.

“Even if we end up with only a tenth of that in actual reserves, the NT has a much bigger future,” he said.

The rush for acreage in the NT began almost a decade ago with Central Petroleum when it acquired vast areas over the Amadeus and Pedirka Basins.

This was based on a proudly counter-cyclical strategy targeting oil.

The recent oil discovery at Surprise in the Amadeus Basin has not translated into an acreage rush nearby because Central had already locked up all the prospective acreage.

Entrants will need to negotiate a joint venture if they want to share in the action.

The global boom in unconventional gas and liquids has been a happy coincidence for Central and led to a re-rating of the potential of many of its permits.

The biggest boost to the unconventional gas potential of the NT is coming from the work of other explorers who are already drilling or have some large budgets set aside to get programs underway in the near future.

At the top of the list is Denver-based Falcon Oil and Gas, which has already drilled Shenandoah-1 in EP 98 in the Beetaloo Sub-basin and flowed gas to the surface at rates of up to 100,000 cubic feet for day.

This flow rate was from a vertical intersection in the Velkerri shale, with only a single stimulation.

The result is highly encouraging for Falcon and its joint venture partner Hess, which is spending $US60 million to earn up to 62.5% in EPs 76, 98 (excluding Shenandoah) and 117.

Most of these funds are being invested in seismic surveys and a four-well drilling campaign.

Falcon’s former managing director Marc Bruner is also driving exploration investment into the Beetaloo.

His private company Paltar Petroleum applied for three areas, EP 235, 236 and 237 in August last year.

It is believed these permits will be the basis of an IPO on the ASX to raise up to $25 million.

Another big mover in the NT’s onshore energy scene is PetroFrontier Corp, focused on the southern Georgina Basin. The Calgary-based explorer is led by Paul Bennett.

He is also one of the principals behind Rodinia Oil and Bight Petroleum, which are conducting their own bold exploration plays in Officer Basin and the Great Australian Bight respectively.

PetroFrontier this week brought a rig back to MacIntyre-2 in EP 127 to drill a horizontal leg, followed by Owen-3 in EP 104.

The company will then fracture and flow test up to three wells in the second half of this year, in what will be the first use of advanced horizontal drilling and completion techniques in the NT.

Local explorers are also driving activity, led by Armour Energy, which listed on the ASX last month after raising $75 million from investors.

The company announced last week that its first well, Cow Lagoon-1 in EP-176 in the McArthur Basin, encountered gas in the Reward dolomite, the first of three main targets. Drilling is still underway.

Shale gas pioneer Beach Energy has also quietly taken a position in the onshore Bonaparte Basin, which it rates highly for its source rock potential.

Across the NT, the acreage acquisition phase is now drawing to a close. Attention will turn to results from drilling, fracturing and stimulation.

If results live up to expectations, prepare for many more IPOs and big-spending joint ventures based on the NT’s onshore energy potential.

Friday, 1 June 2012

David Upton

www.seaaoc.com/news-old/nt-acreage-stampede