proactive investors post

Norwest Energy’s Peter Munachen discusses Perth Basin shale gas potential at One2One Investor Forum
Thursday, June 07, 2012 by Proactive Investors
Peter Munachen, chief executive officer of Norwest Energy, highlighted the potential for near term cash flows from Arrowsmith-2 at last night’s 'Stars in 2012 Series' series in Sydney. Norwest Energy (ASX: NWE) is poised to fracture stimulate and test the key Arrowsmith-2 well in Western Australia’s Perth Basin, where it is focused on shale gas exploration, with equipment arriving in late June.

Peter Munachen, chief executive officer, discussed the commercialisation opportunities of the well, with its location just 12 kilometres from a pipeline, during Question Time at Proactive Investors’ 'Stars in 2012 Series' in Sydney, Wednesday 6th June.

The presentation on the night can be ACCESSED HERE.

Munachen told attendees at last night’s event that Norwest could tap into the pipeline to commercialise the Arrowsmith-2 well by simply establishing some basic facilities.

“You need a basic facility that does de-watering, compression stations, and that’s something of scale, so you could initially develop just a few of those to give you some cash flow and then scale up later.”

Highlighting the potential of the Perth Basin, the United States’ Energy Information Agency last year estimated the basin could hold 59 trillion cubic feet (TCF) of gas. The report also found the Perth and Canning Basins combined hold the world’s fifth largest reserves of shale gas.

The Perth Basin has also been identified as being analogous to the highly prolific Eagle Ford shale in Texas, according to a study commissioned by Norwest that benchmarked its geology with analogs in the U.S.

With the strong level of activity and high expectations that North American independents have placed on the Eagle Ford, the comparison is a strong tick in the Perth Basin’s favour.

Geologically, the Basin contains three thick shale sequences, which preliminary work has indicated have the right characteristics for gas – the Kockatea Shale, the Carynginia Formation and the Irwin River Coal Measures.

AWE, which holds the majority stake in EP413, previously estimated the middle interval of the Carynginia could hold 13-20TCF of gas throughout the Perth Basin, while modelling by Norwest based on a 60 metre Carynginia interval indicated the potential for up to 3TCF of gas within EP413 alone.

These are potentially conservative numbers, as the Arrowsmith-2 well intersected over 1000 metres of shale formations during drilling including a 250 metre Carynginia interval, an overlying 450 metre section of the Kockatea Shale, a 330 metre section of the underlying Irwin River Coal Measures and a 22 metre section of the deepest interval, the High Cliff Sandstones.

Elevated gas readings were also observed in the target sections during drilling.

The upcoming fracture stimulation and testing of the Arrowsmith-2 well will play a key role in determining the ability of the northern Perth Basin shales to produce commercial quantities of gas, and subsequently, will determine Norwest’s plans going forward.

This program is expected to take up to 8 weeks, with early results expected in the first few weeks along with more solid data being available at the end of the program.