shale gas

Beach Petroleum eyes shale gas project

CAMERON ENGLAND

November 16, 2009 11:30pm

..OVER the past two to three years, Beach Petroleum has been quietly building a new position in the Cooper Basin, just northeast of Moomba.

The acreage is in the middle of oil and gas country, and has a gas pipeline running through it.

But conventional oil and gas is not the reason Beach is interested. The Adelaide company aims to be the first Australian company to delve seriously into the shale gas sector - an as-yet-untapped resource that has been undergoing a quiet revolution in the US.

The Barnett shale in north Texas has been responsible for the oil and gas world taking a new look at shale gas.

Explorers have long known that the shales which surround gas reservoirs also contain gas, but it has been difficult to extract the resource.

A company called Mitchell Energy pioneered a method of horizontal drilling and fracture simulation that can liberate the shale gas, and has turned the Barnett shales into what has been suggested could be the biggest on-shore gas play in the US.

Beach managing director Reg Nelson has been following the Barnett story, and has been positioning the company to make its own shale gas play, in a part of the Cooper Basin hosting a geological formation known as the Nappamerri Trough.

It is part of a reimaging of the company, which also involves it being renamed Beach Energy, to reflect the broader nature of the company's activities.

And shale gas is not the only unconventional field Beach is examining.

In his newly created role as managing director, Mr Nelson will also be looking at biodiesel production using algae, gas to diesel projects and more overseas investment.

The company is also earning up to 36 per cent of Petratherm's Paralana geothermal energy project in the Northern Flinders Ranges - one of the more advanced large-scale geothermal projects under development in Australia.

Mr Nelson said it was only in the past 10 years that shale gas had been taken seriously.

"Particularly the past three years, the bigger companies . . . have moved in and the technology is developing almost on a day-by-day basis,'' he said.

After finding what the company thought might be shale gas three or four years ago, they did some work, and found that the best place for shale gas was the Nappamerri Trough, just northeast of the Moomba gas processing plant.

"That's why we've quietly built the position there which, in US terminology, the net position to Beach is 1000 square miles.''

It is too early for Beach to estimate what sort of resource might be in place, but Mr Nelson said the geological structure was similar to the Barnett shale, based on the work done so far. ``It looks very similar to the Barnett in just about every respect,'' he said.

``It actually looks a bit better. We've got a lot of work to do to test and see whether it's going to be feasible, but we're now, I think, convinced there's a very large resource there, the potential for a large resource, and from what we know the shales could be world-class.''

Mr Nelson said there was a rush on for shale gas acreage around the world, and he was surprised that it was yet to take off in Australia.

Mr Nelson said Beach was looking at partnering in the power generation area, in order to monetise its gas reserves, and also was examining other areas such as fertiliser and jet fuel production.