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Canning Superbasin looms as next frontier for gas production

PREMIER Colin Barnett's gas ambitions have switched from the offshore Browse Basin to the onshore Canning Basin.

Still smarting from the decision of Woodside and its joint-venture partners to dump the Premier's grand plan for a onshore processing precinct at James Price Point on the Kimberley coastline for Browse gas, the WA Government is moving full steam ahead to exploit the shale gas riches in the Canning Basin.

Mr Barnett yesterday introduced a Bill into State Parliament that will ratify an agreement to develop the vast onshore Canning resource, which covers more than 530,000sqm across the Kimberley.

The Bill formalises an agreement signed by the State Government and joint venture partners Buru Energy and Mitsubishi Corporation last November. Buru Energy, which has the biggest acreage in the Canning Basin, was the best performing company on the ASX in the past financial year.

In February, The Sunday Times revealed the growing hype around the Canning Basin as the next frontier for gas production.

"This legislation will bring about the continued exploration for natural gas in the remote Canning Basin, the development of a gas pipeline to the Pilbara and ensure Western Australian consumers have first use of any gas discovered,” Mr Barnett said.

The Premier said the US Energy Information Administration estimated the Canning Basin unconventional gas resources at about 229 trillion cubic feet - about one and a half times WA’s currently identified offshore resources.

The gas resources are located between two and four kilometres below the ground’s surface.
CCI chief executive James Pearson said the agreement would help secure WA's future energy supply and was a positive for the economy.

"This is an important step in the development of the Kimberley region and potentially the supply of gas to WA consumers in the future," he said.

"Success would benefit the broader WA economy by providing flow on benefits to other industries and creating more jobs for West Australians."

Under the agreement, if the Joint Venture finds commercially viable gas by mid-2016, it will need to submit a plan to build the domestic gas project, including a pipeline to connect the state’s gas network to the Pilbara.

"Tapping this vast resource will guarantee Western Australia’s domestic gas supplies well into the future,” Mr Barnett said.

"Because this gas is located onshore, it is also entirely owned by the State Government.

"This agreement ensures gas discoveries are rapidly brought into production, and that gas is delivered to the State’s domestic gas network, before any is exported.”

Environmental groups are watching developments closely because extraction of the shale gas will require hydraulic fracturing, better known as fracking,which they claim causes dangerous water pollution.

Shale gas has been hailed as the saviour of the US economy, supplying cheap energy to its industries. WA mining officials are licking their lips at the potential shale gas riches here, as is the industry.

Though Buru is already in a joint venture with Japanese conglomerate Mitsubishi, other international gas players are looking to get involved.

Another local explorer, New Standard Energy, has a partnership with global oil and gas giant Conoco Phillips.

And in February, PetroChina also grabbed a piece of the Canning Basin pie.