Unconventional oil and gas continues to make waves in Australia: Part One Thursday, November 08, 2012 by Bevis Yeo
Activity in the unconventional oil and gas space in Australia has being heating up in the last year with exploration and appraisal activity increasing across most of the prospective basins.
Interest in Australia’s oil and gas activity has continued to grow with both majors and juniors carrying out exploration across Australia. In this first part, Proactive Investors takes a look at some of the players in the Perth and Cooper basins.
Excluding the efforts of coal seam gas majors such as QGC, Santos (ASX: STO), Origin Energy (ASX: ORG) and Arrow Energy, companies such as AWE Limited (ASX:AWE), Beach Energy (ASX: BPT), Buru Energy (ASX: BRU) and Senex Energy (ASX: SXY) have being busy drilling and testing wells on their respective plots.
In the Cooper Basin, both Beach and Senex have been drilling wells targeting the Roseneath, Epsilon and Murteree shale intervals, as well as the Patchawarra Formation, which they believe hosts a basin centred gas accumulation that is capable of producing at higher rates than traditional shale plays while being less expensive to bring into production.
Buru has also uncovered evidence that the Yulleroo field in the onshore Canning Basin could be a similar basin centred accumulation as well as firming up the potential of the Valhalla tight wet gas field as having a resource of multi-trillion cubic feet.
This has also been recognised by the Western Australia state government, which has granted Buru a 25 year tenure over five of its key tenements.
Shale and tight gas wells were also drilled by AWE in the Perth Basin with the Senecio-2 tight gas well flowing at a stabilised rate of 1.35 million cubic feet of gas per day while the Woodada Deep-1 well flowed gas before it was suspended.
Both the Cooper and Perth Basin's offer the advantage of readily accessible infrastructure, making it comparatively easy to bring a successful discovery into production while Buru and partner Mitsubishi Corporation have plans for a
While any of these players offers exposure to the unconventional oil and gas, a number of junior companies also have a focus on or are participating in the sector.
Proactive Investors presents a number of junior companies that may be of interest to investors or punters looking for a discount entry in the unconventional oil and gas space on a basin to basin basis.
Our focus in the first part will be on the more established Perth and Cooper basins.
Perth Basin
Norwest Energy (ASX: NWE) has recently started highly anticipated operations to unlock the potential of its Arrowsmith-2 unconventional, which has already produced gas at a rate of 777,000 cubic feet of gas per day from the deepest interval and oil from shallowest.
This offers investors near term potential to realise gains from any successes that result from the program and with three separate stages, offers three catalysts to drive valuation up.
Norwest is currently testing the shallowest Kockatea Shale which had flowed oil to surface during initial testing earlier this year.
This will then be sealed off and flow back will then recommence on the lower intervals, the Carynginia Formation and the Irwin River Coal Measures, with the ultimate objective being to establish gas rates for contingent resource calculations from each of the individual formations.
Testing will then be carried out the deepest interval, the High Cliff Sandstone.
Transerv Energy (ASX: TSV) has received the continued support of alumina giant Alcoa for exploration and development of its Warro tight gas field, which has estimated recoverable reserves of up to 4 trillion cubic feet of gas.
Work is now starting on detailed studies of the 3D seismic survey completed in 2011 to establish the priority drilling locations for the next phase of drilling while an application has being made for a Retention Lease over the field.
Cooper Basin
While the Cooper Basin is dominated by larger companies such as Santos, Beach, Senex and Drillsearch, a number of smaller companies have carved out acreage, often in association with the players listed above.
Icon Energy (ASX: ICN) is partnered with Beach in ATP 855P, where the recently drilled Halifax-1 unconventional exploration well will be fracture stimulated in late November.
The well is located in the Nappamerri Trough region of the Cooper Basin where Beach has in the adjacent South Australian permit PEL 218 produced gas from the Holdfast-1 and Encounter-1 wells.
With further development planned by Beach, Icon will benefit both from the increased exploration certainty as well as being able to tap into development carried out by the mid-cap.
Orca Energy (ASX: OGY) shares acreage with Senex, which has being engaged in its own successful unconventional exploration program.
The two companies are currently drilling the Kingston Rule-1 in PEL 115, which was selected to target the greatest net thickness of potential shale, siltstone and tight sandstone in the Roseneath-Epsilon-Murteree targets, as well as potential net pay in the Patchawarra tight sand intervals..
With PEL 115 completely surrounded by PEL 516, which Senex estimates could host over 100 trillion cubic feet of in-place shale and coal seam gas, odds are high that Kingston Rule will have substantial resources.
This is also likely to be tapped together with any development in PEL 516, allowing Orca to benefit from its association with Senex.
Ends.
NWE Price at posting:
7.5¢ Sentiment: None Disclosure: Held
