AFR article -
‘Hottest play on the planet’: Beetaloo gas explorer aims highAngela Macdonald-SmithThe Northern Territory’s remote Beetaloo Basin could be supplying gas to the east coast years before most people expect and in time to head off shortages forecast to arise from 2023, according to the head of Santos’ junior partner in its drilling project.Joel Riddle, chief executive of Tamboran Resources, described the exploration area in the NT as ‘‘the hottest play on the planet’’, based on much better than expected flow rates from testing at the Tanumbirini-1 well last week and the ready market for gas on the east coast and in Asia.Tamboran, backed by two huge US funds, is heading for an ASX sharemarket listing early next year, either through an IPO of up to $195 million or a reverse takeover of a listed junior. It is one of several players working – amid opposition from environmental groups – to firm up a potentially huge gas resource in the NT that could be Australia’s answer to the US ‘‘shale gale’’.The explorer, which holds 25 per cent of the exploration venture with Santos, is also backed by Rich Lister Paul Fudge, who made billions from the sale of coal seam gas acreage during Queensland’s CSG boom.The Tanumbirini-1 well lies about 80 kilometres to the east of where Origin Energy is working with North America’s Falcon Oil & Gas, which are due to release test gas flow rates from their drilling within weeks.Also in the region is junior Empire Energy, which this month reported encouraging early results from its drilling that suggested the presence of oil as well as gas.The Beetaloo is one of the gas basins earmarked by the Morrison government for accelerated development as it pursues a gas-led economic recovery from COVID-19.Mr Riddle said the better than expected results from Tanumbirini-1 augured well for a low number of wells to be required for a commercial project, reducing costs.‘‘That’s where the productivity of the Beetaloo really differentiates itself versus other areas of Australia: it’s big, it’s highly productive and it can solve these shortfalls with just a handful of wells,’’ he said. ‘‘This is why I believe this is the hottest play on the planet ... definitely within the OECD countries.’’Horizontal wells to be drilled and fracked next year at the site still need to confirm the initial readings, but Mr Riddle said that ‘‘subject to working with Santos ... we would hope we could get a pilot development going somewhere in the window of 2023 to 2025.’’Mr Riddle compared the average 2.3 million cubic feet per day flow from the first 90 hours of testing at the vertical Tanumbirini-1 well with initial vertical wells at the Marcellus shale play in the US which ran at about 400,000 cubic feet per day before hitting rates many times higher in horizontal drilling.‘‘The fact we are able to achieve minimultiples of what the core Marcellus vertical frack has been has given us a lot of confidence that as soon as we can drill and frack horizontal wells we will be off and running with a pilot project,’’ he said.Mr Riddle said that a pilot production project at the acreage could produce 20 per cent or more of a forecast 500 million cubic feet a day shortfall arising in east coast gas supply.Gas would be transported east through an enlargement of Jemena’s existing Northern Gas Pipeline from Tennant Creek to Mount Isa and would be ‘‘very robust’’ economically at widely forecast gas prices on the east coast of $8-$10 a gigajoule.‘‘This is what’s exciting: Other areas of Australia onshore it might take 50 wells to generate 100 million cubic feet per day, but in the Beetaloo we might only have to drill five to 10 wells,’’ he said. Drilling and fracking for unconventional gas remains highly controversial in the NT, however. Origin’s annual shareholder meeting last week was dominated by concerns over its Beetaloo drilling. Still, the return of Territory Labor in the election in August is being taken as an endorsement of the onshore gas industry, given weak support for minority parties that pledged to veto fracking.For Tamboran the positive results from testing come at an opportune time, given its plans for a public listing in the first quarter of 2021. The Financial Review‘s Street Talk column has reported it is contemplating a $195 million IPO, which would be the biggest oil and gas float for several years, while Mr Riddle said the company was also examining a reverse takeover or merger with an existing public company.‘‘We are exploring multiple paths,’’ he said. ‘‘We want to offer this investment to the Australian institutions here because this is an Australian story. We believe there is appetite to invest in a gas-focused strategy in the Beetaloo pure play and we plan to offer that.’’Tamboran’s two cornerstone investors, large US funds Baupost Group and Lion Point Capital, had a track record of backing successful shale plays in the US and ‘‘have the risk tolerance to support an accelerated pilot development’’ in the Beetaloo, he added.
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