Need to be careful what it is you’re pricing. And which state...

Need to be careful what it is you’re pricing. And which state you’re looking at. And gas composition. And existing infrastructure.

Gas in this Basin is pretty sweet (ie low on inert components. Very little in terms of N2 and CO2). As such processing this gas is not required unless you have some higher levels of H2S. And your conversion from raw gas to sales gas (scf to TJ) will be at a better ratio.

Anyway, without writing a paper here you can safely assume 1 TJ = 1 MMscf for this project.

1 TJ = 1,000 GJ. A gigaJoule (GJ) is typically the unit used for gas pricing in Aus.
Gas is sold on contract. Contracts vary in nature and you won’t always be privileged to that info. So one way to identify the likely pricing is to look at spot pricing. Unfortunately spot pricing pays a premium and isn’t a great indicator of the typical contract price. This is because the spot market isn’t a guaranteed sale.

eg. I have 10 TJ/d to sell for a projected 5 years. Each day the nomination on the spot market might only be 3 TJ/d, so I can only sell 30% of my gas. So I might elect to draw up a contract with a user (at a discounted rate) to guarantee my income. Instead of getting $8/GJ I might only get $4/GJ.

Have a look at gasbb or aemo websites. They give you a good indication for spot pricing. And they also have some great info on pipeline flows and facilities. You’ll note a big difference between east coast and west coast due to the difference in supply and demand. East coast gas might be $16/GJ while west coast is only $8/GJ.

Now, say you want to be conservative. You might say that you can contract your gas at $4/GJ if the spot market is $8/GJ. That $4/GJ assumes the gas molecules are ready at a tie-in of a sales gas pipeline. They are not currently. They are 4-5km below ground. I need to spend money to get it to the sales gas pipeline.
How much do I need to spend you might ask. Well that varies depending on distance to existing infrastructure and your gas composition. If gas Comp doesn’t align with sales gas specs, you need to go through a plant. That plant might already exist or you may have to build it.

So my assumption of $1/GJ above is 1/4 of the sales price of the gas assuming that all that infrastructure is going to cost me $3/GJ and I can get $4/GJ at the tie-in.