Basin review, Bonaparte Basin, Projects

Advent Energy gears up to meet shale potential in Australia

According to a report released by the Commonwealth Scientific and Industrial Research Organisation (CSIRO) in 2012 entitled Australia’s Shale Gas Resources, there is currently limited commercial production of shale gas in Australia,
with the full extent of the resources yet to be ascertained.

However, CSIRO’s initial evaluations have indicated that Australia’s shale gas resources have the potential to significantly contribute to Australia’s energy portfolio and indeed, they constitute a large part of Advent Energy’s operations.

Potential of shale gas in Australia

In a presentation at the South East Australia Offshore and Onshore Conference (SEAOOC) earlier this year, Mr Breeze drew upon a study issued by Boston-based consultancy Lux Research, which touted Australia as the place most able to replicate the shale oil and gas success of the US – overtaking China, where exploration is struggling to gain traction, and other nations that pose too much of a regulatory risk.

The study noted: “Australia beats other nations with potential shale and other unconventional resources because of know-how and government stability.”?

Further, Mr Breeze says independent reports such as the Australian Council of Learned Academics’ (ACOLA) Engineering Energy: Unconventional Gas Production studied Australia’s shale resource potential and identified in excess of 1,000 trillion cubic feet (Tcf) of prospective shale gas resources.

“Australia is viewed as a stable and relatively risk-free LNG supplier to the fast-growing Asia region. Whilst some US-based groups are retreating to the US and concentrating on short-term liquids-rich shale assets, it appears the astute Asian buyers and investors are highly interested in Australia’s shale gas resources, with a view to fulfilling their ever-increasing demand for energy well into the future,'”? Mr Breeze says.

As further investment is made into Australia’s unconventional resources, Mr Breeze says the local shale gas exploration prospects will only continue to prosper.

“The technological advances in drilling and completion made in the US will naturally migrate into Australian practice to ensure we “˜hit the ground running’ upon shale gas exploration and exploitation. Obviously proximity to market and infrastructure will contribute significantly to any resource project’s ultimate success.”?

Mr Breeze’s observation is backed up by the CSIRO 2012 report, which said that continued improvements to drilling and reservoir stimulation technologies, alongside increasing demand and energy prices, are likely to cause more Australian basins to become targets for exploration.

Advent’s Bonaparte Basin projects

Mr Breeze says Advent Energy is capitalising on this potential shale gas boom through its acreage in the Bonaparte Basin, which is strategically located to be attractive to the Asian gas market and is the country’s third most prolific offshore hydrocarbon-producing basin – representing 19 per cent of Australian liquids and 17 per cent of Australian gas, according to a 2005 Geoscience report.

“Advent Energy’s Milligan’s Formation in the Bonaparte Basin has a marine depositional environment, thereby encouraging the view of the potential for liquid hydrocarbon recovery in the event
of a shale resource development,”?
Mr Breeze says.

He draws parallels between Argentina which had reportedly “won the shale lottery”? with the 1,000 foot thick Vaca Muerta formation and the Bonaparte Basin, which has up to 5,000 feet of “known,
very thick accumulations of shale mature source rocks”?.

Advent Energy has calculated 9.8 Tcf of prospective resources for the shale gas areas of Exploration Permit 386 (EP386) and Retention Licence (RL1) which lie on the southern, onshore region of the Bonaparte Basin, and of which it owns 100 per cent. EP386 covers 2,568 km2 in Western Australia, and RL1 covers 166 km2 in the Northern Territory.

More specifically, Advent Energy has assessed its EP386 permit to comprise 356 billion cubic feet (Bcf) of prospective resources of conventional gas at the best estimate level.

“The current rapid development of the Kununurra region in northern Western Australia, including the Ord River Irrigation Area Phase 2, the township of Kununurra, and numerous regional resource projects provide an exceptional opportunity for Advent Energy to potentially develop these nearby gas resources,”? Mr Breeze says.

The thickness estimated from Advent’s well logs shows elevated gas levels from between 300 m and 1,700 m – indicating substantial prospective upside in shale gas resources for Advent’s Bonaparte Basin areas.

“Source rock analyses on core, sidewall core and cuttings samples have indicated the presence of source rocks with up to 4.3 per cent total organic carbon (TOC) and mature for oil and gas generation,”? Mr Breeze says.

Gas potential in the Sydney Basin

The Sydney Basin straddles Australia’s central eastern coast in NSW and is part of a major basin system that extends over 1,500 km from the Bowen Basin in Queensland through to the Gunnedah Basin in NSW.

Advent Energy, through wholly-owned subsidiary Asset Energy, holds 85 per cent of Petroleum Exploration Permit 11 (PEP 11) – an exploration permit prospective for natural gas located in the offshore Sydney Basin. Joint Venture partner Bounty Oil & Gas NL holds the remaining 15 per cent.

Although PEP 11 will not target shale gas and will not encompass a shale gas extraction process of itself, the natural gas in its vicinity will be sourced from shale and coal.

“PEP11 is a significant offshore exploration area with large-scale structuring and potentially multi Tcf gas-charged Permo-Triassic reservoirs,”? Mr Breeze says.

Mr Breeze says the prospectivity of this proven petroleum basin has been enhanced by the confirmation of the presence of apparent ongoing hydrocarbon seeps.

“Sub-bottom profile data, swath bathymetry, seismic and echosounder data collected by Geoscience Australia along the continental slope and permit margin has demonstrated active erosional features in conjunction with geophysical indications of gas escape.

“Advent Energy has previously interpreted significant seismically indicated gas features. Key indicators of hydrocarbon accumulation features have been interpreted following review of the 2004 seismic data (reprocessed in 2010). The seismic features include apparent hydrocarbon-related diagenetic zones (HRDZ), amplitude versus offset (AVO) anomalies and potential flat spots.”?

Mr Breeze says Advent Energy has demonstrated considerable gas generation and migration within PEP11, with the mapped targets highly prospective for the discovery of gas.

Shale gas and Advent’s future operations

Both the Bonaparte Basin and the Sydney Basin are integral to Advent Energy’s operations and offer “magnificent upside potential”? for Advent Energy and its shareholders.

“The onshore Bonaparte Basin offers the company the opportunity to commence conventional natural gas production in a short timeframe. This obviously has excellent attraction to the company for future self-sufficiency and expansion,”?
Mr Breeze says.

According to Mr Breeze, the delineation between conventional gas production and shale gas production blurs – especially when the new technologies for extraction are applied.

“You can be producing from both tight gas sandstone and shale simultaneously. The US started to produce gas from tight sandstone in the first instance, and then they started to produce simultaneously
from tight sandstone and shale gas,”?
Mr Breeze says.

Meanwhile, the Bonaparte onshore shale project and offshore conventional resources demonstrate a “massive upside”? that could propel the company into the next decade, according to Mr Breeze.

“The two projects which Advent have both have the capacity to be company makers. Advent’s objective is to commercialise the proven conventional gas resource in the Bonaparte Basin to a market that is seeking gas as an alternative fuel and power source to expensive diesel fuel. The gas market in NSW also makes the development of PEP 11 an obvious objective.”?

Mr Breeze says Australia’s gas basins are an “opportunity-rich environment”?, given global market conditions and industry experts’ projection that Australia is set to become the world’s largest exporter of LNG.

“Its proximity to the major growth areas of Asia, such as China, which has an objective to double its use of gas within five years and is closing coal-fired power stations to reduce chronic air pollution across its cities, and India, which will need an additional five Tcf of gas each year, mean that the expansion of shale gas will have the potential to push gas into one of Australia’s biggest export earning industries.

“The Bonaparte Basin with its relative proximity to infrastructure has the potential to be one of the areas that can benefit significantly from these factors.”?

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