Basin review, Cooper Basin, Projects

All eyes on the Cooper

Located in Central Australia across the Queensland and South Australian borders, and partly overlain by the Eromanga Basin, the basin holds over 160 gas fields and supplies markets in South Australia, New South Wales and Queensland via extensive pipeline infrastructure.

Not only has the Basin outstanding conventional reserves, its shale potential has been estimated at more than 200 Tcf – an estimate that could dwarf early reserves estimates for giant projects such as the North West Shelf and Bass Strait.

These oil and gas reserves, coupled with significant processing and transport infrastructure, has made this basin the most commercially viable basin in Australia. While Santos is the most active producer in the basin, companies including Origin Energy, Beach Energy, QGC, Drillsearch, Central Petroleum and Icon Energy are just some of the big names currently undertaking drilling operations in the area.

Major international exploration and production companies have also increasingly been showing interest in the basin in recent years, and, given its proximity to the East Coast export market, this is bound to increase.

Government support

The South Australian Government, a recipient of royalty entitlements from the Basin, is highly encouraging of the Basin, and in particular development of its unconventional oil and gas potential. The Government lists the Cooper Basin as having the potential to deliver hundreds of millions, if not billions, of investment dollars to the state.

The Government’s recent Roadmap for Unconventional Gas Projects SA, labelled as a comprehensive plan for the development of its unconventional gas projects, prioritised actions needed to encourage exploration and production of unconventional gas. This has manifested itself through Santos’s success with its shale gas exploration program, beginning with the Moomba-191 well, which achieved a commercial flow rate of 2.6 million cubic feet per day.

Beach Energy General Manager of Investor Relations Chris Jamieson says “South Australia is a fantastic state to operate in – the government is very pro-development.

“This approach should be rolled out federally, and they should use the South Australian approach as the template as to how to operate – new exploration permits are pushed through without delay but all the processes are in place, but there is just not the bureaucracy that exists in other states.”?

The Queensland Government’s support of the basin has also resulted in myriad drilling programs and oil and gas fields being explored in order to support the state’s domestic supply requirements and that of the Curtis Island export facilities.

At the heart of it all – Moomber Gas Plant and pipelines

The Moomba Gas Plant, located in the basin and operated by Santos, accepts production from 115 gas fields and 28 oil fields containing 536 producing gas wells and 177 producing oil wells within the basin, through approximately 5,600 km of pipelines and flowlines via 24 oil and gas satellite facilities, many of which incorporate field boost compression.

Santos, whom it was discussed may have been discussing mothballing the project several years ago, has since poured over $800 million in upgrading the facility – no surer an indicator of the potential Santos sees for the region.

The facility, which processes natural gas liquids and stores processed sales gas and ethane, sends its petroleum products to Adelaide via the 790 km, 550 mm Moomba to Adelaide Pipeline System and to Sydney via the 1,160 km Moomba to Sydney Pipeline.

International attention

It’s not just local exploration and production companies showing keen interest in the advancement of the basin – Santos Vice President for Eastern Australia James Baulderstone recently commented that a large number of international experts see the Cooper Basin as the pre-eminent shale resource outside of the United States.

“The Cooper Basin will fuel Australia for decades,”? said Mr Baulderstone.

One such company has been courting international investment has been financial group Adelaide Capital Partners, which is proposing to develop an oil and gas logistics hub in Adelaide to service the basin. The group has been in equity dealings with the likes of Halliburton, Schlumberger and The Weir Group in order to develop this facility, which would be a boon to its future development.

Exploration forging ahead

Origin Energy, the downstream operator of the Australia Pacific LNG project, recently expanded its presence in the basin by acquiring two unconventional gas blocks through agreements with Senex Energy. The company is investing $97 million in the program. Further, Drillsearch has signed a binding term sheet with QGC over new terms covering their ATP 940P Cooper Basin Shale and Tight Gas Joint Venture in central Australia. Under the original agreement announced in July 2011, the companies are committed to further realizing the unconventional potential of the basin. Drillsearch also recently upgraded its expected oil production from the Bauer field in the basin by more than 1 MMboe.

Beach Energy Managing Director Reg Nelson, whose company recently reported a profit of $158 million for the half-year ended 31 December 2013 (up 160 per cent on the previous corresponding period), singled out the western flank of the basin as the main driver behind the result. As such, Beach is sharply accelerating its plans for exploration in the basin in order to maintain this bottom-line success.

The Cooper Basin is well and truly set to be a game-changer for Australia’s energy future, and with so much of the basin yet to be explored, it will be an exciting area to watch.

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