Basin review, CSG, Markets, Technology

Boomin’ Bowen

The Surat-Bowen Basin comprises two major zones; the southern Bowen Basin and Surat Basin in southern Queensland, and the northern Bowen Basin, which extends to Townsville.

According to the Queensland Department of Mines and Energy, the number of coal seam gas (CSG) wells drilled annually in the basin in the early 1990s averaged ten per annum, whereas in 2007-08 approximately 600 wells were drilled.

In addition, the amount of CSG activity within the Surat-Bowen Basin is expected to increase, with companies planning to use CSG from the basin as feedstock for a number of proposed LNG projects to be located in Gladstone.

Gas Today looks at the activities of companies producing and exploring for CSG within the basin and their opportunities for development.

The big players

BG Group/QGC

Queensland Gas Company (QGC), a BG Group company, holds interests in more than 40,000 square kilometres of acreage, including the Berwyndale South and Argyle-Kenya gas fields located in the Surat Basin.

The Argyle-Kenya Gas Field lies 25 km southwest of Chinchilla. The field contains certified 3P reserves of 642 petajoules (PJ), with 74 PJ contracted for supply to Incitec Pivot over ten years from 2007.

The Berwyndale South field is located 20 km northeast of Condamine and covers an area of 66 sq km. A 14 km spur line connects the processing facilities to the Roma to Brisbane Pipeline, from where gas is transported to customers. The gas field is also connected to the Braemar Gas Pipeline and the Berwyndale to Wallumbilla Pipeline.

Both the Berwyndale South and Argyle-Kenya gas fields supply QGC’s 140 MW Condamine Power Station, located 8 km east of Miles.

QGC is also developing the Lacerta CSG Project, located in ATP 767P, north of Roma. The field contains 2P reserves of 469 PJ of gas.

In February 2008, QGC signed an agreement to establish an alliance with BG Group to explore and develop QGC’s CSG reserves for the 7.5 million tonnes per annum (MMt/a) Queensland Curtis LNG Project. BG has since taken over QGC.

QGC is currently expanding its drilling program within its CSG fields to supply 190 PJ/a of CSG to feed the Curtis LNG project.

Arrow Energy

Arrow Energy has interests in more than 65,000 sq km of CSG exploration tenements in the Surat-Bowen Basin. To date, less than 10 per cent of this land has been explored.

The company is currently producing CSG from its Moranbah Gas Project in the Bowen Basin, and the Tipton West, Daandine, Kogan North and Stratheden fields, located near Dalby in the Surat Basin.

Arrow has interests in a number of power stations in the area – the 230 MW Yabulu Power Station in Townsville, and the 30 MW Daandine and 450 MW Braemar 2 power stations, located near Dalby.

Arrow has scheduled CSG field expansion work in its Surat-Bowen Basin tenements to provide gas for two proposed LNG projects – the Arrow CSG to LNG Project and LNG Ltd’s Gladstone “˜Fisherman’s Landing’ LNG Project.

Arrow and Shell CSG Australia, a subsidiary of Royal Dutch Shell, signed an agreement which will see Shell have the right to off-take LNG produced utilising CSG from Arrow’s fields. In order to transport this gas to Gladstone, Arrow is in the preliminary stages of developing the Surat to Gladstone Pipeline, which will facilitate the supply of up to 150 PJ/a of gas to Gladstone.

In addition, Arrow has entered into an agreement to supply 150 terajoules per day (TJ/d) of gas to LNG Ltd’s proposed
1.5 MMt/a Gladstone “˜Fisherman’s Landing’ LNG Project. The agreement includes the option for a further 150 TJ/d of gas, with delivery as early as 2011.

Origin Energy

Origin Energy’s Surat Basin projects include the Spring Gully Gas Field and the Talinga Gas Project.

The Talinga project covers a number of permits in the Surat Basin, and includes 100 initial wells and gas and water processing facilities.

The Spring Gully field is located near Roma and supplies approximately one quarter of Queensland’s gas needs. The field has recently undergone an expansion, which involved the construction of a third processing plant – the Taloona Gas Plant – at the field. The expansion and construction of the plant has brought Origin’s total production capacity to 150 TJ/d to service the Darling Downs Power Station and Rio Tinto Aluminium contractual commitments.

Origin operates the Taloona Gas Plant for Australia Pacific LNG (APLNG) – a joint venture between Origin and ConocoPhillips – that plans to develop a CSG to LNG project at Gladstone.

In August this year, Origin acquired an 100 per cent interest in ATP 788P, which contains the southerly extension of the Undulla Nose CSG province and lies immediately to the south of the Kenya CSG Field and approximately 20 km from the Talinga, Argyle and Berwyndale South fields.

The deal secures 1,150 PJ of 3P reserves for Origin, which are to be put toward the APLNG Project.

Santos

Santos has interests in approximately 4,000 sq km of CSG exploration acreage in the Bowen Basin, including the Scotia CSG Field.

Scotia is located approximately 145 km northeast of Roma within PL 176. The field comprises 25 connected wells gathered into a central processing facility, and is connected to the Roma to Brisbane Pipeline via the 111 km Scotia/Peat lateral pipeline.

In the Surat Basin, the company recently commissioned an expansion of its Fairview CSG Field to shore up gas reserves for its proposed Gladstone LNG (GLNG) Project.

Current sales gas production from the field is approximately 70 TJ/d. Santos is aiming to develop additional facilities, which will enable sales gas production to increase to approximately 200 TJ/d in 2012.

Santos’ GLNG Project involves transporting gas from the field 418 km to a 3-4 MMt/a liquefaction plant to be located at Curtis Island, Gladstone. A gas supply of 170 – 220 PJ/a will be sourced from Santos’ CSG fields in Queensland’s Bowen and Surat basins.

The up-and-comers

WestSide Corporation

WestSide Corporation operates the Paranui, Tilbrook, Bald Hill and Mount St Martin gas fields, located in the Bowen Basin.

The company is undertaking a program to build on initial gas reserves, targeting commercial flow rates from horizontal drilling at the Tilbrook pilot to support certification of 2P reserves, and
2P reserves to underpin petroleum lease applications at Tilbrook and Paranui.

The company plans to undertake an accelerated appraisal of the Mount St Martin area during 2010, which will assess coal seams to the north of Tilbrook.

Molopo Australia

Molopo’s Mungi Gas Field is located in the Bowen Basin, approximately 400 km south of Townsville.

The gas field covers an area of 34 sq km and has over 100 possible well locations. Molopo, Anglo Coal and Mitsui E&P have been conducting a multilateral well campaign in the field.

Molopo is focusing on refining development techniques for the field, in addition to appraising the Harcourt North and Harcourt South gas prospects, also in the Bowen Basin, approximately 10 km to the north of the Mungi field.

The Harcourt project area is credited with 2P gas reserves of 23 PJ, and Molopo is aiming to upgrade these reserves to 27 Bcf via a drilling program to be undertaken during the last quarter of 2009 and early 2010.

Bow Energy

Bow Energy and Victoria Petroleum are assessing the Don Juan CSG Project, located in permits ATP 593P and ATP 771P in the northwest Surat Basin.

The Don Juan area has the potential to contain in excess of 500 PJ of gas, including 192 PJ of 3P reserves. The area is located immediately adjacent to previously discovered CSG gas flows and about 25 km northwest of the Lacerta CSG Field.

In addition, Bow is exploring for CSG in the Blackwater and Comet CSG fields. The company expects to book 200 PJ of 2P gas reserves for Blackwater, and 100 PJ of 2P reserves for Comet by the end of 2010.

The company is exploring pipeline development options as well as the development of a domestic LNG plant using CSG from the Don Juan field as feedstock.

Icon Energy and Blue Energy

Meanwhile, Icon Energy and Blue Energy are undertaking drilling programs in the region.

Icon, which is drilling in the Surat Basin, is also looking to develop a pipeline to connect its potential reserves to the Queensland gas market.

Exploring storage

Mosaic Oil owns the declining Silver Springs, Taylor and Churchie gas fields in the Surat Basin. Technical work has indicated that up to 100 PJ can be stored in the nearly depleted Silver Springs/Renlim Gas Field.

The company has said that the field could provide suitable storage for ramp-up gas for LNG projects, ongoing gas production management, meet seasonal gas demand and peaking supply for electricity generation, as well as provide security in the event of supply interruptions.

A piece of the CSG action

CSG activity within the Surat-Bowen Basin looks set to continue to increase at an unprecedented rate.

Companies proposing LNG projects at Gladstone are ramping up CSG production and exploration in order to shore up the reserves needed for project development.

In addition, smaller CSG exploration companies are increasing activities for the potential supply of these LNG projects as well as increased domestic supply.

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