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Beach thinks big in Cooper shale-gas basin

Resources booked equal to more than 330 million barrels of oil equivalent

Beach Energy aims to double an initial 2 trillion cubic feet (cf) shale-gas resource booked in its Central Australia Cooper basin permit PEL218. And the Adelaide-based junior is receiving plenty of overtures from potential partners to help unlock the basin’s unconventional potential.

The large initial gross contingent resource of sales gas from Beach’s two vertical shale-gas wells, Holdfast-1 and Encounter-1, is just the beginning of more to come, said managing director Reg Nelson. The resource booking is equal to more than 330 million barrels of oil equivalent (boe), or about five times Beach’s 30 June 2010 reserves of 66 million boe.

While the permit covers an area of around 1,600 square km, the resource booking has been confined to areas of 100 square km around each of the shale-gas evaluation wells. Nelson is confident the permit holds a contiguous, thick and gas-saturated shale, as well as a basin-centred gas play, which has the potential for commercial flows. Last month, Beach reported a large “historic success” with the Holdfast-1 well, achieving production rates of up to 2 million cf/d during testing.

The resource calculation, announced on 10 August, does not include significant upside potential expected in the as-yet untested deeper sections of the Patchawarra formation and the shallower Toolachee and Daralingie formations. These intervals will be targeted for flow testing during follow-up exploration and appraisal activity. This work, set to start in the next six to 12 months, will investigate the potential to more than double identified resources, the company said.

Potential partners

Meanwhile, a spokesman for Beach said there has been no shortage of enquiries from potential partners. It plans to farm-out a portion of the permit in stages. Over the next six months, Beach will select a partner for the pilot programme, consisting of two horizontal wells. This will be the first time the company will be able to assess how good flow rates are. Beyond this, Beach expects a major to jump onboard and lead the project through to development.

Recently, Australia has seen its first international suitors join the shale-gas bandwagon, with investments from US supermajor ConocoPhillips and the UK’s BG Group.

Beach, which operates the permit with a 90% interest on behalf of partner Adelaide Energy (10%), aims to start commercialising the resource in 2014.

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