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Falcon swoops on Beetaloo shale

Company points to successes in testing at Shenandoah-1 exploration well

Falcon Oil & Gas has hailed a testing programme in Australia’s Northern Territory as a success, as it steps up its hunt for Beetaloo basin shale gas. The Toronto-listed firm has been testing its Shenandoah-1 exploration well, in licence EP98, but had not expected high flow rates because the tests targeted intersections of shale zones with single stimulation treatments and were not designed for long-term testing.

Positively, the middle Velkerri shales produced at rates of between 50,000-100,000 cubic feet a day (cf/d), while a lower interval also flowed condensate. The lower Kyalla shale also produced gas to surface, while testing of two separate intervals in the Moroak sandstones did not produce commercial hydrocarbons.

Falcon chief executive Robert Macaulay said he was very pleased with the results of Shenandoah-1, adding that the Velkerri results support Falcon’s belief that recoverable hydrocarbons exist in the deepest part of the Beetaloo basin. They also prove that these particular shales can be fracture-stimulated, a crucial first step in the exploration and appraisal process, he added.

The lower Kyalla result is also encouraging and the company will be working through the data to better understand it before shoring up plans to move forward. Falcon said both Velkerri intervals are candidates for future testing, including horizontal drilling with multiple fracture-stimulation treatments to establish commercial flow rates, while the lower Kyalla is being considered for future exploration.

Macaulay said the Moroak sandstones remained a target of interest and the information would be used to help with the targets elsewhere in the basin.

Hess onboard for shale hunt

In July, US independent Hess hooked up with Falcon as part of a $20 million deal that will see the US independent shoot seismic across Beetaloo exploration permits 76, 98 and 117. Once the sweep is complete and the data analysed, Hess can choose to take a 62.5% stake in the agreement area and push on with the next phase of the work programme. This includes a five-well exploration and appraisal campaign, starting early next year.

To date, Australia has no commercial shale-gas production, but initial estimates suggest the country has great potential – the US Energy Information Administration puts the country’s recoverable resources at 396 trillion cf.

These sentiments are shared by a string of international players. Since June 2010, several overseas players, including Mitsubishi, China National Offshore Oil Corporation, ConocoPhillips and BG Group, have all struck deals with Australian junior oil companies.

Local players Beach Energy and Santos are both eyeing commercial shale-gas production by 2015. But before the shale-gas industry can take-off on a wider scale it must first overcome a series of obstacles, including a lack of hydraulic-fracture stimulation trains and high mobilisation costs, as well as a lack of infrastructure linking potential shale hotspots, in remote sites, to gas markets.

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