Total makes move on Aussie shale
French major Total is poised to enter Australia’s shale-gas sector after striking a deal worth up to $190 million with Central Petroleum
Total will farm into three exploration permits in the Northern Territory’s South Georgina basin, following hot on the heels of Norway’s Statoil and domestic player Santos, which have both recently taken positions in the state’s frontier shale plays. Total will also farm into a permit in Queensland.
Under the deal, Total will commit $48 million to the joint venture's exploration and appraisal programme over the first four years, with Central stumping up $12 million. The French firm has the option to invest another $130 million in stages two and three of the project.
Central will retain operatorship of the permits for the exploration phase, but at the end of the three stages, Total would assume operatorship for 90% of the acreage, leaving Central with 10%.
Australia has become a core growth area for Total’s global gas business. It has interests in two major Australian liquefied natural gas (LNG) projects, Ichthys and Gladstone LNG (GLNG).
Mike Sangster, managing director for Total Exploration and Production Australia, said he was delighted with the deal and its potential to add large resources to Total’s portfolio. The move could see Total become a significant operator in Australia.
Over the past two years, five international oil companies have farmed into junior players' shale acreage across Australia, staking a combined investment of nearly $700 million.
Deals concluded to date include Statoil's $210 million investment in Petrofrontier's Southern Georgina basin acreage; BG's $130 million joint venture with Drillsearch Energy; a $152 million deal between Mitsubishi Corporation and Buru Energy; ConocoPhillips' $107 million agreement with New Standard Energy; and a $60 million joint venture between Hess and Falcon Oil & Gas in the Beetaloo basin.
In early October, Central struck an initial farm-out deal with Australia’s largest domestic gas producer Santos that will see up to $150 million sunk in exploration and development in the Amadeus and Pedirka basins in central Australia.
Australia has an estimated 396 trillion cubic feet (cf) of shale gas. Analysts are tipping the country to be an early mover when it comes to developing these resources. But the sector is still undeveloped, with large-scale commericalisation seen at least a decade away. Santos recently started producing from Australia's first commercial shale-gas well in the Cooper basin.
Total has been steadily building its presence in Australia since 2005. The company has stakes in seven offshore exploration licences - three of which it operates - in the Browse and Bonaparte basins off northwestern Australia.
And the French major also has a big share of Australia's rapidly expanding LNG industry. It has a 30% stake the Inpex-led $34 billion Ichthys LNG project in the Northern Territory and 27.5% interest in Santos' $18.5 billion GLNG project in Queensland. The two projects, due to start up in 2015 and 2017, will produce a gross combined 16.2 million tonnes per year (t/y) of LNG.