RE: AFR - Bumps in the Road Article3 Feb 2022 15:09
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More effective fracture stimulation designs
Tamboran, which is backed by US oil and gas billionaire Bryan Sheffield, advised in December that independent analysis estimated that fracked horizontal wells in the Beetaloo needed to yield at least 3 million cubic feet per day of gas per 1000 metres of horizontal well section to be commercial.
The 30-day flow test at the two Tanumbirini wells achieved normalised rates of 2.5 million and 2.6 million cubic feet per day.
But Mr Riddle said the commerciality threshold estimated by Santos and Tamboran was about 2 million cubic feet per day, while independent modelling showed the potential in future wells for production of more than 5 million cubic feet per day per 1000 metre horizontal section once fracking was optimised.
He said experienced investors in shale such as Mr Sheffield understood that “this is the natural trajectory” for new basins looking to be unlocked for commercial production.
“The rocks are working as expected and the next steps are to optimise the results with larger and more effective fracture stimulation designs,” he said.
Shares in Tamboran, which dropped 13.5 per cent on Tuesday after the results were released, regained some of that ground on Wednesday, climbing 4.9 per cent to 32¢.
‘A bit ahead of itself’
Analysts caution that work in the Beetaloo remains in its early stages, and extensive gas processing and pipeline infrastructure will be required to bring gas to market, requiring a large resource to warrant the cost. At the same time, the climate for such long-dated investments in new fossil fuel developments looks set to get increasingly difficult as climate pressures mount in the journey towards net zero emissions.
One energy analyst suggested that the market had “got a bit ahead of itself” in terms of expectations for Beetaloo gas, noting that the US’s extensive gas infrastructure, well-developed service industry, easier land access and huge domestic market all provided significant advantages over Australia in terms of shale gas development.
“Where is the infrastructure, where is the market? It’s very long-dated,” the analyst said, pointing out that there was “no line of sight” to earnings from Beetaloo gas.
Mr Riddle said the expert team Tamboran had brought together would “accelerate the learning curve” towards development and help bring down well costs.
The Santos/Tamboran venture is one of a handful now working on drilling and testing for gas in the Beetaloo, including a venture between Origin Energy and Falcon Oil & Gas, and Empire Energy, which is drilling in its 100 per cent-owned acreage.
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