Upstream Petroleum

Resources Working and

Group
Report to
COAG Energy Council
on Resources,
Unconventional Reserves,
Production,
Forecasts and Drilling Rates

Canberra, November 2014

Contents
Introduction 2
Key points 3
Australian Unconventional Gas Reserves/Resources 4
Scope and assumptions 4
Definitions 4
SPE PRMS 5
Rate decline in unconventional wells 6
Resource potential by jurisdiction 8
General references 9
Summaries:
Queensland 10
New South Wales 18
Victoria 21
Tasmania 23
South Australia 24
Western Australia 28
Northern Territory 31
Offshore areas 33

Introduction
This report updates the 2013 report produced for the former
Standing Council on Energy and Resources (SCER; now COAG
Energy Council).

The significant changes from the 2013 report are:

Increase in Queenslands 2P reserves from 35 435 PJ to

41 124 PJ,

Decrease in New South Wales 2C resources from 7443

PJ to 4128 PJ,

Northern Territory now reporting 257 276 PJ of

prospective resources.

In addition, some operators are now releasing more

information on well production performance, but these are
still limited to the average maximum rates and still do not
provide the detailed well performance to fully assess
deliverability risks.

Key points

Current booked coal seam gas (CSG) reserves exceed

current liquefied natural gas (LNG) contract
requirements

Current Queensland CSG reserves allocated to LNG projects

total 28.8 Tcf (30 600 PJ) while contracted volumes total 24.3
Tcf (25 700 PJ) of gas. Arrow Energy has an additional 9.9 Tcf
(10 500 PJ) of currently uncommitted gas. In addition, Santos
has secured access to an additional 1.3 Tcf (1350 PJ) of
conventional gas from the Cooper Basin and over 2 Tcf (2200
PJ) third party CSG supply agreements.

Current drilling rates meet estimated required drilling

rates for CSG wells

Current drilling rates are similar to projected required drilling

rates so should be sustainable in the longer term (see Figure
2.4).
 There is a risk of shortfall in rate of gas supply due to
production capacity that is dependent on actual well
production rates. The data required to estimate the
magnitude of the risk is not currently available to
Geoscience Australia

The contracted gas volumes and projected drilling rates set a

critical period from late 2015 through early 2019 where the
required production rate per well will be at a maximum of
between 400 000 and 500 000 cubic feet per day per well (if
only gas resources allocated to the projects are considered)
(Table 2.4). It is not clear to Geoscience Australia that
production will be able to be sustained at this level for that
duration and we do not currently have access to the data
required to assess the risk.

It is unlikely that other sources of unconventional gas

will be able to supply any shortfall in production rate
before 2020

The most mature source of unconventional gas that may be

developed in the medium term is in the Cooper Basin. It is
not anticipated that significant volumes of this gas will
become available before 2020 and so will not be available to
meet any shortfall in gas demand during the critical period
for the CSG LNG projects. The future of coal seam gas
resource development in New South Wales is not clear but it
is unlikely that production could be ramped up in time to
contribute to the current gas contracts.

It is likely that any shortfall in production rate will be

met firstly by transfer of gas between LNG projects
including incorporation of Arrows gas reserves and
secondly by diversion of conventional gas production
from the Cooper Basin

Australian Unconventional Gas Reserves/Resources

The following table is used to sum the reserves and resources

presented in the sections on each jurisdiction. This summation is not
strictly correct for reasons discussed below but does give an indication
of overall resource potential.

T D C PRODUCTION: 283 PJ in 2013

 O O
T M
A M
L E
RESERVES RESERVES RESERVES
R
I 1P: 284 PJ 2P: 43 743 PJ 3P: 3 919 PJ
P C
S
E I
C
T A
O
R L
V
O S
E
L U CONTINGENT CONTINGENT CONTINGENT
R
E B RESOURCES RESOURCES RESOURCES
E
U - 1C: 5 933 PJ 2C: 14 897 PJ 3C: 17 015 PJ
D
M C
O
P
I M
I
N M
I
I E
P
T R UNRECOVERABLE
I C
A I
L A
L L
Y
PROSPECTIVE PROSPECTIVE
- PROSPECTIVE
RESOURCES RESOURCES
I RESOURCES
Best Estimate: 980 High Estimate: 268 000
N Low Estimate: 45 000 PJ
729 PJ PJ
-
P
L
A UNDISC
C OVERED
E PIIP

UNRECOVERABLE
(
P
I
I
P
)
NOTE: Not all jurisdictions have reported volumes for each category so totals may
not be indicative of the distribution of resources across each category
Table 1.1: Australian unconventional resources

Scope and assumptions

This report covers potential for tight oil and gas, shale oil and gas and
CSG sourced from publicly available data published by operating
companies, States authorities and other reporting bodies.

Resource data is not available for many prospective basins and

formations, so the following estimates of unconventional resources are
likely to understate the potential. To become reserves, however, these
resources will need a commercially viable gas price, suitable
infrastructure and a market. It is probable that the majority of the
resources, if proven to exist, will not be produced for decades.

Unconventional resource potential from other resources such as oil

shale, coal gasification or offshore methane hydrates has not been
considered.

Definitions

A useful summary of the types and setting of unconventional resources

can be found in Chapter 1 of ACOLA Report 6 Securing Australias
Future Engineering energy: unconventional gas production (see link
in Reference) and in the Roadmap for Unconventional Gas Projects in
South Australia (see link in Reference) which also includes a brief
description of the Society of Petroleum Engineers Petroleum Resources
Management System (SPE PRMS) resource reporting system in Chapter
1.

The following definitions have been adopted in listing the prospective

formations in each jurisdiction:

Inactive The formation may contain a resource but there is no current

activity

Preliminary exploration The formation is being actively explored

Under assessment The formation is being tested for its ability to produce
commercially

Producing The formation is currently producing

SPE PRMS

The Society of Petroleum Engineers has published the Petroleum

Resources Management System (SPE PRMS) to standardise the
reporting of petroleum reserves and resource volumes. The reporting
matrix lists reserves and resources by chance of commerciality in the
vertical direction and technical uncertainty in the horizontal direction.

It should be noted that only petroleum that is developed or is part of a

current development project can be booked as reserves and petroleum
that has been demonstrated to exist through exploration and testing
can be booked as a contingent resource; the remainder should be
booked as a prospective resource. There is a possibility that a
contingent resource or a prospective resource may never become
recoverable due to cost or the limitations of technology. A prospective
resource may not exist at all as the assumptions or correlations used to
predict its existence may found to be invalid.
T C PRODUCTION
O O
T M
A M
L E
D RESERVES RESERVES RESERVES
R
I 1P 2P 3P
P C
S
E I
C
T A
O
R L
V
O S
E
L U CONTINGENT CONTINGENT CONTINGENT
R
E B RESOURCES RESOURCES RESOURCES
E
U - 1C 2C 3C
D
M C
O
P
I M
I
N M
I
I E
P
T R UNRECOVERABLE
I C
A I
L A
L L
Y
- PROSPECTIVE PROSPECTIVE PROSPECTIVE
I RESOURCES RESOURCES RESOURCES
N Low Estimate Best Estimate High Estimate
-
P
L
A UNDISC
C OVERED
E PIIP

UNRECOVERABLE
(
P
I
I
P
)
Table 1.2: PRMS matrix

Resource estimates range from estimates of the number of methane

molecules in all the rocks in a basin, through estimates of the volume
that could be produced without consideration of technical factors and
economics to the amount likely to be produced given current
technology and commercial considerations. It is important to consider
the nature of these different types of estimates when looking at
resources in the PRMS matrix. Geoscience Australias view of the
relationship between these types of estimate is summarised below.
 The published literature indicates that, for shale gas wells at least, only the
volume accessed by the fracturing process (the stimulated rock volume)
contributes to production. Within this volume the recovery can be as high as
70% of the petroleum initially in place (PIIP in the PRMS matrix above). This
stimulated rock volume does not, however, connect with all of the petroleum-
bearing rock as the fractures are not evenly spaced and new fractures
generated too close to current fractures or natural fracture networks may
follow the pre-existing fractures. This means that, even with a recovery as
high as 70%, the overall production may only recover about 30% of the
petroleum initially in place in the developed area. In addition, not all of the
petroleum-bearing rock has properties that are suitable for commercial
development. The rock layers may become too thin or not contain sufficient
petroleum to support commercial operations or the rock properties may vary
so a suitable fracture network cannot be established. This may further reduce
overall recovery so that the recoverable portion of the resource is of the order
of 5 to 10% of the petroleum initially in place.

As a result, when a prospective formation is explored and developed the

assessed petroleum volumes associated with the formation can decrease
markedly as the resource estimates mature from petroleum in place and
prospective resource to contingent resources, reserves and production. It is
probable that this sort of relationship between initial in place volumes and
reserves and production holds for other types of unconventional resources.

A description of the definitions used in the system is on the SPE

website (see link in Reference). A non-technical guideline and the full
guideline, including sections on estimation of different types of
unconventional resource are also available (see links in Reference).

Rate decline in unconventional wells

Conventional gas wells in good quality reservoirs typically sustain high

rates of production over many years. This is due to the high degree of
connectivity in the reservoir; the well is connected to a substantial
portion of the gas in place and can produce gas from distant parts of
the petroleum bearing rock.

Unlike conventional gas wells, both shale gas wells and coal seam gas
wells are only connected to the coal or rock immediately surrounding
the well bore or adjacent to any natural or induced fracture network
that may be present. This results in a production profile that is
characterised by an initial period of high production followed by a
steep decline in production rate and a long production tail that may
last for a decade or more. This is caused by initial rapid depletion of
the gas in the fractures followed by slower desorption of gas from the
organic material in the shale or coal as reservoir pressure is lowered
during production. This is shown in the production performance for
Beach Energys Halifax 1 shale gas well in the Cooper Basin.
Source: Beach Energy press releases
Figure 1.1: Halifax 1 gas production

While not directly comparable, coal seam gas wells follow a similar
production profile to shale gas wells after an initial period of
dewatering. This is illustrated in the figures below:

Source: Moore, T. A., Coalbed methane: A review

Figure 1.2: Coal seam gas well decline

Figures B and C show wells where the gas production has reached a
peak and is now declining; to 60 per cent of peak after one year in
Figure B (from the Bowen Basin) and to 30 per cent of peak after four
years in Figure C.

While the overall production profile is usually similar, the timing of

peak and decline has been observed to vary markedly, even within a
small area of the same resource. This is discussed further in the
section on Queensland resources.

Resource potential by jurisdiction

The body of the report presents data on unconventional resources in

each onshore jurisdiction.

The unconventional resource potential section includes listing of

the basins and formations that are currently thought to be prospective,
including the type(s) of resource thought to be present and the current
exploration and development status of the formation.

The reserves/resources section is a compilation of the reserves and

resources, which are listed according to Geoscience Australias best
estimate of where they should be placed in the SPE PRMS matrix. The
totals are a summation of each of the categories of reserve or resource
but it should be noted that this is not strictly statistically correct except
for 2P/2C/Best Estimate categories and will underestimate 1P/1C/Low
Estimate reserves and resources and overestimate 3P/3C/High
Estimate reserves and resources. This is due to the probabilistic nature
of the estimates. For this reason, only the 2P/2C/Best Estimate
reserves and resources summation should be regarded as a reliable
estimate of potential.

The production/forecasts section forecast has been prepared from

published contracted gas volumes for LNG in Queensland.

The unconventional resource drilling activity section tabulates

drilling activity.

The commentary section includes Geoscience Australias

observations on the status of unconventional resources in the
jurisdiction and any caveats that should be applied in interpreting the
data.

General references
ACOLA Report 6 Securing Australias Future Engineering energy:
unconventional gas
Production http://www.acola.org.au/PDF/SAF06FINAL/Final%20Report
%20Engineering%20Energy%20June%202013.pdf
Beach Energy
http://www.beachenergy.com.au/irm/archive/asx-announcements3.aspx
DMITRE South Australia
http://www.petroleum.dmitre.sa.gov.au/__data/assets/pdf_file/0008/179621/Ro
admap_Unconventional_Gas_Projects_SA_12-12-12_web.pdf
Drill, Baby, Drill
http://www.postcarbon.org/reports/DBD-report-FINAL.pdf
EIA/ARI World Shale Gas and Shale Oil Resource Assessment
http://www.eia.gov/analysis/studies/worldshalegas/
Moore, T. A., Coalbed methane: A review, International Journal of Coal
Geology 101 (2012) 36
81
SPE Guidelines for Application of the Petroleum Resources
Management System
http://www.spe.org/industry/docs/PRMS_Guidelines_Nov2011.pdf
SPE Petroleum Resources Management System
http://www.spe.org/industry/docs/Petroleum_Resources_Management_System_
2007.pdf
SPE Petroleum Resources Management System Guide for Non-Technical
Users
http://www.spe.org/industry/docs/PRMS_guide_non_tech.pdf
RFC Ambrian Australian Unconventional Oil & Gas
http://www.armourenergy.com.au/assets/downloads/investment_research/201
3/09-2013_rfc-ambrian_australian-unconventional_oil_and_gas_report_.pdf

Queensland

Unconventional resource potential:

Basin/Formation Tight Shale CSG Status

gas gas
Laura Basin
Dalrymple Sandstone Inactive
Maryborough Basin
Maryborough Formation Inactive
Tiaro Coal Measures Inactive
Burrum Coal Measures Preliminary
exploration
Clarence-Moreton Basin
 Walloon Coal Measures Under assessment
Surat Basin
Walloon Coal Measures Producing
Bowen Basin
Black Alley Shale Preliminary
exploration
Tinowon Formation Under assessment
Moranbah Coal Measures Producing
Baralaba Coal Measures Producing
Fort Cooper Coal Under assessment
Measures
Rangal Coal Measures Under assessment
Bandanna Formation Producing
Eromanga Basin
Winton Formation Inactive
Toolebuc Formation * Preliminary
exploration
Birkhead Formation Inactive
Westbourne Formation Inactive
Poolowanna Formation Inactive
Cooper Basin
Toolachee Formation Under assessment
Roseneath Shale Under assessment
Epsilon Formation Under assessment
Murteree Shale Under assessment
Patchawarra Formation Under assessment
Galilee Basin
Betts Creek Beds Preliminary
exploration
Aramac Coal Measures Preliminary
exploration
Bandanna Formation Preliminary
exploration
Lake Galilee Sandstone Preliminary
exploration
Adavale Basin
Log Creek Formation Inactive
Lissoy Sandstone Inactive
Cooladdi Dolomite Inactive
Georgina Basin
Arrinthrunga Formation Inactive
Inca Shale Inactive
Thorntonia Limestone Inactive
Beetle Creek Formation Inactive
Georgina Limestone Inactive
Mount Isa Superbasin
Lawn Hill Shale Preliminary
exploration
Termite Range Formation Inactive
Riversleigh Siltstone Preliminary
exploration
Styx Basin
 Styx Coal Measures Preliminary
exploration
Ipswich Basin
Tivoli Formation Preliminary
exploration
*Unconventional oil and gas potential
Table 2.1: Queensland unconventional resource potential

Reserves/Resources:

T C PRODUCTION: 264.3 PJ (2012-13)*

O O
T M
A M
L E
D RESERVES RESERVES RESERVES
R
I 1P 2P: 41 124 PJ* 3P
P C
S
E I
C
T A
O
R L
V
O S
E
L U CONTINGENT CONTINGENT CONTINGENT
R
E B RESOURCES RESOURCES RESOURCES
E
U - 1C 2C 3C
D
M C
O
P
I M
I
N M
I
I E
P
T R UNRECOVERABLE
I C
A I
L A
L L
Y
PROSPECTIVE
- PROSPECTIVE PROSPECTIVE
RESOURCES
I RESOURCES RESOURCES
Best Estimate: 164
N Low Estimate High Estimate
000 PJ**
-
P
L
A UNDISC
C OVERED
E PIIP

UNRECOVERABLE
(
P
I
I
P
)
Source: *Queensland production and reserves statistics as at 31/12/2013,
Queenslands petroleum exploration, development and potential 2012-13,**ACOLA
Report 6 Securing Australias Future Engineering energy: unconventional gas
production (Bowen and Clarence-Moreton shale gas), EIA/ARI World Shale Gas and
Shale Oil Resource Assessment (Maryborough shale gas), Independent Experts
Report for Armour Energy Limited (Mount Isa Superbasin)
Table 2.2: Queensland unconventional resources

Coal seam gas reserves have increased markedly from 2007 as drilling
accelerated to prove up reserves for the LNG projects as shown in the
graph below (1 Tcf is approximately equal to 1000 PJ). Sustained
drilling in the last three years has not seen significant changes in
reserves, except for the QGCLNG project, which booked about 3 Tcf
additional gas reserves in 2013 through its drilling program (Figure
2.1).

Figure 2.1: Queensland reserves growth in coal seam gas for LNG
projects

Production/Forecasts:

The current total annual gas production for the State was about 320 PJ
in 2013 (41 PJ of conventional gas and 280 PJ of coal seam gas, the
equivalent of about 6 MT/a LNG). In contrast, the forecast gas demand
to supply the CSG LNG projects will be about 25 MT/a or almost 1400
PJ/a for a total of 18.5 Tcf (19 400 PJ) of gas. This is shown by contract
in the graph below, compiled from published LNG export volumes. A
portion of the QCLNG gas (top light blue bars) may be sourced
internationally.

Figure 2.2: Contracted volumes by year for Queensland coal seam gas
for LNG projects

Unconventional resource drilling activity:

High.

Drilling activity has been high, in preparation for LNG exports. The
number of wells drilled per month and the cumulative total of coal
seam gas wells are shown in the graph below.

Figure 2.3: Well drilling rates and cumulative coal seam methane wells
drilled

In order to sustain the high rate of production required for the LNG
projects, an equally high rate of drilling will be required. The graph
below shows the projected drilling for the LNG projects, based on
published data. This by far exceeds all other petroleum related activity
in the State.
Figure 2.4: Historic and proposed cumulative coal seam methane wells

Commentary:

Coal seam methane reserves booked by the three CSG LNG projects
along with contracted LNG volumes are tabulated below. The current
reserves appear to be sufficient to cover the current contracts.
Project Reserves Tcf (PJ)
Contracted volume
Tcf (PJ)
APLNG* 12.6 (13 382) 8.6 (9116)
GLNG# 6.4 (6780) 7.2 (7600)
QCLNG@ 12.4 (13 200) 8.5 (9000)
Arrow 9.9 (10 500) -
Table 2.3: Coal seam gas resources and LNG contracted volumes

*: 2P value, see
http://www.originenergy.com.au/news/files/asx_investor_site_tour_presentation.pdf
#: 2P + 2C value. See http://www.santos.com/library/2014_09_15_%20CLSA
%20presentation.pdf@: Resource estimates from Queensland Department, contract
information from http://www.qgc.com.au/media/239458/bg_fsheet_2013_lng_v2.pdf
@: http://www.qgc.com.au/media/239458/bg_fsheet_2013_lng_v2.pdf

The current reserves for GLNG project may not be adequate to fulfil the
contracts. Over 2 Tcf (2200 PJ) third party gas supplies have been
arranged (Table 2.4).
Quanti Delivery Price
Supplier TJ/day Starts Term
ty point basis
Santos
portfolio Wallumbill
Horizon 750 PJ 140 2015 15 years a Oil-linked
Origin Wallumbill
365 PJ 100 2015 10 years a Oil-linked
Origin Wallumbill
194 PJ1 50-1001 2016 5 years a Oil-linked
Other 7 years
suppliers 10-15 2015 21 Wallumbill
85 PJ 60-100 2016 months a Oil-linked
Meridian Oil-
JV 445 PJ2 20-65 2015 20 years GLNG GTP linked3
Combabul
a/
Spring
Gully 355 PJ4 30-50 2015 30 years Fairview Oil-linked
Table 2.4: Third party gas supplies arrangement for GLNG project
1 100 PJ firm volume over 5 years. Origin has the option to supply additional volumes of up to 94 PJ during
the same period.
2 Source: WestSide Corporation Target Statement of 16 May 2014. Excludes additional gas production by
the Meridian Joint Venture beyond 65 TJ/day. Volumes subject to Meridian field production performance and
implementation of expansion plans.
3 Oil-linked from 2016.
4 Santos share 2P reserves in the APLNG-operated Combabula, Spring Gully and Ramyard fields at the end
of 2013.

The CSG LNG projects have also published projected drilling programs
and these can be combined with the contracted LNG volumes to
estimate a required average production rate per well. These are
tabulated for the three projects below in millions of cubic feet per well
per day.

QUARTE
GLNG APLNG QCLNG TOTAL
R
201 1
4 Q 0.290 0.132
201 2
4 Q 0.275 0.125
201 3
4 Q 0.262 0.119
201 4
4 Q 0.250 0.113
201 1
5 Q 0.115 0.565 0.284
201 2
5 Q 0.217 0.536 0.298
201 3
5 Q 0.412 0.390 0.510 0.453
201 4
5 Q 0.393 0.371 0.486 0.433
201 1
6 Q 0.421 0.433 0.465 0.451
201 2
6 Q 0.403 0.411 0.445 0.433
201 3
6 Q 0.429 0.634 0.427 0.501
201 4
6 Q 0.411 0.605 0.410 0.483
201 1
7 Q 0.435 0.578 0.395 0.476
201 2
7 Q 0.418 0.553 0.380 0.461
201 3
7 Q 0.440 0.531 0.367 0.456
201 4
7 Q 0.425 0.510 0.355 0.442
201 1
8 Q 0.444 0.491 0.343 0.438
201 2
8 Q 0.430 0.473 0.332 0.426
201 3
8 Q 0.416 0.457 0.322 0.415
201 4 0.404 0.441 0.312 0.404
 8 Q
201 1
9 Q 0.434 0.427 0.303 0.405
201 2
9 Q 0.421 0.414 0.295 0.395
201 3
9 Q 0.410 0.401 0.287 0.386
201 4
9 Q 0.398 0.389 0.279 0.378
202 1
0 Q 0.388 0.378 0.272 0.370
202 2
0 Q 0.378 0.367 0.265 0.362
202 3
0 Q 0.368 0.357 0.258 0.355
202 4
0 Q 0.359 0.348 0.252 0.348
202 1
1 Q 0.351 0.338 0.246 0.341
202 2
1 Q 0.342 0.328 0.241 0.334
202 3
1 Q 0.335 0.319 0.235 0.328
202 4
1 Q 0.327 0.311 0.230 0.322
202 1
2 Q 0.320 0.302 0.225 0.316
202 2
2 Q 0.313 0.295 0.220 0.311
202 3
2 Q 0.306 0.288 0.216 0.306
202 4
2 Q 0.300 0.281 0.211 0.301
Table 2.5: CSG production rates needed to fulfil LNG contracted
volumes (mmscf/well per day)

The table shows that for the period 3Q 2015 to 1Q 2019, the
production rate will need to be maintained at between 400 000 and
500 000 cubic feet per day per well across all three projects. Within
each project the required peak rate can be even higher. The risk
associated with this may explain the recent gas sharing agreement
between the CSG LNG projects and the connection of the Arrow
resources.

While the projected drilling rate appears to be sustainable, based on

drilling rates to date, the estimation of required wells is only valid for a
given productivity per well; that is, if the peak production per well is
less than anticipated or the production rate per well declines more
rapidly to a lower production tail with time, more wells will be
required to meet the contracted volumes. The actual well productivity
is only known after dewatering has been completed and it is unlikely
that this has occurred for the majority of coal seam gas wells for the
LNG projects. Limited data on well rates is available in the public
domain suggests peak 7-day average gas rate of 650 000 cubic feet
per day per well with a median rate of 550 000 cubic feet per day per
well in the Berwyndale South Walloon Coal Measures accumulation.
The longer term sustained production rate is not known.

Recently, Origin presented that for wells that have been online for
more than six months, the observed maximum average well production
rates were 2.1 TJ/d per well (equivalent to 2 mmscf/d per well) for the
Talinga project and 1.1 TJ/d (about 1 mmscf/d per well) for the Spring
Gully project, higher than its expectation of 1.2 TJ/d per well on
average of its Phase 1 drilling operation (see link below). These
production rates appear to meet the required rates for the contracted
demand (Table 2.5). For GLNG project, Santos stated that the
performance of Fairview wells continues to exceed expectations with
average optimum gas capacity of 2.2 TJ/day per well. Roma wells are
on line and are dewatering, supporting individual well capacity of 0.5
TJ/day; Roma 02- 04-01 well are producing over 1 TJ/day. All this
information is still limited to the average peak production rates per
well. No longer term sustained production rates are available to us. So,
no definitive statement can be made about the likely long term rate
from coal seam gas production in Queensland although it seems likely
that additional sources of gas may be required to meet contract
commitment. If required, the most probable source of this gas outside
the area of coal seam gas development would be the conventional
resources in the Cooper Basin. This was indicated in the Santos Annual
Report 2012 which stated

GAS SUPPLY BUILD CONTINUES

To execute the most efficient gas supply for the project, gas will
be sourced from the dedicated CSG fields, underground storage,
supply from Santos portfolio and third parties.

In 2012, 143 wells were drilled in the projects CSG acreage, with
the gas produced supplied to domestic gas contracts and the
remainder injected into underground storage. A further 200 to
300 wells are planned to be drilled each year from 2013 to 2015.

Additional gas supply agreements for a total of 595 PJ were

signed with third parties in 2012 for gas supply to the GLNG
project, adding to the 750 petajoules that Santos has agreed to
supply, primarily from the Cooper Basin.

References:

Armour Energy
http://www.armourenergy.com.au/investors/investment-research (7-August-
2013)
Changes in Completion Strategy Unlocks Massive Jurassic Coalbed
Methane Resource Base in
the Surat Basin, Australia, R.L. Johnson, SPE, S. Scott and M.
Herrington, Queensland Gas
 Co. Ltd., SPE 101109
Independent Experts Report for Armour Energy Limited
http://www.empireenergy.com/pdf/McArthur%20Basin%20Armour%20Co
%20Ltd%20Ind.%20Geo's%20Report.pdf
Origin APLNG Operational Review and Asset Visit (May 2014)
http://www.originenergy.com.au/news/files/asx_investor_site_tour
_presentation.pdf
BG Groups LNG business:
http://www.qgc.com.au/media/239458/bg_fsheet_2013_lng_v2.pdf
Queenslands petroleum exploration, development and potential 2012-
13
http://mines.industry.qld.gov.au/assets/coal-pdf/queenslands-petroleum-
2014.pdf
Queenslands unconventional petroleum potential
http://mines.industry.qld.gov.au/assets/coal-pdf/qld-unconventional-2014.pdf
Queenslands coal seam gas overview
http://mines.industry.qld.gov.au/assets/coal-pdf/csg-update-2014.pdf
Queensland production and reserves statistics
http://mines.industry.qld.gov.au/mining/production-reserves-statistics.htm
Santos Annual Report 2012
http://www.santos.com/Archive/NewsDetail.aspx?p=121 HYPERLINK
"http://www.santos.com/Archive/NewsDetail.aspx?p=121&id=1367"& HYPERLINK
"http://www.santos.com/Archive/NewsDetail.aspx?p=121&id=1367"id=1367
Santos GLNG contracted resources and well production rates
http://www.santos.com/library/2014_09_15_%20CLSA%20presentation.pdf
(pages 113-14)

New South Wales

Unconventional resource potential:

Basin/Formation Tight Shale CSG Status

gas gas
Clarence-Moreton Basin
Walloon Coal Measures Preliminary
exploration
Ipswich Coal Measures Inactive
Nymboida Coal Measures Inactive
Surat Basin
Walloon Coal Measures Preliminary
exploration
Gunnedah Basin
Black Jack Formation Preliminary
exploration
Maules Creek Formation Preliminary
exploration
Sydney Basin
Narrabeen Group Inactive
Bulgo Sandstone Inactive
Colo Vale Sandstone Inactive
 Illawarra Coal Measures Producing
Wittingham Coal Preliminary
Measures exploration
Newcastle Coal Measures Preliminary
exploration
Tomago Coal Measures Preliminary
exploration
Greta Coal Measures Preliminary
exploration
Shoalhaven Group Inactive
Clyde Coal Measures Inactive
Gloucester Basin
Gloucester Coal Measures Preliminary
exploration
Ashford Basin
Ashford Coal Measures Preliminary
exploration
Table 3.1: New South Wales unconventional resource potential

Reserves/Resources:

T C PRODUCTION: 3 PJ in 2013
O O
T M
A M
L E
D RESERVES RESERVES RESERVES
R
I 1P: 284 PJ 2P: 2 619 PJ 3P: 3 919 PJ
P C
S
E I
C
T A
O
R L
V
O S
E
L U CONTINGENT CONTINGENT CONTINGENT
R
E B RESOURCES RESOURCES RESOURCES
E
U - 1C: 527 PJ 2C: 4 128 PJ 3C: 3 757 PJ
D
M C
O
P
I M
I
N M
I
I E
P
T R UNRECOVERABLE
I C
A I
L A
L L
Y
PROSPECTIVE
- PROSPECTIVE PROSPECTIVE
RESOURCES
I UNDISC RESOURCES RESOURCES
Best Estimate: 14 401
N OVERED Low Estimate High Estimate
PJ
- PIIP
P
UNRECOVERABLE
L
 A
C
E

(
P
I
I
P
)
Source: NSW Department of Resources and Energy, July 2014 (CSG in the Sydney,
Gunnedah, and Clarence-Moreton Basins); APPEA 2013 production statistics
Table 3.2: New South Wales unconventional resources

Production/Forecasts:

The only unconventional gas produced in NSW is from AGLs Camden

Gas Project, which produces about 5 per cent of the States gas supply,
averaging approximately 6 PJ per annum. NSW currently consumes
approximately 160 PJ per annum of natural gas (Santos Ltd 2013).

No significant increases in production are forecast in the short term but

applications have been submitted to the NSW Department of Planning
for AGLs Gloucester Gas Project and Santoss Narrabri Gas Project. The
Gloucester Gas project proposes to produce up to 30 PJ per annum for
30 years, and the Narrabri Gas project proposes to produce up to 73 PJ
per annum for 25 years. For now it is uncertain as to when these
projects will finalise the approval process and begin producing.

EXPECTED ANNUAL NORTHWEST NSW CSG PRODUCTION

Source: The Allen Consulting Group (2011)

Figure 3.1: Proposed gas production from the Narrabri Coal Seam Gas
project
Unconventional resource drilling activity:

Currently low.

Source: NSW Department of Resources and Energy, July 2014

Figure 3.2: Drilling activity in New South Wales

Commentary:

In addition to the CSG resources identified to date, conventional and

tight gas resources may also be present, either in sandstones
associated with the coal seams or independent of them. A number of
gas accumulations have been discovered in the Sydney Basin but
these typically produce gas at a rapidly declining rate from vertical
wells, indicating tight reservoirs or limited reservoir extent. Current
drilling technology may make further investigation of these discoveries
viable.

References:

APPEA Petroleum Production Statistics 2013

http://www.appea.com.au/?attachment_id=5432
Cadman, S. J. and Pain, L., (1998) Bowen and Surat Basins, Clarence-
Moreton Basin, Sydney Basin, Gunnedah Basin and other minor
onshore basins, Queensland, NSW and NT. Australian Petroleum
Accumulations Report 11, Bureau of Resource Sciences, Canberra
Inaugural Report to the Standing Council on Energy and Resources
(SCER), NSW Department of Resources and Energy, August 2013
The Allen Consulting Group, The economic impacts of developing coal
seam gas operations in Northwest NSW, Report to Santos,
December 2011
http://www.allenconsult.com.au/resources/acgeconomicimpactcoalseam2011.pd
f
Santos Ltd (2013) Inquiry into downstream gas supply and availability
in NSW, Santos submission to NSW Legislative Assembly, State
and Regional Development Committee, 21st June 2013,
http://www.santos.com/library/Inquiry_into_downstream_gas_suppl
y_and_availability_Santos_submission.pdf

Victoria

Unconventional resource potential:

Basin/Formation Tight Shale CSG Status

gas gas
Gippsland Basin
Lakes Entrance Formation * Inactive
Strzelecki Formation * Under
assessment**
Otway Basin
Pretty Hill Formation Inactive
Sawpit Shale Preliminary
exploration
Casterton Formation * Preliminary
exploration
*Unconventional oil and gas potential
**Activities suspended due to current State moratorium on fracture stimulation.
Table 4.1: Victorian unconventional resource potential

Reserves/Resources:

T D C PRODUCTION
 O O
T M
A M
L E
RESERVES RESERVES RESERVES
R
I 1P 2P 3P
P C
S
E I
C
T A
O
R L
V
O S
E
L U CONTINGENT CONTINGENT CONTINGENT
R
E B RESOURCES RESOURCES RESOURCES
E
U - 1C: 403 PJ 2C: 755 PJ 3C: 1 212 PJ
D
M C
O
P
I M
I
N M
I
I E
P
T R UNRECOVERABLE
I C
A I
L A
L L
Y
PROSPECTIVE
- PROSPECTIVE PROSPECTIVE
RESOURCES
I RESOURCES RESOURCES
Best Estimate: 452
N Low Estimate High Estimate
PJ*
-
P
L
A UNDISC
C OVERED
E PIIP

UNRECOVERABLE
(
P
I
I
P
)
Source: Lakes Oil, includes Wombat, Trifon, Gangell and North Seaspray tight gas
except for *Wombat only
Table 4.2: Victorian unconventional resources

Production/Forecasts:

None.

Unconventional resource drilling activity:

nil.
Commentary:

The difficulties of developing the tight gas resource in proximity to

ample supplies of conventional gas offshore have been compounded
by the recent moratorium on fracture stimulation which will be required
to prove the commercial viability of these reservoirs. This has provided
little incentive to explore further in the region.

References:

Lakes Oil website

http://www.lakesoil.com.au/index.php/reports-and-
announcements/category/announcements-2010 10-August-2010
http://www.lakesoil.com.au/index.php/reports-and-
announcements/category/announcements-2009 1-July-2009

Tasmania

Unconventional resource potential:

Basin/Formation Tight Shale CSG Status

gas gas
Tasmania Basin
Woody Island Formation *+ *+ Inactive
+
*Unconventional oil and gas potential nature of resources yet to be determined
Table 5.1: Tasmanian unconventional resource potential

Reserves/Resources:

None.

Production/Forecasts:

None.

Unconventional resource drilling activity:

None.

Commentary:

While there is prospectivity for both conventional and unconventional

resources in Tasmania, there have been no discoveries and limited
exploration undertaken to date.
References:

The Tasmania Basin Gondwanan Petroleum system

http://www.mrt.tas.gov.au/mrtdoc/tasxplor/download/02_4832/Tasmaniax.pdf

South Australia

Unconventional resource potential:

Basin/Formation Tight Shale CSG Status

gas gas
Eromanga Basin
Winton Formation Inactive**
Cooper Basin
Toolachee Formation Under
assessment***
Roseneath Shale Under
assessment***
Epsilon Formation Under
assessment***
Murteree Shale Under
assessment***
Patchawarra Formation Under
assessment***
Warburton Basin
Pando Formation Inactive
Dullingari Group Inactive
Kalladeina Formation Inactive
Mooracoochie Volvcanics * Inactive
Pedirka Basin
Purni Formation Inactive
Simpson Basin
Peera Peera Formation Inactive
Officer Basin
Observatory Hill * Inactive
Formation
Ouldburra Formation Inactive
Narana Formation Inactive
Dee Dee Mudstone Inactive
Arckaringa Basin
Mount Toondina Formation Preliminary
exploration
Stuart Range Formation * Preliminary
exploration
Otway Basin
Pretty Hill Formation Inactive
Sawpit Shale Preliminary
exploration
 Casterton Formation * Preliminary
exploration
*Unconventional oil and gas potential
**Preliminary exploration showed coal thickness and gas content currently below
commercial thresholds
***Minor production
Table 6.1: South Australian unconventional resource potential

The nature of these resource plays is fully described in Chapters 2 and

4 of the Roadmap for Unconventional Gas Projects in South Australia.

Reserves/Resources:

T C PRODUCTION
O O
T M
A M
L E
D RESERVES RESERVES RESERVES
R
I 1P 2P 3P
P C
S
E I
C
T A
O
R L
V
O S
E
L U CONTINGENT CONTINGENT CONTINGENT
R
E B RESOURCES RESOURCES RESOURCES
E
U - 1C: 1 725 PJ* 2C: 5 395 PJ** 3C: 6 807 PJ*
D
M C
O
P
I M
I
N M
I
I E
P
T R UNRECOVERABLE
I C
A I
L A
L L
Y
PROSPECTIVE PROSPECTIVE PROSPECTIVE
-
RESOURCES RESOURCES RESOURCES
I
Low Estimate: 45 000 Best Estimate: 118 High Estimate: 268
N
PJ*** 000 PJ* 000 PJ***
-
P UNDISC
L OVERED
A PIIP
C
UNRECOVERABLE
E

(
P
 I
I
P
)
Source: *Roadmap for Unconventional Gas Projects, pages 91-2, Santos Cooper Basin
Unconventional Gas Opportunities and Commercialisation, page 6, includes
PGA Prospective Resource Best Estimate,
** As for * plus Beach Energy,
*** As for * plus Roadmap for Unconventional Gas Projects, page 108
Table 6.2: South Australian unconventional resources

Production/Forecasts:

Minor production from recent shale gas exportation wells.

Santos plan material commercial shale production and reserve

bookings by 2015/16 underpinning Cooper development beyond 2020
suggesting larger scale production by the end of the decade (Santos
Cooper Basin Unconventional Gas Opportunities and
Commercialisation).

The challenges associated with accelerating shale gas production are

described at pages 158 and 159 of the Roadmap for Unconventional
Gas Projects in South Australia (see link below).

Beach Energy, Drillsearch and Senex are also actively exploring the
REM and Patchawarra resource while Beach Energy and Strike Energy
are assessing coal seam gas potential in the southern Cooper Basin.
Beach booked 2P+2C unconventional resources of 362 mmbbloe in the
Cooper Basin, equivalent to 2.168 Tcf of gas. For PRLs 33 to 48 and ATP
855 along, net 1.6 Tcf 2C resources was booked for Beach Energy (see
the link below). Contingent unconventional gas resources totalling
more than 5 Tcf have been identified in the South Australian Cooper
Basin by the Cooper Basin Joint Venture (operated by Santos), Beach
Energy and Senex Energy, approaching the total sales gas production
from the Basin to date. Cooper Energy is investigating the shale gas
potential of the Otway Basin. There is no production forecast
associated with this activity.

Unconventional resource drilling activity:

Moderate.

Explorers have accelerated appraisal of Cooper Basin unconventional

plays since the first exploration well to test these plays was drilled in
2010 (Table 1). Following on from 13 vertical wells to test
unconventional gas plays in 2012, 13 wells were drilled during 2013
(Table 6.2). In December 2012, Beach Energy spudded Holdfast, the
first dedicated horizontal well to test shale gas deliverability in the
State. Fracture stimulation and flow testing programs have also
gathered pace.
Year No. of Wells
Drilled
2010 2
2011 2
2012 13
2013 13

Source: Department of State Development, South Australia

Table 6.2. Number of wells targeting natural gas in unconventional
reservoirs, SA.

In 2013, Santos drilled Moomba 192, Moomba 194 and Roswell 2

horizontal wells targeting deep unconventional gas plays in the
Moomba Field and Van der Waals 1 and Langmuir 1 in the Nappamerri
Trough. Santos announced in December 2013 that the Moomba 194
vertical shale gas well, adjacent to Moomba 191, flowed gas at an
average rate of 3 mmscf/d. The well appraised the gas potential in
various unconventional and shale plays, five standard fracture
stimulation stages were run to test the Patchawarra deep coal,
Patchawarra tight sand, upper Patchawarra hybrid shale, as well as the
Murteree shale and Epsilon hybrid shale zones. Moomba 195 horizontal
well is expected to test the Murteree Shale.

Beach Energy continued to explore Nappamerri Trough shale gas and

basin centred gas plays in PEL 218; a total of ten vertical and two
horizontal exploration wells have been drilled, eight of these have been
fracture stimulated and four flow tested. The first horizontal well to test
Cooper Basin shale gas deliverability, Holdfast 2, spudded in December
2012 and on 22 January 2013, the vertical section was completed and
the well was deviated towards the horizontal section through the
Murteree Shale target.

Senex drilled 6 exploration, 4 appraisal and 4 development wells in

Cooper Basin Permits. Senex also acquired 2140 km2 3D from the
Dundinna, Cordillo and Lignum seismic surveys. Burruna 2 oil
discovery was their outstanding success in 2013 with flows in excess of
3600 barrels of oil per day (BOPD). Production rates are expected to be
restricted to 800 BOPD. Successful fracture stimulation of Senex
unconventional gas wells in 2013 include favourable results with
Hornet 1 flowing at 2.2 million standard cubic feet per day (mmscfd)
and Kingston Rule 1 flowing at 1.2 mmscfd. Senex also fracture
stimulated Paning 2 deep coal exploration well. The Toolachee coal
successfully demonstrated the ability to flow gas at 90 000 standard
cubic feet per day on a four day production test.

PEL 96 in the southern Cooper Basin was granted to Strike Energy in

May 2009 and exploration for moderate to deep Permian coals
commenced in 2010 with the drilling of Forge 1. In November 2013 Le
Chiffre 1 was drilled and encountered 105 m of Permian coal of which
86 m was cored and recovered. The well is currently cased for future
fracture stimulation. Mid December 2013, Klebb 1 was spudded and
plans for extensive wireline logging to be acquired. Strike plan for the
well to be cased and suspended for future production testing.

Commentary:

Over 700 fracture stimulations have been undertaken in the Cooper

Basin since production commenced in 1969. Some of these
stimulations were in tight sandstones in the REM and Patchawarra
Formation sequence that contain the shale gas and coal seam gas
resources. Better than expected well performance suggests that these
wells have been producing from the unconventional reservoirs adjacent
to the tight sands.

The potential from these reservoirs is very large. Morton (1998) has
estimated that the Cooper Basin source rocks have the potential to
have generated between 4 027 and 8 055 Tcf of gas although only a
small portion of that could reasonably be regarded as a resource.

With regard to the timing of production, it is unlikely that substantial

volumes of gas from this resource will be available to the East coast
gas market in the short term.

References:

Beach Energy, FY14 Full Year Results Roadshow in September 2014

http://www.beachenergy.com.au/IRM/Company/ShowPage.aspx/P
DFs/3581-
79282719/FY14FullYearResultsRoadshowSeptember2014
Morton, J.G.G., 1998. Undiscovered petroleum resources. In:
Gravestock, D.I., Hibburt, J.E. and Drexel, J.F. (eds) The Petroleum
Geology of South Australia, Volume 4: Cooper Basin. South
Australian Department of Primary Industries and Resources.
Report Book 203-09
Roadmap for Unconventional Gas Projects in South Australia
http://www.pir.sa.gov.au/petroleum/prospectivity/basin_and_province_informati
on/unconventional_gas/unconventional_gas_interest_group/roadmap_for_unco
nventional_gas_projects_in_sa
Santos Annual Report 2012
http://www.santos.com/Archive/NewsDetail.aspx?p=121 HYPERLINK
"http://www.santos.com/Archive/NewsDetail.aspx?p=121&id=1367"& HYPERLINK
"http://www.santos.com/Archive/NewsDetail.aspx?p=121&id=1367"id=1367
Santos Cooper Basin Unconventional Gas Opportunities and
Commercialisation
http://www.santos.com/library/121112_EABU_Cooper_Basin_Unconventional_G
as_Opportunities_and_Commercialisation.pdf
http://www.santos.com/library/121112_EABU_Cooper_Basin_Unconventional_G
as_Opportunities_and_Commercialisation.pdf
Western Australia

Unconventional resource potential:

Basin/Formation Tight Shale CSG Status

gas gas
Northern Perth Basin
Yarragadee Formation Under assessment
Kockatea Shale * Under assessment
Dongara/Wagina Under assessment
Sandstone
Carynginia Formation Under assessment
Irwin River Coal Measures Under assessment
High Cliff Sandstone Under assessment
Southern Perth Basin
Sue Coal Measures Inactive
Canning Basin
Laurel Formation Preliminary
exploration
Goldwyer Formation * Preliminary
exploration
Bonaparte Basin
Milligans Formation Inactive
Bonaparte Formation Inactive
*Unconventional oil and gas potential
Table 7.1: Western Australian unconventional resource potential

Reserves/Resources:

T D C PRODUCTION
O I O
T S M
A C M
L O E
V R RESERVES RESERVES RESERVES
P E C 1P 2P 3P
E R I
T E A
R D L
O S
L P U CONTINGENT CONTINGENT CONTINGENT
E I B RESOURCES RESOURCES RESOURCES
U I - 1C: 3 275 PJ* 2C: 4 599 PJ* 3C: 5 898 PJ*
M P C
O UNRECOVERABLE
I M
N M
 I E
T R
I C
A I
L A
L L
Y
PROSPECTIVE
- PROSPECTIVE PROSPECTIVE
RESOURCES
I RESOURCES RESOURCES
Best Estimate: 427
N Low Estimate High Estimate
000 PJ**
-
P
L
A UNDISC
C OVERED
E PIIP
UNRECOVERABLE
(
P
I
I
P
)
Source:* Norwest Energy, Transerv,,AWE ** Norwest Energy, EIA/ARI World Shale Gas
and Shale Oil Resource Assessment, AWT data in ACOLA Report 6 Securing
Australias Future Engineering energy
Table 7.2: Western Australian unconventional resources

Production/Forecasts:

None

Unconventional resource drilling activity:

Moderate.

Since 2005 towards end 2013, 15 exploration wells have been drilled
to search for shale and tight gas resources in Western Australia. Seven
of these involved hydraulic fracturing to test the capacity of the
reservoir to generate commercial gas flows.

Commentary:

WA is considered to hold significant shale and tight gas resources in

the Kimberley, East Pilbara and Midwest regions. DMPWA has shown
that the state potentially contains an estimated 280 trillion cubic feet
in place resources of shale and tight gas. Of this, approximately 235
trillion cubic feet are in the Canning Basin (Kimberley and East Pilbara
regions) and 45 trillion cubic feet are in the northern Perth basin
(Midwest region).

The Canning Basin is recognised as having great potential, if only for

the vast size of the basin.

Prospective formations have great areal extent although the extent of

unconventional resources within them is currently unknown. Resource
estimates assessing the whole of a formation across the basin should,
therefore, be suitably discounted for this uncertainty. Due to the
remoteness of the basin, transport and infrastructure will also be a
significant issue in any unconventional resource development.

The Northern Perth Basin, however, is however better placed near

infrastructure and pipelines and is more likely to see unconventional
gas reach market first.

If exploration in Western Australia proves successful, significant

commercial production is anticipated to be five to 10 years away.

References:

Arrowsmith
http://www.norwestenergy.com.au/assets/files/ASX
%20Announcements/2013/2013%2008%2002%20EP413%20DM
%20Contingent%20Resource%20Estimate.pdf
AWE 2014FY Results
http://www.awexplore.com/IRM/Company/ShowPage.aspx/PDFs/3270
DMP, 2014 Natural Gas from Shale and Tight Rocks
http://www.dmp.wa.gov.au/documents/Natural_Gas_from_Shale_and_Tight_Roc
ks_-_An_overview_of_Western_Australia_regulatory_framework.pdf
EIA/ARI World Shale Gas and Shale Oil Resource Assessment
http://www.eia.gov/analysis/studies/worldshalegas/
Warro
http://www.transerv.com.au/images/stories/2012-11-
05_Warro_Final_Commitment.pdf
Western Australian Atlas of Petroleum Fields, Vol. 1, Onshore Perth
Basin, Owad-Jones, D. and
Ellis, G., 2000
Western Australia Atlas of Petroleum Fields, Volume 2, Part 1, Onshore
Canning Basin,
Jonasson, K.E., 2001
Western Australia Atlas of Petroleum Fields, Volume 2, Part 2, Onshore
Carnarvon Basin, Ellis,
G.K. and Jonasson, K.E., 2001
Whicher Range Development Concept
http://www.whicherenergy.com/index.php?option=com_content HYPERLINK
"http://www.whicherenergy.com/index.php?
option=com_content&view=article&id=60:development-
concept&catid=37:ep408&Itemid=69"& HYPERLINK
"http://www.whicherenergy.com/index.php?
option=com_content&view=article&id=60:development-
concept&catid=37:ep408&Itemid=69"view=article HYPERLINK
 "http://www.whicherenergy.com/index.php?
option=com_content&view=article&id=60:development-
concept&catid=37:ep408&Itemid=69"& HYPERLINK
"http://www.whicherenergy.com/index.php?
option=com_content&view=article&id=60:development-
concept&catid=37:ep408&Itemid=69"id=60:development-concept HYPERLINK
"http://www.whicherenergy.com/index.php?
option=com_content&view=article&id=60:development-
concept&catid=37:ep408&Itemid=69"& HYPERLINK
"http://www.whicherenergy.com/index.php?
option=com_content&view=article&id=60:development-
concept&catid=37:ep408&Itemid=69"catid=37:ep408 HYPERLINK
"http://www.whicherenergy.com/index.php?
option=com_content&view=article&id=60:development-
concept&catid=37:ep408&Itemid=69"& HYPERLINK
"http://www.whicherenergy.com/index.php?
option=com_content&view=article&id=60:development-
concept&catid=37:ep408&Itemid=69"Itemid=69

Northern Territory

Unconventional resource potential:

Basin/Formation Tight Shale CSG Status

gas gas
Onshore Bonaparte Basin
Milligans Formation Inactive
Bonaparte Formation Preliminary
exploration
Georgina Basin
Arthur Creek Formation Preliminary
exploration
Thorntonia Limestone Preliminary
exploration
Chabalowe Formation Inactive
McArthur Basin/Beetaloo Sub-
basin
Kyalla Formation Preliminary
exploration
Velkerri Formation Preliminary
exploration
Barney Creek Formation Preliminary
exploration
Coxco Dolostone Preliminary
exploration
Bessie Creek Sandstone Preliminary
exploration
Moroak Sandstone Preliminary
 exploration
Mount Isa Superbasin
Lawn Hill Shale Inactive
Riversleigh Siltstone Inactive
Amadeus Basin
Pacoota Sandstone Preliminary
exploration
Horn Valley Siltstone Preliminary
exploration
Stairway Sandstone Preliminary
exploration
Eromanga Basin
Toolebuc Formation Inactive
Oodnadatta Formation Inactive
Pedirka Basin
Peera Peera Formation Inactive
Purni Formation Inactive
Ngalia Basin
Mount Eclipse Sandstone Inactive
Wiso Basin
Montejinni Limestone Inactive
Table 8.1: Northern Territory unconventional resource potential

Reserves/Resources:
T D C PRODUCTION
O I O
T S M
A C M
L O E
V R RESERVES RESERVES RESERVES
P E C 1P 2P 3P
E R I
T E A
R D L
O S
L P U CONTINGENT CONTINGENT CONTINGENT
E I B RESOURCES RESOURCES RESOURCES
U I - 1C: 3.2 PJ 2C: 19.6 PJ 3C: 61.1 PJ
M P C
O UNRECOVERABLE
I M
N M
I E
T R
I C
A I
L A
L L
 Y PROSPECTIVE
- PROSPECTIVE PROSPECTIVE
RESOURCES
I RESOURCES RESOURCES
Best Estimate: 257
N Low Estimate High Estimate
276 PJ
-
P
L
A UNDISC
C OVERED
E PIIP

UNRECOVERABLE
(
P
I
I
P
)
Source: Munson (2014)
Table 8.2: Northern Territory unconventional resources

Production/Forecasts:

None

Unconventional resource drilling activity:

The number of wells drilled for unconventional resource exploration

since 2011 are shown in Table 8.3 and Figure 8.1.
No. of Wells
Year Drilled
2011 2
2012 5
2013 10
Table 8.3: Number of unconventional wells drilled since 2011
Figure 8.1: Number of Unconventional Gas Wells Drilled per Year

Commentary:

The rapid uptake of acreage in the Northern Territory is an indication of

the interest in the prospectivity of the basins in this region. There have
been widespread indications of petroleum during petroleum and
stratigraphic drilling, and mineral exploration over many years. Some
operating companies are currently following up these indications,
notably PetroFrontier previously and now Statoil in the Georgina Basin,
and Armour Energy in the Glyde Subbasin of the McArthur Basin.
Santos, Origin Energy and Sasol, and Pangaea Resources are actively
investigating shale plays in the Beetaloo Sub-basin.

In the Amadeus Basin, tight gas resources were identified during

exploration drilling in the 1960s and 1980s, most notably in the
Ooraminna and Dingo tight gas discoveries and follow up work by
Central Petroleum has confirmed their potential. A recent agreement
will see production from the Dingo accumulation by 2015. Beach
Energy has commenced drilling wells for unconventional targets within
the Onshore Bonaparte Basin.

Basins in the Northern Territory, such as the McArthur Basin (including

the Beetaloo Sub-basin) host some of the oldest potentially
recoverable unconventional gas resources in the world. Recent seismic
data has demonstrated the undercover continuity of the McArthur
Basin over more than 20 per cent of the Northern Territory.

At this stage there is no production from the unconventional gas

resources in the Northern Territory. Unconventional gas exploration is
still at its early stage.

References:

Armour Energy
http://www.armourenergy.com.au/investors/investment-research
7-August-2013
Energy NT 2013
http://www.nt.gov.au/d/core/Content/File/commodities/2013_EnergyNT.pdf
Independent Experts Report for Armour Energy Limited
http://www.empireenergy.com/pdf/McArthur%20Basin%20Armour
%20Co%20Ltd%20Ind.%20Geo's%20Report.pdf
Magellan signs long-term gas supply deal for Dingo field
http://www.ogj.com/articles/2013/09/magellan-signs-long-term-
gas-supply-deal-for-dingo-field.html
Munson TJ, 2014. Petroleum geology and potential of the onshore
Northern Territory,
2014. Northern Territory Geological Survey, Report 22.

Offshore areas
Unconventional resource potential:

None

Reserves/Resources:

None

Production/Forecasts:

None

Unconventional resource drilling activity:

None

Commentary:

While unconventional resources undoubtedly exist in offshore

jurisdictions, the current cost of recovery is likely to be prohibitive,
even where significant liquids recovery is possible.

It is unlikely that changes in price or technology will change this

situation in the foreseeable future.