Beetaloo Could Bring Long Term Gas Supply to Oz East Coast: WoodMac

Australia's Beetaloo basin is the only new gas resource with sufficient scale to supply the east coast market in the long term, Wood Mackenzie said May 30.

Australia's east coast market has seen a rapid transition from conventional gas resources to unconventional gas supplies, WoodMac said. “As legacy gas sources mature and decline, the race is on to seek alternative supplies to meet east coast demand,” it said.

Last year, coalbed methane (CBM) accounted for two-thirds of total east coast gas production. Since CBM is mostly produced for LNG export, the answer to the east coast's supply squeeze could lie in the country's largest untapped unconventional sources – the deep coals of the Cooper Basin and Beetaloo shale, WoodMac said.

"A tightening domestic market and rising prices provide strong incentives for operators to develop these stranded resources. In the case of Beetaloo, the potential multi-tcf scale of the play could offer long-term security of supply," said senior analyst Chris Meredith at the Australian Petroleum Production & Exploration Association conference in Brisbane.

"To compete with the LNG netback price, unconventional plays will need to breakeven at between US$7 and US$9 (per mcf). For the Beetaloo, a development would need at least 5 tcf and significant associated liquids to meet this after accounting for pipeline costs," added Meredith.

To progress the project, the regulatory process will need to be scalable to meet the number of wells required, the fiscal environment will need to be stable, and operators will need stakeholder support.

"There is also competition out there, including proposals to import LNG into the east coast market. We anticipate at least one import terminal progressing, but even so, the need for new sources of unconventional gas supply will continue to grow," concluded Meredith.