Shale Panel Re-inforces Engagement with Various Stakeholders

The first day of the Shale Gas World Australia 2011 conference in Adelaide was brought to a close with a lively panel discussion, which highlighted several topics including the need for greater industry communication with stakeholders.

Onstage before an audience of about 60 delegates, Drillsearch Energy CEO Brad Lingo, who has over 25 years experience in oil and gas, said good communication was something his company would focus on in the future. “How we say, what we say and how we engage with the community is a company KPI for 2012,” Lingo said.

“The industry has not always done it well so far. It’s about how we engage with stakeholders including local communities, environmental groups, traditional landowners and even governments. We have to get the message across that what we are doing is a good thing.”

Lingo said it was crucial to let people know the industry is not only interested in its ability to extract resources, but also that it is done in an environmentally responsible way. “It’s not going to be easy because we have this genie out of the bottle and we need to make sure it’s a friendly genie,” he added.

Joining Lingo onstage for the discussion was Central Petroleum Exploration Manager Trevor Short and Senex Energy Managing Director Ian Davies. Chair for day one of the conference, David Warner, a consultant for DSWPET, was seated alongside the trio to lead the conversation.

Keeping in mind Australia is the driest continent in the world, Short also identified water as an issue the Australian industry would have to address in terms of its communication with stakeholders. “I can see water as a big issue, particularly with the droughts experienced here,” he said.

Warner, a geologist with 37 years experience in the oil and gas industry, had earlier raised the topic of costs involved when drilling outside a closure. “I know there has been resistance to drill outside a closure for these unconventional plays, and it seems to me that there may be an element of - not addressing the issue,” he said.

“In fact, you end up spending more money because you can’t prove that you’ve got gas outside a closure, and that’s what you need to prove. In the context of what we are talking about, have there been a lot of companies that have been willing to actually drill outside a closure to test the resource?”

Lingo pondered the question and said finding gas outside the closure is just one of the things you have to solve, as well as the gas content, gas composition and the all important provability.

“It is really a question of what you are trying to address with that particular well opportunity in terms of, is it outside a closure that you are trying to demonstrate the presence of gas, or is it some other thing that you can’t, under a targeted basis, establish,”

“We are very strong proponents for looking at those opportunities where you can test for conventional and unconventional components. But you have to have a clear objective in your mind about what you are trying to do with each particular component of that well.”

Short said from his experience that would always be a problem for a small company. “One of the things we’ve seen in Canada is the drift now towards larger and larger companies doing unconventional plays,” he said.

“When you start getting into doing unconventional gas there is a big risk as a small company, of just the mechanical aspects of you actually completing the operations on the well, especially if, you know, we’ve been in Australia with older equipment.

“If you get in there and you get stuck and you have to fish for equipment or something along that line, you can be in a world of hurt as a junior company.”

One of the delegates in the audience brought up the fact that the increase in shale gas production in the United States had compressed the gas price significantly. The point was then made that Australia had the access to export markets. But can the industry here meet expectations?

Short said the Australian industry was going to need a lot more equipment to meet those expectations. “Someone is going to have to bite the bullet here and put in a big project that has the minimum size to attract some major fraccing equipment and some decent wells,” he said.

“Basically, a couple of wells here and there are just not going to bring the fraccing equipment in. These companies want to be busy 100 per cent of the time, like they are in the United States.

“It’s going to need a lot of big projects to get this thing really underway. I’m not quite sure who that is going to be. Hopefully someone, and hopefully someone soon to get this whole thing rolling.”

At one stage during the discussion, Warner brought up the potential of the Cooper Basin, noting its significant thicknesses of gas bearing rock. Davies was equally excited about the possibilities and raised the interesting point about the region’s remoteness being an advantage, with the recent issues surrounding access to farming land for miners being raised in Queensland. “From our point of view it’s perfectly placed,” he said.

“It’s remote. Now at the moment that’s seen typically as a down side but if you look at what’s happening in Queensland these days I’d see it as an upside, a massive upside. It’s remote but it’s also close to existing infrastructure.”

Reported by Simon Trayhorn