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Explorers line up for $50m Beetaloo drilling funds

Angela Macdonald-Smith
Angela Macdonald-SmithSenior resources writer
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Origin Energy and Santos look set to tap $50 million of funding controversially announced by the federal government to accelerate exploration and production from the gas-rich Beetaloo Basin in the Northern Territory by two years.

Juniors including Empire Energy, Tamboran Resources and Falcon Oil & Gas are also on the likely list of applicants for a 25 per cent subsidy on the cost of exploration work carried out in the highly prospective region by mid-2022.

The funding, which was attacked by anti-gas groups as propping up a dangerous industry, is capped at $7.5 million per well and three wells per exploration venture.

The $50 million of funding for drilling in the Beetaloo has enraged anti-gas groups. The Age

Federal Resources Minister Keith Pitt said it would allow the benefits of the important pool of resources to be realised sooner, pointing to a potential 200,000 petajoules of gas held in the region about 600km south of Darwin that could supply both the east coast and overseas markets.

“The Beetaloo Basin has been described as the ‘hottest play on the planet’ with the potential to be a world-class gas resource, transform the Northern Territory economy and generate 6000 jobs by 2040,” he said.

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“The government will provide up to $50 million for exploration that occurs before 30 June, 2022, allowing the benefits of this important asset to be realised soon.”

The funding is part of the Morrison government’s agenda for a gas-fired recovery from the COVID-19 pandemic, which singled out the Beetaloo region among five “strategic basins” to be prioritised for early production. Most analysts expect any commercial production from the basin would only start in the second half of the decade.

Origin and Santos, both of which have key wells planned after the wet season to follow up promising drilling and testing completed this year, are expected to apply for the funding.

“We welcome government support for the Beetaloo Basin, which can play an important role in helping to accelerate exploration and appraisal activity, as well as overcome challenges such the remote location of the Beetaloo by helping to connect the resources to the east coast market,” an Origin spokeswoman said.

She added that Origin is focused on further exploring in the Beetaloo to assess the quality of the resource, which would be a key factor to drive the scale and timing of any commercial development. Origin fracked the Kyalla 117 well near Daly Waters in October but has yet to record a significant gas flow test.

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Santos advised this month it would drill four onshore wells over the next two years in the Beetaloo and the South Nicholson Basin, which straddles the NT and Queensland border.

Santos’ partner in the Beetaloo venture, Tamboran, also intends to drill a well in a separate 100 per cent-owned permit next year. Chief executive Joel Riddle said while he could not yet comment on whether Tamboran would utilise the government funds, he was confident government support would accelerate development in the basin.

“It is important to remember that this is a large area and not all parts of the Beetaloo are created equal,” he said.

“Industry must work together with the government to make sure that these funds have a positive impact on developing the best assets in an environmentally responsible manner to bring gas to market quickly for the benefit of Australian consumers and industry.”

Empire Energy, which released promising results of liquids-rich gas at its first well in the Beetaloo Basin in October, will be able to expand its 2021 work program on the back of the funding, said managing director Alex Underwood.

The explorer is already planning to frack and flow test that vertical Carpentaria-1 well but might now also carry out horizontal drilling and flow testing, subject to regulatory approvals, he said.

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“The US shale gas experience has demonstrated that achieving commercial flow rates from horizontal appraisal drilling was the trigger for large-scale development and the broad economic benefits that followed,” Mr Underwood said.

“This initiative will accelerate the emergence of the Beetaloo Basin consistent with the federal government’s Gas Fired Recovery Plan and the Northern Territory government’s vision for the Territory to be a world-class gas production, manufacturing and services hub.”

Activist group Lock the Gate Alliance branded the federal government’s move as “appalling”, claiming that the fracking supported by taxpayers’ funds would “threaten communities and the environment”.

“What this announcement clearly shows is that fracking the Beetaloo Basin for gas is not economically viable without massive subsidies,” said Graeme Sawyer from Protect Country Alliance, which involves several Indigenous and environmental groups, including Lock the Gate.

Gas industry representative Keld Knudsen pointed out that the industry had not sought government subsidies to carry out drilling, but said the funds might help incentivise more wells than now planned.

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The re-election of the Gunner Labor government in the NT in August has widely been seen as an endorsement of work to develop onshore gas. The Gunner government lifted a moratorium on fracking in 2018 after a full scientific inquiry.

Meanwhile, lawyers for AGL Energy have slammed deliberate misinformation campaigns run by interest groups on social media to stoke opposition to its $300 million LNG import terminal in Victoria, saying they interfered with the environmental approval process.

The “inflammatory rhetoric and jargon” shared to generate large numbers of objections to the Crib Point terminal diverted attention away from the factual information made public, Chris Townshend, counsel for AGL, told the panel assessing the controversial project.

Social media campaign

Mr Townshend took issue with the campaign drawing links between the environmental approval process for the terminal and state and national policy on climate change, and on its “mistaken premise” that there is a policy to de-industrialise the Port of Hastings, an issue that was seized on in many of the 6058 submissions.

AGL highlighted a social media campaign run by Save Westernport that claimed on Facebook that a photo of a large offshore oil rig was of the proposed LNG import terminal, describing it as “a huge floating city” that would block any view of French Island in Western Port.

It said that Environment Victoria, which engendered about 4900 submissions objecting to the project through an online submission engine, was “clearly successful” in dissuading viewers from looking at the official documents given the executive summary of the environmental statement was downloaded only 735 times and other parts of it even fewer times.

Environment Victoria campaigns manager Nicholas Aberle took issue with AGL’s arguments, noting “almost unanimous” opposition to the project.

“These accusations are a blatant attempt to divert attention away from the very serious information exposed during the inquiry, which raises serious concerns about this project’s impacts on the community and environment,” Dr Aberle said.

Angela Macdonald-Smith writes on the resources industry with a focus on energy, including gas, oil, electricity and renewables. Connect with Angela on Twitter. Email Angela at amacdonald-smith@afr.com

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