Drilling success at Queensland’s Taroom Trough could undercut gas reservation debate
While federal opposition leader Peter Dutton’s plan to enforce a gas reservation policy on the east coast of Australia is creating major angst within the nation’s energy industry, recent drilling success in central Queensland could make it a moot point in the long term.
Global energy major Shell, leading Australian gas supplier Santos (ASX: STO) and a string of aggressive smaller companies have opened up a play in Queensland’s Taroom Trough.
Some observers are likening Taroom to the unconventional hydrocarbon basins that completely changed the USA’s energy situation.
Significant province
Omega Oil & Gas (ASX: OMA) recently told an online audience that an internationally significant petroleum province is emerging in Queensland after obtaining unexpectedly high oil flows from its Canyon-1H well.
Drilled to test the gas potential at the Canyon-1H site, the well produced sustained rates over a 24-hour period which translated to 987 barrels of oil per day.
The oil flows were accompanied by gas flows of 1.45 million standard cubic feet per day.
Game-changing opportunity
Omega chief executive officer Trevor Brown says the results from Canyon-1H led some of the company’s experienced international contractors to compare Taroom’s potential with major US basins like the Eagle Ford and Wolfcamp.
The development of unconventional plays like Eagle Ford and Wolfcamp completely turned the US energy equation around, taking it from a major gas importer to now being the largest LNG exporter in the world.
“They’ve seen a lot of data over many decades, and they have equated it with some of the more prolific project-producing fields and some of the best liquids-rich, unconventional flows in the US,” Mr Brown said.
Omega is now looking at dual commercialisation pathways with major oil and gas potential, with the oil to be transported to refineries while the gas can be converted to LNG.
Daydream-2 excitement
Another with drilling success in the Taroom Trough is Elixir Energy (ASX: EXR), which has hit an unexpected new, deeper gas intersection at its Daydream-2 well.
Managing director Neil Young and chief geoscientist Greg Channon said that the Taroom Trough is showing signs that it may provide the answers to gas shortages on the east coast.
“Taroom Trough is fabulously well located to meet the challenges—it is very close to Gladstone, where the LNG plants are [and] connected to the east coast markets in New South Wales and Victoria,” Mr Young said.
Substantial gas resource
He said recent exploration work by Elixir, Omega Oil & Gas and big players such as Shell and Santos had unlocked what is a substantial gas resource.
While Shell is keeping information on its Taroom Trough activities under wraps, industry sources have suggested it may be onto something significant.
Along with the unconfirmed reports of strong gas flows from the Shell wells, it has also been reported that the global major has committed to invest millions to continue its Taroom Trough testing program.
Mr Young said that the Taroom Trough had a multi-TCF potential unrivalled on the east coast for its volumes of gas.
While it is still early stages, the plans to step up drilling there are a good sign that industry is confident it can provide major changes to Australia’s energy equation.