Cooper Basin-focused explorer Real Energy (ASX: RLE) has locked in deals with two Australian oil and gas majors to process gas from its flagship Windorah project in Queensland for sale in the east coast gas market.
The company today announced it had signed binding agreements with Santos (ASX: STO) and Beach Energy (ASX: BPT) to tie-in its gas wells to the Santos-operated gas gathering network in the Cooper Basin and process gas at the joint venture’s facilities in Moomba, South Australia.
The arrangement involves gas transportation and tie-in of the Tamarama wells at Mount Howitt, before raw gas is processed into sales gas at Moomba to be supplied to the east coast market.
According to Real Energy, this deal is a significant step towards commercialising the Windorah gas resources, located in the company’s wholly-owned exploration permit ATP 927P.
“The signing of the gas processing agreement allows us to commercialise our gas without the need to build an expensive gas plant and other associated infrastructure,” Real Energy managing director Scott Brown said.
He added that the agreements potentially added “considerable value” to the company, as well as being major de-risking events for the Windorah project.
Tamarama flow testing
Real Energy believes it is well-placed to take advantage of the growing demand for gas in Australia’s east coast, with its Windorah gas project estimated to hold 13.7 trillion cubic feet of prospective gas resources.
Earlier this month, the company completed a multi-stage fracture stimulation program on its Tamarama-2 and Tamarama-3 wells and will now look to establish flow rates once most of the frack fluids have been recovered from the wells.
Last week, Real Energy said flow test results were anticipated in “a few weeks”.
The company is aiming to prove commercial gas flow from the wells and then, along with Tamarama-1 which has been flowing gas since 2016, it will link flow lines to Santos’ network for processing.
“Right now, our immediate focus is the successful delivery of commercially viable gas flows from Tamarama-2 and Tamarama-3,” Brown said.
“We look forward to moving our gas project into production,” he added.
The gas processing and tie-in agreements are subject to certain conditions precedents including Real Energy receiving all regulatory approvals, access rights allowing pipeline connections, entering unconditional gas supply arrangements and a final investment decision.
While not revealing the commercial terms, the company said they were in line with a memorandum of understanding signed with Santos in May 2017.
Real Energy shares were up 5.95% to $0.089 on the news by early afternoon trade.