The Beetaloo Basin is one of the most promising shale gas resources anywhere in the world, but the viability of a gas resource is about more than just the volume and quality of the resource.
The Beetaloo Sub-Basin has the potential to rival the world’s biggest and best gas resources. The development of this resource has been subject to many complications and delays, but nevertheless has the potential to create thousands of jobs and act as a significant driving force for economic growth within the Northern Territory.
Since the strategic development plan for the Beetaloo Basin was developed, the field’s potential to spur significant downstream manufacturing opportunities, deliver cheaper and more reliable gas to households and industry and provide additional sources of gas for LNG export facilities has been evident.
Nevertheless, efforts to get the Beetaloo Sub-Basin running optimally have not been without its complications.
Empire and APA Group ramp up pipeline wars
In October 2021, gas pipeline giant APA Group intensified the competition to build the multibillion-dollar infrastructure project which would help unlock the huge Beetaloo gas resource in the NT. The group signed with explorer Empire Energy, rivalling plans by Jemena and Cheung Kong Group.
News of the memorandum of understanding (MoU) between APA Group and Empire Energy, which envisaged a new common-user pipeline to bring Beetaloo shale gas to the eastern states of Australia, came after major gas producers including Santos, Woodside and Inpex agreed to co-operate to examine the viability of large-scale carbon capture in Darwin.
The proposed infrastructure, which would also involve expanding existing pipelines and building gas processing plants, also supported the NT government’s ambitions for a gas-based manufacturing industry and the expansion of LNG exports from Darwin.
The pipeline developers were battling to build the larger transmission lines that would move gas from the remote Beetaloo region near Daly Waters in the NT, where majors such as Santos have high hopes for commercial gas production, as do juniors Empire, Tamboran and Falcon Oil & Gas.
Successful early drilling results from September 2021 indicated that hopes that the Beetaloo could be Australia’s answer to the USA’s shale gas revolution of the previous decade. These hopes have continued and been further solidified in lieu of 2022’s global gas and energy crisis, with the need to have ample and affordable gas to back up renewable energy and supply domestic manufacturers in the market paramount.
The project proposed by APA Group and Empire Energy involved a new pipeline connection between the Amadeus pipeline that runs from Alice Springs to Darwin and Mount Isa, where it would then link into APA Group’s existing Carpentaria pipeline that runs south to Ballina in New South Wales. Additionally, it would involve further expansion north from the Beetaloo Basin to Darwin.
The proposed new Beetaloo pipeline would become part of the existing APA Group gas distribution network and be the most capital efficient model for connecting the Beetaloo Sub-Basin to market.
In March 2022, then Minister for Energy and Emissions Reduction and Minister for Industry Angus Taylor called for priority actions for early works support on a feasibility study for proposed infrastructure in the Beetaloo Sub-Basin. The feasibility study would aim to determine the most efficient infrastructure to deliver natural gas from the Beetaloo Basin to the east coast gas market.
At the time of publishing, neither APA Group nor Jemena have been awarded approval to begin works on the infrastructure.
What happens next as Origin says farewell to Beetaloo
The Beetaloo Basin is now headed by Tamboran Resources alongside Falcon Oil & Gas in a joint venture (JV) under the Beetaloo exploration project after Origin announced its decision to divest its interest in the field in early September 2022.
Upon announcing its decision, Origin said it was going to sell its exploration interests in the basin to Tamboran Resources for $60 million. The company is expected to lose between $70 million and $90 million because of the move but struck deals to buy gas and receive a royalty payment of 5.5 per cent of revenue from gas if production in the field goes ahead.
Origin is set to undertake a strategic review of all remaining exploration permits (excluding its interests in Australia Pacific LNG) with the intention to exit those permits over time. The company will continue to comply with its various obligations under existing joint venture (JV) agreements and work alongside its JV partners as it works to considers potential exits.
Origin CEO Frank Calabria stated that the decision to divest its interest in the Beetaloo and exit similar upstream exploration permits over time will grant the company a greater flexibility to allocate capital to growing cleaner energy and customer solutions.
“We believe gas will continue to play an important role in the energy mix and it remains a core part of our business,” says Calabria.
“Notwithstanding the prospectivity of any of these permits, typically the experience in progressing these types of projects is that the exploration and appraisal phase can be uncertain, and it can be capital intensive to bring projects into production.
“Ultimately, we believe Origin is better placed prioritising capital towards other opportunities that are aligned to our refreshed strategy.”
The company previously described the Beetaloo as one of the most promising shale gas resources anywhere in the world and was the largest player testing commercial viability of the basin’s gas deposits.
Support continues for Beetaloo
While complications have surely staggard the progress of Beetaloo’s seemingly uphill battle toward its production goals, Federal Resources Minister Keith Pitt is among many who have continued to believe in the viability and success of Beetaloo.
In March 2022, Pitt granted another $7.5 million to the industry to continue works in the NT’s Beetaloo Basin. The funding grant was awarded to Sweetpea Petroleum, a subsidiary of Tamboran Resources, to undertake exploration drilling.
Minister Pitt cited the continuing Russian invasion of the Ukraine and the subsequent fallout for the energy sector as a driving force behind the government’s ongoing support for expanding Australia’s gas industry.
“We should take the energy crisis in Europe as a warning of what could happen in Australia if there is not enough investment in the gas sector,” says Pitt.
“Beetaloo has the potential to provide a world-class gas resource and we are determined to support its development as part of our gas-led recovery.”
Given the continued supply difficulties for gas and energy across the globe, it’s clear that Australia has been correct to continue expanding oil and gas developments but concerns over gas’ place – and therefore the place of basins such as Beetaloo – in a net zero Australia remain.
Beetaloo’s place in a low carbon future
Beetaloo Basin gas, in addition to other onshore and offshore gas, has a very integral role to play in the transition to lower carbon energy sources such as hydrogen, solar or wind.
The International Energy Agency (IEA) forecasts that the use of gas is anticipated to rise because of the shift to lower carbon energy sources.
Upon examining emissions from the full energy cycle, it’s evident that without gas, emissions from operations are not likely to reduce as quickly when utilising gas to enable a smoother energy transition as there are very limited energy and technology alternatives.
In addition to the benefits provided by switching from coal-to-gas both domestically and through LNG exports to overseas markets, there is a notable potential for development of newer and more future-oriented industries which are built around the development of the Beetaloo – such as carbon offsets, carbon capture and sequestration.
Greater gas production in areas such as the Northern Territory provides an opportunity for commercial-scale carbon offsets, as well as carbon capture and storage developments.
As an energy and carbon hub, the Beetaloo Sub-Basin – and the Northern Territory as a whole – have a bright and shining future.
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This article is featured in the November edition of The Australian Pipeliner.