In April 2018, the Northern Territories of Australia lifted a ban on fracking that has been in place since 2016. It is a move that has had energy companies salivating, tempted by sky-high estimates of shale gas and oil trapped deep underneath the Outback. It is also one few of the Australian territories to embrace fracking after massive opposition on environmental and social grounds, which has already seen fracking banned by legislation in most places in Australia.
Why is this happening? With a massive onshore area, Australia is known to be onshore gas-rich. Tapping into this has long been the ambition of the country’s energy players, but they have had to face an organised grassroots and political opposition that has campaigned to prevent fracking from taking place, citing issues over water pollution, geological stability and environmental impact. Add to this conundrum of Australia’s internal supply/demand balance – where the country as a whole is a major exporter of LNG through the giant offshore projects in Western Australia, while the more industrialised and populous East and Southeast face a domestic gas crunch.
Origin Energy is hoping that it will be able to solve these issues, while proving that responsible fracking can assuage citizenry concerns and showcase it as a ‘good energy player’. It has announced plans to drill two new wells in the Beetaloo Basin this year; named after a cattle ranch the size of Hawai’i, Beetaloo has been called the ‘best immediate prospect’ the replacing dwindling gas from the Bass Strait in Victoria state. An estimate suggests that Beetaloo holds some 500 trillion cubic feet of gas, a size that would put it on par with pioneering US shale basins like Marcellus and Barnett. Drilling that occurred prior to 2016 suggested a recoverable resource of 6.6 tcf, which alone would be enough to supply an LNG export train for 20 years. The new round of drilling – at the liquids-rich Kyalla and Velkerri shale plays – is aimed to looking for liquids, the sort of shale oil that has been found in onshore USA and that truly revolutionised the industry there.
Origin Energy (and its partner Falcon Oil & Gas) isn’t the only player in Northern Territories shale. Fellow Australian player Santos is also looking to start drilling in the NT McArthur basin this year, having already submitted its environmental management plan to the NT government after calling it the ‘largest and most promising shale gas opportunity in Australia.’ If any of this gas (that is yet-to-be-explored) makes it to commercialisation, it will come to market around 2024-2025 at the earliest – just in time to stave off the chronic shortage of natural gas on the east coast.
But it won’t be easy. Even if the shale gas and shale liquids are commercially viable, the Beetaloo and McArthur basins are – to put it simply – in the middle of nowhere. Origin Energy’s permit area is roughly three times the size of Singapore in area with little human activity beyond farming. It is also some 2,500 kilometres away from Sydney and the closest industrial applications that would require that gas, necessitating a massive expansion of cross-state gas transmission networks and pipelines. Connection to Darwin and its port facilities is also possible, sending the gas overseas or within Australia as LNG, but that too will require significant investment of at least A$1.5 billion. In that sense, the issues facing Australian shale are not different from that faced by US shale: there is plenty of gas. Getting it out of the ground is the easier part; getting it to market is the far harder part.
The Beetaloo and McArthur Shale Basins:
- 600km southeast of Darwin, ~30,000 square kilometres
- Holds an estimated 70% of total shale gas resources in the Northern Territories
- Origin Energy/Falcon Oil & Gas hold exploration permits for EP76, EP98 and EP 117 (covering 4.6 million acres)
- 500km southeast of Darwin, ~180,000 square kilometres
- Very high unconventional oil and gas potential’, particularly in the Barney Creek Formation
- Santos holds exploration permits for EP161, EP162, EP189 and EP(A)288
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GEO ExPro Vol. 16, No. 6 was published on 9th December 2019 bringing light to the latest science and technology activity in the global geoscience community within the oil, gas and energy sector.
This issue focusses on oil and gas exploration in frontier regions within Europe, with stories and articles discussing new modelling and mapping technologies available to the industry. This issue also presents several articles discussing the discipline of geochemistry and how it can be used to further enhance hydrocarbon exploration.
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Headline crude prices for the week beginning 13 January 2020 – Brent: US$64/b; WTI: US$59/b
Headlines of the week
Source: U.S. Energy Information Administration, Short-Term Energy Outlook, January 2020
In its latest Short-Term Energy Outlook (STEO), released on January 14, the U.S. Energy Information Administration (EIA) forecasts that generation from natural gas-fired power plants in the electric power sector will grow by 1.3% in 2020. This growth rate would be the slowest growth rate in natural gas generation since 2017. EIA forecasts that generation from nonhydropower renewable energy sources, such as solar and wind, will grow by 15% in 2020—the fastest rate in four years. Forecast generation from coal-fired power plants declines by 13% in 2020.
During the past decade, the electric power sector has been retiring coal-fired generation plants while adding more natural gas generating capacity. In 2019, EIA estimates that 12.7 gigawatts (GW) of coal-fired capacity in the United States was retired, equivalent to 5% of the total existing coal-fired capacity at the beginning of the year. An additional 5.8 GW of U.S. coal capacity is scheduled to retire in 2020, contributing to a forecast 13% decline in coal-fired generation this year. In contrast, EIA estimates that the electric power sector has added or plans to add 11.4 GW of capacity at natural gas combined-cycle power plants in 2019 and 2020.
Generating capacity fueled by renewable energy sources, especially solar and wind, has increased steadily in recent years. EIA expects the U.S. electric power sector will add 19.3 GW of new utility-scale solar capacity in 2019 and 2020, a 65% increase from 2018 capacity levels. EIA expects a 32% increase of new wind capacity—or nearly 30 GW—to be installed in 2019 and 2020. Much of this new renewables capacity comes online at the end of the year, which affects generation trends in the following year.
Forecast generation mix varies in each of the 11 STEO electricity supply regions. A large proportion of the retired coal-fired capacity is located in the mid-Atlantic area, where PJM manages the dispatch of electricity. EIA forecasts that coal generation in the mid-Atlantic will decline by 37 billion kilowatthours (kWh) in 2020. Some of this decline is offset by more generation from mid-Atlantic natural gas-fired power plants; EIA expects generation from these plants to grow by 23 billion kWh.
Source: U.S. Energy Information Administration, Short-Term Energy Outlook, January 2020
In the Midwest, where the Midcontinent ISO (MISO) manages electricity, EIA expects coal generation to fall in 2020 by 33 billion kWh. This decline is offset by an increase in natural gas electricity generation (12 billion kWh) and by nonhydropower renewable energy sources (13 billion kWh). The regional increase in renewables is primarily a result of new wind generating capacity.
The electric power sector in the area of Texas managed by the Electric Reliability Council of Texas (ERCOT) is planning to see large increases in generating capacity from both wind and solar. EIA expects this new capacity will increase generation from nonhydropower renewable energy sources by 24 billion kWh this year. EIA expects the increased ERCOT renewable generation will lead to a regional decline of natural gas-fired generation and coal generation of 14 billion kWh for each fuel source in 2020.
EIA expects these trends to continue into 2021. EIA forecasts U.S. generation from nonhydropower renewable energy sources will grow by 17% next year as the electric power sector continues expanding solar and wind capacity. This increase in renewables, along with forecast increases in natural gas fuel costs, contributes to EIA’s forecast of a 2.3% decline in natural gas-fired generation in 2021. U.S. coal generation in 2021 is forecast to fall by 3.2%.