Buru Energy on Track for Canning Basin Projects

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Researched by Industrial Info Resources Australia (Perth, Australia)--Buru Energy Limited (ASX:BRU) (Perth, Australia) looks set to continue its plans in the Canning Super-Basin, after it secured almost $90 million (AUD$100 million) in funding to support development of its Ungani oilfield. The funding comes from joint venture partner Mitsubishi Corporation (Tokyo, Japan) and long-term supporter Alcoa of Australia Limited (Melbourne, Australia), along with a loan facility from the National Australia Bank.

Mitsubishi has committed $25 million (AUD$27 million), Alcoa $18 million (AUD$20 million) and the National Australia Bank $40 million (AUD$43 million) to the project.

The U.S. Energy Information Agency (EIA) has identified the Canning Basin as the most prospective region for unconventional gas outside of the U.S., estimating the resource at about 229 trillion cubic feet, roughly equivalent to one-and-a-half times Western Australia's' identified offshore resources.

Late in 2012, Buru Energy and Mitsubishi signed an agreement with the Western Australian state government to develop the unconventional gas reserves in the Canning Basin. The agreement allows the joint venture partners to explore for gas in the environmentally sensitive Kimberley region of Western Australia and to build a 375-mile (600-kilometer), $456 million (AUD$500 million) natural gas pipeline to Port Headland. Buru has confirmed that they will be looking to an outside company to build the pipeline.

At the same time, the joint venture partners signed an agreement with Alcoa Incorporated (NYSE:AA) (Pittsburgh, Pennsylvania) for the sale of 500,000 terajoules (474 BMSCF) of gas for its Australian aluminium refineries. Alcoa made a $36 million (AUD$40 million) pre-payment to secure the deal.

Buru plans to use its recently acquired funding to continue pre-FID (final investment decision) exploration and development work. 3D seismic studies are being conducted at the Ungani and Ungani North wells, and existing facilities will be upgraded. A vertical appraisal well, Ungani 3, is planned for December, with the final investment decision to be made at the completion of the Ungani 3 assessment.

"We are very excited to now be fully funded to move from explorer to significant oil producer," said Buru managing director Keiran Wulff. "It is also particularly pleasing that our strategic partners, Mitsubishi Corporation and Alcoa, have demonstrated their confidence in our plans by providing additional support."

Industrial Info is tracking the pipeline project, and should the drilling program be successful and plans for new facilities approved by Buru Energy, those projects will be added as well.

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