Chevron Invests in Cooper Basin Shale Gas in Australia

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Researched by Industrial Info Resources (Perth, Australia)--Beach Energy (ASX:BPT) (Adelaide, South Australia) will transfer up to 60% of two Cooper Basin permits to Chevron Exploration Australia, a division of Chevron Corporation (NYSE:CVX) (San Ramon, California).

Beach Energy could earn as much as $349 million from the deal in a staged development. Stage I already has begun, with Chevron having committed 30% equity in PEL 218 and 18% equity in ATP 855.

The permits are situated near the remote "company town" of Moomba, in central Australia. Moomba is a natural gas exploration and processing town owned by Santos (ASX:STO) (Adelaide, Australia). The permits, while close in proximity, actually lie in neighbouring Australian states--PEL 218 in South Australia and ATP 855 in Queensland. The location is suitable for marketing to the Australian east coast, with an existing pipeline infrastructure.

Beach Energy is the current operator and believes the Cooper Basin shale gas reserves will be profitable. If Chevron nominates for operatorship of the permits following positive appraisal results (post-Stage II work program), Beach expects to support Chevron as operator and majority owner.

Reg Nelson, Beach Energy's managing director, recognizes that the two permits are "very much at an exploration phase. We know there's gas there, but we need to understand how to unlock it in an economic and viable sense, and that is the next challenge."

The shale gas industry in Australia is in its infancy at this point, with rapid growth expected in the coming decade.

For more information, see October 25, 2012, article - Santos and Joint Venture Partners Celebrate Shale Gas Production in Outback Australia.

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