Magellan Petroleum Revives Dingo Gas Field in Central Australia

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Researched by Industrial Info Resources Australia (Perth, Australia)--The Dingo Gas Field has lain dormant in central Australia since the mid-1980s, but it is set to begin production again as early as 2015. Magellan Petroleum Australia Limited, a subsidiary of Magellan Petroleum Corporation (NASDAQ:MPET) (Denver, Colorado), has signed an agreement with government-owned utility Northern Territory Power and Water Corporation to supply up to 31 billion cubic feet of natural gas over a 20-year period.

The Dingo Gas Field is a small field in Central Australia at the heart of the Amadeus Basin. It was discovered in 1981, with four appraisal wells drilled between 1981 and 1990. These wells established the presence of a viable commercial quantity of gas, but at the time, low gas prices, a lack of demand, and the remote nature of the gas field prevented its full development. However, with the current issues facing gas supplies within the Northern Territory, development of the field has become commercially viable.

Magellan Petroleum maintains its interest in the Dingo Gas Field through Retention Lease Number 2, which expires in February 2014, but is subject to renewal for another five years.

"Contracting for the sale of a substantial portion of Dingo's gas resources is yet another milestone achieved in our strategy of proving up the value of the company's assets," said J. Thomas Wilson, the president and CEO of Magellan. "Dingo's reserves potential was established nearly 25 years ago through a four-well exploratory program, but, with no customer, the field has since been left dormant. We will work vigorously to achieve the regulatory approvals and commissioning of Dingo as quickly as possible, and we look forward to working once again with PWC, which has been a valued customer of Magellan at our Palm Valley gas field over the past three decades."

Assuming the required regulatory approvals are granted, work is expected to begin by early 2014. Three of the four original appraisal wells will be recommissioned and connected to a grassroot, 27-mile (45-kilometre) natural gas pipeline that will link the surface infrastructure at the field to the nearby Alice Springs and Palm Valley Natural Gas Pipeline.

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