Santos and Joint Venture Partners Celebrate Shale Gas Production in Outback Australia

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Researched by Industrial Info Resources (Sugar Land, Texas)--Santos Limited (Adelaide, Australia), the operator of the South Australian Cooper Basin joint venture, has announced commercial natural gas production from its Moomba-191 shale well.

The South Australian Cooper Basin joint venture is a three-party consortium consisting of Santos (66.6%), Beach Energy (Adelaide) and Origin Energy (Sydney, Australia). Santos has existing operations in the Cooper Basin in oil and conventional natural gas production, via the Moomba natural gas processing facilities.

Shale exploration is new to Australia, and the new Moomba-191 shale well is the first in Australian production. The well is flowing at a stabilised rate of 2.7 million standard cubic feet per day (mmscfd) of natural gas. The well was situated closely enough to existing infrastructure to allow for Santos to bring it online at a hastened pace. The well was only 350 meters from the existing pipeline network and 8 kilometers (5 miles) from the Moomba Gas Processing plant.

Santos' Vice President for eastern Australia, James Baulderstone, looks forward to continuing shale exploration and production. "The connection of the Moomba-191 shale well is a significant step forward as [Santos] works to unlock the vast unconventional potential of the Cooper Basin," he said. "While this is the first commercial shale well, and more work will be required to unlock the area's full potential, this is clearly a landmark for Australia's natural gas industry. Producing commercial quantities of natural gas from the Cooper's shale rock formations would provide the potential for ongoing energy security for South Australia and our eastern states, plus viable export revenue."

Shale gas exploration is occurring in other parts of Australia. Hess Corporation (NYSE:HES) (New York, New York) has been exploring the Beetaloo Basin in the Northern Territory. ConocoPhillips (NYSE:COP) (Houston, Texas) and New Standard Energy (Perth, Australia) might be following suit relatively soon, with positive drilling results potentially allowing the joint venture to advance its Goldwyer shale gas project beyond the exploration phase in the Canning Basin in Western Australia.

Santos and its joint venture partners plan to continue drilling for shale gas in 2013.

Large-scale commercialization plans are still some way off. Beach Energy is investigating the commercial viability of building a liquefied natural gas (LNG) production plant to process shale gas from the Cooper Basin. The proposed LNG production plant is likely to be built at Port Bonython, on the coast of South Australia, roughly 600 kilometers (370 miles) from Cooper Basin shale deposits.

The Cooper Basin covers 130,000 square kilometres of land in South Australia's outback and extends into Queensland.

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