Commercialization is beginning to creep into the vocabulary being used to describe shale gas plays in New South Wales, Queensland, Northern Territory and Western Australia as operators increase unconventional activity in these states.

In its first-quarter 2014 financial report, Santos stated, “The unconventional gas exploration and commercialization program continued as planned with several milestones and project objectives achieved during the first quarter.”

The company noted in a recent presentation that clear progress was being made along the commercialization pathway. Two shale wells are now producing, including the Moomba-194 vertical well, which recorded a peak flow of 87,820 cm/d (3.1 MMcf/d). A horizontal well in a shale target was drilled and stimulated, and it achieved flow. The company expected to stimulate the Moomba-193H in June with 10 stages.

Its Cooper Basin Center Gas exploration program confirmed a prospective resource through coring, logs and other analyses. The program proved gas accumulation in the Nappamerri Trough with more than 1,000 m (3,280 ft) of gas-saturated rock. Santos noted it is “building knowledge and technological capacity to ‘crack the code.’”

Senex Energy Ltd. also is focused on commercialization. In a Feb. 24 press release, the company reported two farm-out agreements with Origin Energy Ltd., where the latter got interests in three petroleum exploration licenses in the Cooper-Eromanga Basin in South Australia. In the first stage of a work program, the companies will evaluate tight gas sands, shales and deep coal seams. The second stage will evaluate the commerciality of the gas resource.

More companies are now focusing on commercializing the resource given the success of earlier exploration efforts.

Targeting three key basins

Beach Energy Ltd. has strategically targeted three key basins for unconventional acreage—Cooper, Otway and Bonaparte. Its Cooper Basin activity includes Nappamerri Trough natural gas with Chevron and Icon Energy and its South Australian Cooper Basin Joint Venture (SACB JV) targeting the unconventional Roseneath-Epsilon-Murteree (REM) formations and basin-centered gas plays.

The company is targeting unconventional gas and gas liquids in the Otway and Bonaparte basins. It is out to uncover sweet spots, with focused activity around them. Well profiles are a key focus, and Beach expects process improvements and technology to drive efficiencies, which would drive down costs. EUR per well is the key for commerciality.

The company recently awarded a four-well fracture stimulation program to Condor Energy Services Ltd. The stimulation program is scheduled to begin in July 2014. Six vertical wells will be drilled, and four will be fracture-stimulated.

Beach recently completed the sixth and final exploration well drilled in its current campaign. The Etty-1 is a vertical exploration well in ATP 855, owned by Beach, 46.9%; Icon Energy, operator with 35.1%; and Chevron Exploration Australia 1 Pty. Ltd., 18%. Preliminary interpretation of wireline logs indicated the target interval to be gas-saturated. The well will be cased and suspended for fracture stimulation and production testing to assess the deliverability potential of the basin-centered play.

Acquisition expands unconventional resource

Drillsearch Energy Ltd. acquired Ambassador Oil and Gas Ltd., according to a May 30 press release. Drillsearch will provide full carry on a $42.5 million work program in PEL 570 targeting unconventional resource potential. The program is to be operated by New Standard Energy with technical support from Magnum Hunter Resources.

The acquisition offers regional diversification for Drillsearch’s unconventional business, which is currently focused on ATP 940P in the Central Unconventional Fairway in the Nappamerri Trough.

On April 21, the Charal-1 vertical exploration well in the fairway reached a total depth of 3,866 m (12,680 ft) with indications of elevated gas in the primary target intervals. The well has been cased and suspended for hydraulic stimulation and production testing, which are planned for the September quarter.

Cooper Basin unconventional gas

Within the Nappamerri Trough basin-centered gas play, initial flow-testing was completed on the Langmuir-1 vertical well located within PPL-102, according to Santos. Ten fracture stimulation stages were placed across sand, shale and coal intervals within the Toolachee, Patchawarra and Tirrawarra formations.

In Santos’ Roswell project in the REM shale play, the Roswell-2 horizontal shale well was successfully stimulated and flow-tested during the quarter. Roswell-2, located in PPL-9, is a horizontal well drilled to a measured depth (MD) of 3,481 m (11,418 ft), which includes a 550-m (1,804-ft) horizontal lateral within the lower Roseneath Shale. Five fracture stimulation treatments were placed along the lateral section. Additional diagnostics including surface microseismic monitoring and stimulation stage fluid tracers also were obtained to provide critical information for optimization of future wells.

In the Aurora project, the Moomba-193H horizontal well was drilled to an MD of 3,996 m (13,110 ft) with a 900-m (2,952-ft) horizontal lateral within the Murteree Shale. The well is Santos’ second horizontal shale gas well. Fracture stimulation activities are scheduled for mid-2014 using 10 frack stages planned with further optimized stimulation treatments based on Roswell-2 experience to scale up flow rates.

In the SACB JV unconventional gas program, further drilling to appraise the basin-centered gas accumulation focused on reservoir characterization and stimulation optimization.

In the Southwest Queensland Joint Venture (Beach, 23.2%, Santos, 60.06%, Origin, operator, 16.5%, and Australia Pacific LNG Ltd., 0.24%) a two-well gas development campaign began with the Vega-4 well.

In the Bonaparte Basin in the Northern Territory, the Cullen-1 exploration well in EP 126 (Beach, 75%, and Territory Oil & Gas Pty. Ltd., operator, 25%) spudded on May 23. The well is targeting the conventional and unconventional hydrocarbon potential of the largely unexplored Keep Inlet sub-basin.

Western Australia activity

AWE Ltd. is on track to drill three additional gas wells in calendar year 2014. The company tested the Arrowsmith-2 appraisal well on EP413, high-grading the Carynginia and Irwin River Coal measures.

The Drover-1 exploration well on EP455 is scheduled to spud in the June quarter. An appraisal well—Senecio-3—will spud on L1/L2 in September.

Gross unconventional prospective resources for EP413, EP455, L4 and L5 were independently estimated at 314 Bcm (11.1 Tcf) and 31 MMbbl of NGL.

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