Not so long ago, people thought the Cooper Basin was dead.

Australia’s largest onshore hydrocarbon resource had supplied almost 6 trillion cubic feet (Tcf) of natural gas to homes and businesses across a wide swathe of southern and eastern Australia, but after 40 years some people thought it was on its last legs. Others had more faith, and now the believers have been proven right.

The Cooper Basin is entering a new renaissance, driven by escalating domestic gas demand and the voracious appetite of three new LNG plants in Queensland.

It was New Year’s Eve, 1963, when the Cooper Basin was born. At 6 a.m., the Gidgealpa-2 well struck gas in the sandy wilderness of the South Australian outback. A plane bringing supplies to the isolated rig from Adelaide, 800km to the south, was promptly recalled and filled with as many bottles of champagne as it could hold, and South Australia’s first hydrocarbon discovery was celebrated with gusto.

The discovery was made by Adelaide-based Santos in partnership with Delhi Petroleum, owned by Texas oil baron Clint Murchison. Santos owned the acreage, and Delhi provided funding, operatorship and experience to the then-fledgling Australian company. Further drilling soon confirmed a medium-size gas field at Gidgealpa, but it wasn’t until the discovery of the much-larger Moomba field in 1966, that a commercial volume of gas was assured.

By then, British oil giant Burmah Oil Co had joined the partnership, bolstering Santos’s technical expertise and providing valuable direction for construction of the gas processing plant at Moomba and the pipeline to Adelaide. It also offered commercial advice for contract negotiations with the first industrial customers—the South Australian Gas Company and the Electricity Trust of South Australia.

Burmah’s leadership—in conjunction with Delhi’s initial failure to detect hydrogen sulphide in the Cooper Basin gas, leading to expensive design modifications at the gas plant—resulted in Santos gaining operatorship of the Moomba plant in 1971, which it has retained ever since. Delhi continued as exploration and field production operator in various roles until Santos finally took over all Cooper Basin operations across Queensland and South Australia in 1992.

Still going strong

That was then, this is now.

“The Cooper Basin remains a valuable producing asset for Santos,” said Lou Dello, Santos’ general manager, Central Australia. “The Cooper Basin is far from decline and we have seen strong growth in conventional 2P reserves since 2010.”

He highlighted underexplored greenfield potential in southwest Queensland, significant gas-in-place resources in greater Tindilpie, the liquids-rich northern fields in South Australia and further development opportunities at Moomba and Big Lake.

In 2014, the Cooper Basin produced 16.2 million barrels of oil equivalent (boe), approximately 30 per cent of Santos’s total production. Of this production, 20 per cent came from oil, 67 percent from gas, and the remainder from condensate and LPG.

In the current environment of constrained world oil prices, activity in these jointly held areas is focused on maximising efficiencies and operating only the best wells across the basin’s 190 gas fields and 115 oil fields, Santos CEO David Knox informed shareholders at the company AGM in April. Those fields contain about 820 producing gas wells feeding into production facilities at Moomba in South Australia and Ballera in Queensland for gas sales to Sydney, Adelaide, Mt Isa and Brisbane.

Ethane is piped to the Qenos petrochemical plant in Sydney, while gas liquids, condensate and oil from the more than 400 producing oil wells are piped to wharf facilities at Port Bonython near Whyalla, South Australia, for export.

Demand for gas is expected to triple in the next few years as NSW sales contracts expire and LNG plants on the Queensland coast at Gladstone ramp up to full production. Santos is buying 750 petajoules of Cooper Basin gas from its so-called Horizon portfolio to help fuel its Gladstone LNG (GLNG) plant while Beach Energy is selling gas to Origin Energy for its Australian Pacific LNG (APLNG) plant.

“GLNG has facilitated the development of our coal seam gas fields in Queensland but it has also been an essential catalyst for the development of our wider east coast resources,” Knox said.

“It has exposed the Cooper Basin to new markets, which has made continued development of the Cooper viable. If Santos had remained as heavily focused on the domestic market as it was just 10 years ago, those resources would not be commercially viable today. Higher gas prices lead to higher investment and ultimately production. And that is what is happening in the Cooper today.”

Unconventional future

After the gas discoveries of the 1960s and 1970s, and the oil boon of the 1980s, it is the rise of the unconventionals that will take the Cooper Basin into the new millennium and beyond. Deep coals, tight sands and shales are all being investigated in the new wave of exploration.

In 2012, 46 years after the Moomba-1 gas discovery of 1966, the first commercial shale well in the Cooper Basin commenced production. Moomba-191 is flowing natural gas at a rate of 1.7 MMcf/d from the Roseneath, Epsilon and Murteree shale rock, with a composition consistent with gas produced from the Moomba/Big Lake area. Santos currently has three unconventional shale wells in production.

“Although it is still early days, Santos is encouraged by the potential of unconventional resources in Central Australia,” Carl Greenstreet, Santos’ general manager, unconventional resources, said.

“Across the Cooper Basin in South Australia and southwest Queensland and the Amadeus Basin and McArthur Basin in the Northern Territory, we have 100,000 sq km of highly prospective acreage in unconventional gas plays.”

However, with world oil prices at a six-year low, much of the unconventional resources program has been put on the shelf. Despite the potential for a new multi-trillion cubic feet opportunity in the Cooper Basin, it is a time of belt-tightening and protecting finances until economic conditions improve.

“I do believe it will be developed, it’s just going to take some time and we’re not going to rush out in this environment and spend all of our equity dollars,” said Chris Jamieson, Beach Energy’s group executive, external affairs.

Beach Energy is exploring tight gas acreage in the Nappamerri Trough with permits covering more than 800,000 acres stretching across the South Australia/Queensland border. Despite the disappointment of Chevron exiting the partnership in March, Beach and junior partner Icon Energy (35.1 per cent of Queensland permit ATP 855) are upbeat about the future opportunities.

“During the past three years the joint venture flowed natural gas from four wells, achieved the highest flow rate from a shale gas well (Halifax-1) in the Cooper Basin, had six petroleum discoveries in ATP 855 and has identified a significant natural gas resource within the Permian formations of the Nappamerri Trough,” said Icon Energy managing director Ray James.

Chevron ploughed $330 million into the program, which has uncovered 2C contingent gas resources of 1572 Bcf in the Queensland permit. Beach is also exploring in South Australian permits PRL 33 and PRL 49, with 18 wells drilled across the entire trough to date.

“We’ve had some really good results,” Jamieson said. “There’s potentially a massive gas resource there, however, it’s challenging. It’s not low-hanging fruit.

“These formations are three to four kilometres down. It’s deep, and it’s hot, and it’s high pressure. However, the coring that we’ve done has shown that there’s a lot of gas down there. And we’ve flowed gas, which has been a big tick in the box.

“Now it’s a matter of drilling and completing these wells efficiently, more cheaply, and fracture stimulating in a way that will generate commercial-style flow rates.”

New technologies and industry developments will continue to assist the drive for unconventionals in the Cooper. Innovations in fracture stimulation, such as electrical pulsing and low fluid volumes, will also help unlock hydrocarbons from the deep coals of the Patchawarra Trough and southern Cooper Basin being targeted by all the major Cooper Basin players, as well as smaller companies such as Senex Energy and Strike Energy.

Santos’ Tirrawarra South-1, the first dedicated deep coal producer, is expected online in the next few months for long-term production monitoring.

Meanwhile, Beach Energy is confident of finding a new partner to join its Nappamerri Trough program once the stage one data has been analysed.

“We want to make sure we’re fully across all the data and make sure we’re in the right position in terms of the next stage,” Jamieson said. “We’re still confident that this area will be developed at some stage, it’s just a matter of when—whether it’s five years time or whether it’s 20 year’s time—we’re confident it will be developed.”

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