BEACH Energy’s drilling rig at the Haselgrove-3 conventional exploration well this week reached 3.3km below the surface as the company continues its program to target commercial gas reserves.
The Haselgrove-3 drilling program is estimated to cost up to $15m with the petroleum company hoping the prospect could potentially host 34 billion cubic feet of gas.
Beach regional manager Glenn Toogood said the company was now installing the production hole as the drill moved closer to possible gas reserves.
“We are in the last part of the hole – which is called the production hole – that goes down into the particular targeted geological formations, which we believe will host gas,” Mr Toogood said this week.
He said the drill was close to the lower Pretty Hill sandstone, which had been the predominant reservoir that had stored significant gas for the South East over the past 25 years.
“We will progress through that and see whether it does have any gas and then onto a deeper reservoir called the Sawpit sandstone,” Mr Toogood said.
He said the company hoped this reservoir would also host commercial volumes of gas.
“But we won’t know until we get to the formation, which should happen over the coming week to fortnight,” the company spokesperson said.
Regarding the operations at the site, he said the drilling program had been running smoothly.
“We have had a good safety record – safety is paramount in everything that we do,” Mr Toogood said.
“We are progressing well and it is good to see the improvement in the weather.”
If commercial gas reserves were discovered, he said this information would be released firstly to the Australian Stock Exchange.
“We have got particular reporting requirements in terms of disclosure under the ASX,” Mr Toogood said.
“If it gets to the point where we do need to disclose something that is market sensitive, then we will go through that process.”
The Beach Energy manager also revealed there had been no protesters at the site since the heavy trucks conveyed drilling parts onto the site.
“We have actually had a lot of interest from a lot of people from Penola about the drilling activity and how it is progressing, particularly the lights of the drilling rig at night,” Mr Toogood said.
Given Australia’s looming gas shortage, he said Beach was “doing its part” to supply more energy to the market.
He said any gas from the Haselgrove-3 site would be supplied firstly to power generators, which was a condition of the $6m State Government grant.
“First it needs to be offered to power generators under those conditions and then we will look to offer it to the market under commercial arrangements,” Mr Toogood said.
He said a number of large gas users from the region had already contacted Beach about potential supply.
“Some large gas users are very interested in what will happen to the gas and what opportunities there may be,” he said.
But he said the company could not begin negotiations with large gas users until the quantities of gas could be determined.
“While it is nice to have a lot of expressions of interest, until we have a volume of gas we can sell we can’t extend any conversation at this stage,” Mr Toogood said.
Although the onshore Otway Basin had significant reserves of gas, Mr Toogood said the challenge was finding the right location based on the seismic information.
“There will always be gas in these geological formations, the question will always be whether there is a commercial amount of gas,” he said.
If commercial gas was discovered, he said it would be processed through the mothballed Katnook gas plant.
He said the company would not know if there was a commercial quantity of gas until mid next year given the extensive audits required.
“There is a lot of checking and verification – the industry is quite rigorous when it comes to posting reserves,” Mr Toogood said.
He said a production hole was constructed as part of the exploration process.
“If it doesn’t yield a commercial quantity of gas, we will plug the well and remediate the site and it would be returned to its original land use,” Mr Toogood said.
If commercial gas was found, he said the Katnook gas plant would be recommissioned and refurbished.
The gas plant was constructed in 1991 and mothballed in 2013.
