BEACH Energy will ramp up its regional drilling expansion program after receiving nearly $7m from the State Government to drive conventional gas production.
The windfall is part of $12m of taxpayers money that will be ploughed into underpinning two new gas drilling exploration projects in the Penola/Nangwarry district.
This comes on top of the $6m in State Government funding for Beach Energy’s Haselgrove-3 conventional well south of Penola.
Energy company Rawson Oil and Gas – with its joint venture partner Vintage Energy – will be given nearly $5m to support the drilling of a new gas exploration well in the Nangwarry district.
Releasing a statement, Beach Energy – together with its joint venture partner Cooper Energy Limited – announced it would fast-track its multi-million dollar Dombey well drilling project.
While the exact location is yet to be announced, the conventional well will be drilled around 20km west of Penola.
Beach Energy chief executive officer Matt Kay said Beach would continue to engage with the regional community through the duration of the drilling program and beyond.
“We are very excited to continue our activity in the South East – we have received a warm welcome from the Penola community and beyond and for that we are truly thankful,” Mr Kay said.
“We want to continue our strong track record of working with the community and our full-time representative in the South East, Glenn Toogood, is here to engage and answer any questions people might have.”
Mr Kay said the company was pleased again to receive support from the South Australian Government to explore for gas in the onshore Otway Basin.
“This support is crucial in helping identify and develop new gas resources for South Australia,” he said.
Beach will again hold community information sessions with dates and locations to be advised closer to the campaign starting.
Similar to the Haselgrove-3 project, this conventional well will aim to bring new gas to the market within three years.
Mr Kay said it was hoped the project would eventually supply gas to regional businesses as well as broader residential and industrial markets.
Beach has completed drilling the Haselgrove-3 well near Penola and it is being prepared for further evaluation.
Meanwhile, Rawson chairman Allister Richardson welcomed the government’s grant.
“We are looking forward to testing this prospect with the drill bit and we are confident it can bring new gas to the market,” Mr Richardson said.
“It is encouraging to see the recent drilling success and Plan for Accelerating Exploration (PACE) Gas awards pointing to a positive outlook for the onshore Otway Basin.
“I would like to acknowledge the support the South Australian Government has provided with PACE and we look forward to advancing gas exploration in South Australia.”
The joint venture has begun planning the conventional gas exploration well and expects drilling to begin before the end of 2018.
Mr Richardson said gas from the well could be delivered expeditiously into the South Australian market, utilising the existing infrastructure and on prevailing market terms.
This additional gas supply is expected to increase competition in the gas market and support the South Australian Government Energy Plan objective of lowering electricity generation costs.
The new gas exploration well will target a conventional gas and liquids prospect in a three-way dip, fault dependent trap in the proven top Pretty Hills Formation.
The well will be located about 10km south-east of the Katnook Gas processing facility.
“Beach Energy announced earlier this month they have encountered encouraging gas shows in the target Pretty Hill and Sawpit sandstone zones of Haselgrove-3 ST1,” the company said.
Energy Minister Tom Koutsantonis said the grants were being delivered through round two of the PACE Gas grants program.
“There is a gas supply shortfall in Australia, driven in part by reckless and unscientific bans and moratoria on exploration and development in other jurisdictions,” Mr Koutsantonis said.
“In South Australia we want to boost supply to put downward pressure on both gas and power prices, which is why we are partnering with these leading companies to explore for and unlock reserves of gas in the Cooper and Otway basins.
“These are highly prospective regions, which is why there was so much interest in this second round of PACE gas grants.”
The minister argued the key to lowering prices was encouraging companies to invest in innovative new methods of bringing forward production now to meet the tight market across the east coast.
“There is enough gas in the ground in South Australia to power our grid for centuries,” Mr Koutsantonis said.
“My message to gas companies around Australia is that in South Australia we want to drive investment in this sector and will work with proponents to discover and extract more gas.”
