Origin Energy exits Beetaloo gas in NT as it focuses on clean energy generation

Origin Energy has sold out of the gas-rich Beetaloo Basin and plans to exit a raft of exploration permits, in its latest move to redirect investment into renewables generation.

Origin Energy's Beetaloo Basin Kyalla well site.

Origin Energy has sold out of the Northern Territory’s gas-rich Beetaloo Basin and plans to exit a raft of exploration permits, in the latest move by the power giant to redirect investment into renewables generation.

A deal was struck by Origin to sell its 77.5 per cent stake in the Beetaloo to listed junior Tamboran Resources for $60m along with a 5.5 per cent royalty on future production over the life of the field.

Origin also signed a gas deal taking up to 36.5 petajoules annually over a decade should Tamboran ultimately sanction the project. The sale will see it slugged with a non-cash post-tax loss of $70m-$90m at its interim 2023 financial results.

The decision by Origin follows its move to bring forward the closure of Australia’s largest coal plant, NSW’s Eraring, by up to seven years as it ploughs more money into renewables, batteries and green hydrogen through the course of this decade.

“We’ve lost no excitement in what this resource can be from an Origin perspective,” chief executive Frank Calabria said. “But it’s capital intensive, there will always be some uncertainty associated with any exploration and we ultimately made this call based on capital allocation priorities.”

The electricity and gas operator has plans to develop “multi” gigawatts of renewable energy this decade and a 2GW virtual power plant as part of a bid to bring on new green supplies once its Eraring power station closes as early as mid-2025.

Origin still owns 27.5 per cent of the giant APLNG gas export project in Queensland and remains open to gas investments, noting the decision on Beetaloo had not been influenced by climate-concerned shareholders.

The power player copped several large votes at last year’s AGM from shareholders supporting resolutions on climate change and recently laid out new long-term climate goals.

“We still remain open to gas opportunities as we look at Origin going forward given the critical and important role gas plays in the energy mix,” Mr Calabria said.

Origin Energy chief executive Frank Calabria. Picture: Justin Lloyd.

It will also undertake a strategic review of all remaining exploration permits – excluding its interests in APLNG – with a view to exiting those permits over time.

Tamboran said the Beetaloo scheme, 500km southeast of Darwin, could supply up to two-thirds of all volumes on Australia’s east coast should it live up its potential with the company’s backer, Bryan Sheffield, comparing the resource to the giant Permian shale basin which revolutionised the US energy sector.

“What we’re talking about in a full field development is two-thirds of east coast demand,” said Joel Riddle, CEO of Tamboran, which remains in a trading halt.

“Another commerciality pathway for us is to develop the LNG out of Darwin and if you think about 1000 terajoules a day, that is roughly about 9 million tonnes of LNG equivalent which is the size of the Ichthys plant.”

Tamboran will become operator of the joint venture, which is 22.5 per cent owned by Falcon Oil & Gas, which still has pre-emptive rights on the deal.

The junior explorer, which listed on the ASX last year, has been targeting an aggressive drilling plan covering eight wells by 2023 with an aim of supplying gas by 2024 before forecast shortages hit the east coast.

Tamboran is targeting gas supplies at $6-$8 a gigajoule, which would make it competitive with existing supplies and potentially cheaper than a slew of LNG import plants dotted through NSW, Victoria and South Australia.

It’s also plotting a route to market as part of a $6bn plan to open up the Beetaloo for east coast users and Darwin LNG exports via a pact with distributor Jemena.

Origin endured a bumpy journey at the Beetaloo with questions raised over the process of obtaining informed consent from local land owners along with concerns over the fracking process on land and water supplies across the sprawling 18,500 square kilometre site.

But Origin has also criticised activist groups critical of the development and said traditional owners who have agreed to allow exploration were “horrified” over claims the gas industry was not welcome in the region.

Originally published as Origin Energy exits Beetaloo gas in NT as it focuses on clean energy generation