MinRes declares its Perth Basin one of WA’s largest onshore gas resources
Drilling results have positioned Mineral Resources to capitalise with a part or full sale of the project, should WA change its domestic gas rules.
Mineral Resources has declared its Perth Basin project contains as much gas as anywhere in WA and is now considering development plans which could see the Chris Ellison-controlled company sell the development.
The drilling result positions the company to capitalise should WA revise its domestic gas policy.
WA is considering changing its existing legislation, put in place by the Carpenter government, requiring offshore gas producers to sell 15 per cent of the gas their projects produce into the local market over the life of a project
Some WA developers are pushing for changes, insisting WA has sufficient supplies, and amending the rules would allow them to meet looming shortfall needs across Australia’s east coast.
The Australian Energy Market Operator has warned gas supplies across the east coast will get so tight gas power stations could be forced to run on diesel as soon as 2026. By 2028 there will be a substantial shortfall, stoking alarm among major users, which have warned their viability is at stake.
In an announcement which could allow MinRes to capitalise, the company said drilling of six wells in the Perth Basin had indicated 435PJ of reserves.
MinRes managing director Chris Ellison said the results cement the prospect of the project: “Our Perth Basin conventional oil and gas discoveries are among the largest onshore finds in Western Australia, with significant upside on these two exploration permits alone.
“Developing these resources provides MinRes with yet another option to grow shareholder value through our portfolio of commodities located in the world’s best resources jurisdiction.
“With the commissioning of our new exploration rig, we are just getting started and the energy division is firming up targets on the largest acreage holding in the highly prospective Perth and Carnarvon basins.”
MinRes said it is pushing ahead with development plans. It said it could opt to sell down stakes in the project, or even proceed with an outright sale.
But, MinRes warned it would not sell cheaply. “MinRes will only consider opportunities that realise greater value for shareholders than what MinRes considers it can achieve through its stand-alone delivery plans,” the company said in a statement.
Adam Martin, executive director of energy at E&P, said Beach Energy or billionaire Gina Rinehart could be possible buyers.
“Beach/Mitsui could be interested given the Waitsia project has a reserve life of c. 10-11
years. Hancock Energy could also be interested given neighbouring permits and gas
discoveries. A full sale could release close to $500m-plus which would strengthen the
company’s liquidity position and de-risk the investment proposition,” said Mr Martin.
MinRes said it expects to have an update on its development plans by the end of the calendar year
Mr Ellison said developing the Perth Basin remains conditional on changes to the WA domestic gas policy.
There is growing momentum to tweak the rules, with a recent WA state government-commissioned report concluding the policy as it stands is not fit for purpose.
Advocates for change insist the LNG industry should do more to ensure state supplies and the heavy lifting should not be predominantly imposed on onshore developments.
