Tamboran chief Joel Riddle pumps up hopes of next gas boom
From his Manly base, Joel Riddle is plotting Australia’s next gas boom - even if it’s a 3300km trek to get there.
From his Manly base, Joel Riddle is plotting Australia’s next gas boom — even if it’s a 3300km trek to get there.
The Northern Territory’s Beetaloo Basin has emerged as a world-class shale gas resource, picked out by Scott Morrison as a major asset that could help ease a looming supply squeeze.
After years of being talked about as a potential solution for the tight east coast market, Mr Riddle’s Tamboran Resources now expects to start supplying gas by 2024 before forecast shortages hit. “I think we can all see that there’s clearly a supply problem. We can all see it coming and now is the time to do something about it,” Mr Riddle, Tamboran’s chief executive, told The Australian from his Manly base on Sydney’s northern beaches.
“We have the wind at our back, we have full alignment with government both at federal and state level and we want to be part of that story to bring costs down for Australian consumers.”
Tamboran may not be the biggest operator in the bustling Beetaloo — it is a junior partner to Santos in its main development project, with Origin Energy one of its high-profile neighbours.
But ahead of an $100m ASX sharemarket listing in the June quarter, Tamboran has plenty of high-profile backers as it plots its own path to shale success from its Beetaloo and McArthur acreage 600km south of Darwin.
Paul Fudge, who made his fortune selling coal-seam gas acreage to majors, is one shareholder, while New York hedge funds Lion Point Capital and Baupost Group were among early investors in US shale giant Pioneer Natural Resources.
Dick Stoneburner, who helped engineer the sale of Petrohawk to BHP for $US12bn, recently made the step from being one of Tamboran’s non-executive directors to its chairman where he leads the board from his Houston base.
One of his first jobs will involve delivering one of the biggest IPOs seen in Australia’s oil and gas industry in recent times.
Mr Riddle, a former ExxonMobil engineer, expects strong interest from the US capital markets while also pitching the float as an opportunity for Australia’s superannuation funds to gain exposure to an untapped energy resource.
“We looked at New York and Toronto listings but we think it’s an Australian story and a differentiated one at that,” he said.
“So far we’ve got huge interest from US funds and also Australian investors. It’s obviously a huge focus for the company.”
Tamboran expects to raise at least $100m to help fund an aggressive drilling plan covering eight wells by 2023. While drilling in the remote Beetaloo is not cheap at between $30m and $40m a well, Tamboran aims to eventually halve those costs by applying US shale technologies in the Australian outback.
Tapping Mr Stoneburner’s experience at Petrohawk will go a long way to executing highly ambitious targets. Tamboran’s chairman made his name helping spark a drilling boom in the Eagle Ford shale in southern Texas.
“Dick drilled the first 30 wells in the Eagle Ford and it’s very similar to what we are trying to do in the Beetaloo,” Mr Riddle said. “He’s a typical Texan, he has ice in his veins, he’s a geologist and he has seen it all.”
Tamboran hopes to deliver 100 million cubic feet per day of gas by 2024, covering about one-fifth of a projected shortfall for the eastern states as traditional offshore resources like Victoria’s Bass Strait suffer volume declines.
The Australian Competition & Consumer Commission gas inquiry interim report showed prices fell during the pandemic, from $8-$14 a gigajoule in the second half of 2019 to $6-$8GJ by mid-2020.
Tamboran is targeting gas supplies at about $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 is 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.
A $1bn component of the plan would result in $1bn being invested in connecting the Beetaloo to Darwin, where both the Santos-led Darwin and Inpex-owned Ichthys LNG export plants already operate.
Mr Riddle said it gave optionality to supply both domestic users but also the big LNG plants as they inevitably searched for third-party supplies to top up their own production.
“There’s going to be an opportunity when you hear the chairman of Inpex say every six months that Ichthys is going to need new gas,” he said. “Santos acknowledges Darwin LNG needs new gas. They will be developing Barossa but that’s 18 per cent carbon dioxide whereas Beetaloo is 2-3 per cent CO2. We think that’s a better option.”
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