Underwhelming Beetaloo drilling results but Tamboran pushes on

Lower-than-expected results are likely to intensify pressure on the Northern Territory project that has become a lightning rod for environmental and indigenous opposition.

Tamboran has unveiled drill test data from the Beetaloo Basin that industry sources said is up to 30 per cent lower than anticipated, a result that is likely to intensify pressure on the development that has emerged as a lightning rod for environmental and Indigenous opposition.

The Northern Territory government in May said it would allow fracking in the Beetaloo, a decision the country’s oil and gas industry said would aid Australia’s $2 trillion economy and improve energy security but has ignited a wave of opposition from environmentalists and some Indigenous groups.

The Beetaloo Basin is widely considered to have enough gas to service and expand existing LNG export markets and secure the domestic gas supply, but the region is culturally and environmentally sensitive.

Tamboran has quickly emerged as a leading player, making aggressive plans to capitalise on local and global demand. But in testing results published to the Australian Securities Exchange – Tamboran said the Tanumbirini wells showed so-called 20-year Estimated Ultimate Recovery – the quantity of oil or gas that is potentially recoverable – at approximately 1.87.

Energy experts said the findings were about 25-30 per cent lower than what the company and the market would have expected.

Industry sources said the issues can be overcome with additional drilling – but this would add costs and time to the project.

Tamboran’s chief executive officer Joel Riddle described the results as “encouraging” but stressed they were initial.

“Importantly, this is an early-stage result with potential improvements when key learnings and design changes are implemented in future wells,” Mr Riddle said.

The Australian understands work continues on fresh testing and new results will be announced next quarter.

Tamboran’s largest shareholder is billionaire Bryan Sheffield, a third generation oil and gas developer, and the company’s investors have shown a willingness to invest significant capital and resources.

Still and while far from terminal, the result will intensify debate about the benefits of drilling in the Beetaloo.

There is little argument about the quantities of gas in the region, and Australia’s east coast market is facing a material shortfall in the coming years. Australia is also likely to have to increase its reliance on gas to firm up its electricity generation system as major firming projects such as Snowy Hydro 2.0 suffer extensive delays.

But opponents to drilling in the Beetaloo insist the region is culturally sensitive and should be preserved. For Tamboran to improve its result, more drilling will be required, industry sources said, intensifying anger,

Should Tamboran not overcome the underwhelming result, it risks the lucrative returns that the NT government has envisaged from the region.

Chair of Nurrdalinji Aboriginal Corporation Johnny Wilson at Beetaloo. Source: Supplied.

GRAND PLANS

While the drilling data underwhelmed the market, Tamboran continued to express confidence in its prospects and on Friday unveiled its plans for pipelines to service the domestic market and potentially the lucrative LNG export market.

Tamboran said it has picked APA Group as the preferred developer to build a new pipeline to plug into existing NT infrastructure and to potentially service an order from Origin Energy. The pipeline is expected to be operational in 2025.

Tamboran also said APA will also conduct work on a pipeline to allow for the transport of gas to Australia’s east coast. A new pipeline would be required to be built to APA’s Carpentaria Gas Pipeline, which services the east coast market. The Carpentaria Gas Pipeline could then be expanded if there was sufficient supply and demand, though.

“We are excited to be working closely with APA Group, the largest and most respected pipeline operator in Australia, to commercialise our low reservoir CO2 gas in the Beetaloo Basin via access to the Northern Territory, Australia’s East Coast and international LNG markets,” said Mr Riddle.

Earlier this month, Tamboran said it is exploring building an LNG processing facility in Darwin at the territory’s proposed Middle Arm industrial development.

As Tamboran looks to demonstrate demand, it said it has signed two tentative agreements with BP and Shell for shipments should it proceed with the LNG exporting facility.