Drillsearch Seeks Unconventional Future in Cooper Basin

Drillsearch Energy Ltd. CEO Brad Lingo took to the stage at the Shale Gas World Australia 2011 conference in Adelaide, and told the enthusiastic audience about how his company is capitalizing on unconventional gas opportunities in the Cooper Basin.

Lingo started with a brief overview of the company’s extensive assets in the Cooper Basin. “We do hold 15 permits covering about 23,000 square km,” he said.

“We are an existing producer with 13 oil fields in production. We also have new production projects underway with four new oil discoveries made in total in the last two months under development, and we have 10 wet gas discoveries under appraisal or development.

“It’s really those wet gas discoveries that are base discoveries for Drillsearch that really draw the unconventional into focus for Drillsearch. It was going back and looking at those discoveries and figuring out how to get them developed that we recognised the multitude of plays that we were faced with.”

According to Lingo, one of the main strengths of those conventional and unconventional plays in the Cooper Basin was access to markets and infrastructure. “The Cooper Basin has been supplying gas into the eastern markets since 1969 and will continue to do so for the foreseeable future,” he said. “It does present a huge unconventional opportunity.”

Lingo said Drillsearch Energy had three growth platforms in the Cooper Basin – oil, wet gas and unconventional. In regards to unconventional resources in the Cooper Basin, Lingo said, “the landscape is changing throughout the Basin.”

“It hasn’t happened overnight,” he continued. “It’s been unfolding over the last several years and, in fact, for the more technically minded the seeds of the unconventional plays were really documented in a paper delivered to APIA in 2001. Specifically focusing in on the tight and unconventional gas plays of the Nappamerri Trough.”

Lingo explained Drillsearch was evaluating its unconventional resource potential in its western Cooper holdings in the Nappamerri Trough.

Lingo said the unconventional in the Cooper Basin was the sleeping giant, noting that it was a well understood basin with known mature source rock accumulation of big shale and coal. “There are multiple unconventional plays – shale gas, tight gas and oil,” he said.

“The known gas and unconventional targets is seen historically through conventional drilling, repeating the discovery of unconventional resources that we see in North America. We are now moving into a significant booking of those unconventional reserves and resources.

“Ultimately in the Cooper Basin, we see it as presenting a lower exploration risk than that associated with conventional plays.

Lingo then raised what he and others had described as ‘the elephant in the room’ - dealing with land owner issues. He believed the Cooper Basin’s remote location and historical association with mining provided a suitable environment for developing unconventional resources with little potential for land owner impact.

“The area is remote, largely non-arable and it is an area historical for gas operations,” he said. “That doesn’t mean we don’t have to be just as diligent or even more so in the current environment in dealing with all of our health, safety and environmental issues - we do.”

Looking specifically at the Cooper Basin Nappamerri Trough shale gas play, Lingo pointed out there was an extensive data base on the shale distribution.

“We know from source rocks, historical source rocks studies that it’s a rich thermal mature shale source packages throughout the fairway,” he said.

“You can see potential for wet and dry shale gas plays throughout the fairway.”

Lingo said the approach to Cooper Basin unconventional from a Drillsearch perspective was to focus on the EAD lifecycle. “Our role in the development of this resource is the exploration, appraisement and delineation,” he said.

“That role really means we focus on activity to establish the three ‘Ps’ of the resource – its presence, its prevalence and its produceability. One of the things that we have been exercising a fair amount of discretion around our unconventional resources are the three ‘Ls’ – look, listen and learn.”

Lingo also highlighted the point that the company liked to combine unconventional activities and conventional aspiration in their appraisals. “The two birds with one stone approach,” he explained. “To maximise the chance of success and minimize the cost of both.”

The audience was provided with a quick rundown of the company’s shale gas exploration program in the ATP 940p of the Cooper Basin, where Lingo said the first focus was on seismic acquisition, then secondly, the exploration drilling stage and thirdly the pilot production stage.

Lingo also talked about Drillsearch and their relationship with QGC in the Cooper Basin. “Finding gas in Australia onshore is not the issue, finding gas in the Cooper Basin, as Drillsearch has known for quite some time, is not the issue – it’s getting access to markets,” he said.

Lingo said it was apparent that QGC had relationships that facilitated commercialization for world class gas resources, multiple gas commercialization channels, commitment to Australia, shale gas expertise and superior access to unconventional technology.

In terms of what the company knew about gas in the Cooper Basin and what still needed to be established, Lingo made the important point that, “there is a lot that we know but even more we need to determine to take these projects to commercial development.”

Lingo again brought up the subject of how to minimize risk and maximize opportunity in gas exploration. “Combining conventional and unconventional does just that,” he began. “Most successful unconventional plays were discovered through conventional activity.”

The use of technology and its role in production was another aspect of Lingo’s excellent presentation. He said in terms of technologies opening up new plays in the Cooper Basin, there were recognised technologies such as horizontal drilling, multi-stage fraccing and pad drilling.

“These are being used in opening up and recognizing the untapped plays in the Cooper Basin,” he said.