The state of play of the Territory gas industry is described more cautiously by a resource executive at the Annual Geoscience Exploration Seminar in Alice Springs this week when compared to the hype of the Giles Government.
Even if the current fracking enquiry gives the green light, it will take up to eight years until it’s known how much of currently estimated deposits are actual reserves. And the industry’s future will depend on much more exploration, the market and politics.
“There is a lot of blue sky in terms of resource potential,” says David Close, Chief Geologist and Unconventional Exploration Manager of Origin, during an interview with the Alice Springs News Online.
And independent monitoring of operations still seems to be a work in progress.
Mr Close says the volume has emerged as less of a risk in business and commercial terms during this “early phase” of the exploration program.
“Origin’s resource in the Beetaloo basin may be viable.
“We’ve had two years of exploration and it’s gone well. Further appraisal will be the key step to go from a technical success to potentially a commercial project.”
He says social and environmental impacts of a full development would be assessed in the future through a thorough Environmental Impact Statement process.
“If it is viable as a commercial project it would be very meaningful in terms of gas supply for Australia.
“It is potentially of a comparable scale to some of the other major projects in Australia, the coal seam gas projects in Queensland that have gone to liquefied natural gas (LNG) over the last decade, and also supply substantial gas into the domestic market, as well as the Cooper Basin which for 40 years has been a major supplier of east coast gas.”
What percentage of the national energy supply – gas, coal, hydro, renewables – could NT gas represent?
“That’s almost impossible to answer. It will depend on so many factors but gas will play a part for a number of decades. Most energy transition plans from where we are today to a lower emissions future include gas as an important step.
“At the moment gas supplies in the order of 20% to 30% of the nation’s fixed electricity distribution. It is used in manufacturing extensively. Australia’s annual consumption is in the order of one to one and half trillion cubic feet (TCF).
“Currently very little NT gas is consumed throughout Australia.”
The opportunity for the Territory’s unconventional – fracked – gas would come with the scaling down of conventional gas in the east coast market.
The Tennant Creek to Mt Isa pipeline “is of course a fundamental part of that proposition,” says Mr Close.
The NT has a “very low reserve base at the moment.
“In the ASX release in February Origin announced a 6.6 TCF contingent resource.
“You would expect some of that to be converted to a reserve, not necessarily all of it.
“That is the key step that we need more data to be able to confirm – will any of it progress from contingent resource to a reserve? And if so, how much?
“And then we can answer those questions about how realistic is it that these resources will be part of the long term solution to the east coast supply gap and if the reserves are sufficient to underpin both domestic and export markets.”
At best NT gas would displace Cooper and Bass, as they decline: “There is no reliable way to estimate how NT gas might displace other sources of gas and / or future generation options.
“More data, the free market and government policy of the day will dictate that.
“We want the [fracking] enquiry to run its course, we want that to be a robust process, it is an independent scientific panel, they will report their findings in due course.
“If we are able to go back to continue our exploration program then we’ll talk with the regulator and ensure we have the work program in place to do that.”
If the green light is given, how long will it take to have certainty about the size of the actual gas resource? We heard fantastic figures from the last Chief Minister.
“There is a study from 2013 by the Energy Information Administration which estimated over 200 TCF for the Northern Territory. That number gets used a lot as a reserve number.
“It is inaccurate to describe it as that. To prove up what is there and how much is there would take anywhere from three to eight years. It won’t be instant.
“We have to get back on the ground to do some more drilling and testing. It will be a multi-year process.”
The News put to Mr Close that pro-fracking circles are claiming there have been 1000 fracked wells in Australia without any serious problems. Do we really know what’s going on, several thousand meters below the surface?
Says Mr Close: “Of course we do. Absolutely we do. The gas is coming from the reservoir into the well bore, and then up the well bore to our well head where we can monitor the exact rate, pressure and so forth.
“If anything different was happening we would understand that from what we produce at the well bore. We understand the pressures, the rock integrity. We understand in detail the entire system, our impact on it, both in the drilling stage and also the production stage.
“We monitor and we have decades and decades of data to show that there are no systemic environmental impacts from these activities.”
Even if they were under ground you would know? Contamination of the water table, for example.
“That’s very close to the surface. We have thousands of bores that go into aquifers, that people take water from, people drink it around the world – have done for decades.”
What could happen below, 4000 metres below, for example?
“The gas has been in that rock for hundreds of millions of years. It doesn’t communicate fluids outside that rock. If it did there wouldn’t be gas inside that rock. It is a fully-contained, self-contained system.”
But you puncture that system.
“We decrease the pressure. You are not flowing things into the earth. You are flowing gas out of the formation to the surface.
“So what you are left with is a rock as it was before, with less gas in it.”
We put to Mr Close that the safety related monitoring he describes is carried out by his staff. Tina Hunter says independent monitoring is essential. To what extent is that in place?
CLOSE: This has not been introduced in any Australian jurisdictions as far as I know. It does occur in NZ, I understand. We do have an internal independent technical authority, whose function is almost identical to that described by Dr Hunter.
NEWS: How is it being done?
CLOSE: Once under production all our wells are monitored in accordance with our Well Integrity Management System, which dictates frequency of physical inspection and in many cases continuously monitors indicators of integrity such as well head pressure and rates.
NEWS: Is every single operation the subject of independent monitoring?
CLOSE: Most of a well’s life cycle is spent in a production phase, during production it is becoming standard to continuously monitor data from wells and to be able to operate them remotely, that means wells can be shut in or turned off from a central control centre as well as at location.
NEWS: Is that 24/7?
CLOSE: The monitoring I have just described during the production phase is typically 24/7 yes. There are no proposals I know of to have independent monitoring of wells 24/7 as that would not be practical.
PHOTO at top: An image shown by Mr Close during his presentation at the seminar.