Opinions about developing new gas provinces vary widely from keen due to concerns about shortages sending prices soaring to vehement opposition from those who think it will further damage the environment.

Both camps have valid reasons for their stance but it is clear (and honestly really unsurprising) which side Australia’s gas companies operating in the Beetaloo sub-Basin, Northern Territory stand on.

So just what is the Beetaloo sub-Basin and why do its proponents believe that it might well be the answer to eastern Australia’s gas supply woes?

The 28,000km2 sub-basin – part of the larger 180,000km2 McArthur Basin – is located about 500km southwest of Darwin and between Katherine, 100km to the north, and Tennant Creek, 250km to the south.

Existing infrastructure includes the Stuart, Barkly, Roper and Carpentaria Highways, the Adelaide-Darwin railway, regional airports and – perhaps most importantly – three existing gas pipelines with the Northern Gas Pipeline linking the Amadeus Gas Pipeline to the East Coast market, though its capacity is limited.

Pastoral leasehold covers much of rolling plains that make up the Beetaloo though it is the extensive, gas-rich shales that underlie much of sub-Basin that makes it sought after.

Gas rich basin

According to the Northern Territory government, the Beetaloo could host some 500 trillion cubic feet of in-place gas resources just in the proven Velkerri B layer.

Even if just 10% of this amount is recoverable, 50Tcf of gas is equivalent to about 25 years’ worth of domestic gas demand.

By way of comparison, the Greater Gorgon area has proved and probable gas reserves of 17.6Tcf.

That said there are significant challenges involved in developing shale gas resources.

Shale gas formations typically have very low permeability, meaning that while there is plenty of gas, getting it to flow freely requires substantially more work than in more conventional gas reservoirs.

Getting shales to flow gas commercially requires a horizontal section – often between 1km to 2km long – to be drilled along the most prospective part of the shale.

Hydraulic fracturing (fraccing or fracking as it is commonly known) involves pumping large quantities of water and proppant into the shales around the horizontal section.

The pressurised water cracks the shale, improving its permeability, while the proppant – a gritty material that includes natural sand and/or manmade ceramics – keeps the fractures open.

This well-established process, which was developed in the US shale sector, will allow gas to flow.

Needless to say this process requires higher costs compared to conventional gas wells though shale formations tend to be capable of greater production than coal seams – the other unconventional source of gas.

The challenges don’t stop there. While there is existing infrastructure, it is simply not developed enough if it is going to help address the expected East Coast gas supply shortage.

This will mean more gas processing and pipeline infrastructure, which the NT government has pitched to Infrastructure Australia, which has in turn added the proposal to its national priority list making it more likely that it will be funded.

This does run up against Resources Minister Madeleine King’s comments that the federal government would not intervene or put huge amounts of cash into coal and gas developments, so it is anyone’s guess about whether the NT government can score some sweet funding.

At the end of the day though, if the numbers work out, there’s every reason to believe that the industry will just push ahead with its development.

ASX companies operating in the Beetaloo

So just what are some of the companies operating in the Beetaloo sub-Basin?

On the big end of town are Santos (ASX:STO) and Origin Energy (ASX:ORG) with the former recently increasing the amount of gas flow from its appraisal wells following the installation of production tubing.

The Tanumbirini-2H and Tanumbirini-3H wells in EP 161 are flowed gas at rates of 7.4 million standard cubic feet per day (MMscfd) and 4.3MMscfd respectively, up 40% and 150% from testing in January 2022 before the tubing was installed.

Both wells, which produce from the Mid-Velkerri B shale, will continue to be flow tested to gather further information on the formation.

Meanwhile, Origin is seeking a partner to take up a stake in its Beetaloo assets where production testing of the Amungee NW H1 returned gas flow at a normalised rate of between 5.2MMscfd and 5.8MMscfd.

Tamboran Resources (ASX:TBN) has a 25% stake in Santos’ EP 161, which gives it great insight into what works ahead of drilling its wholly-owned and operated Maverick-1H well within EP 136 in September.

Its own well has been designed with optimised fracture stimulation and with lessons learned from the two Santos wells.

Maverick-1H will include an optimised production casing well design over a planned 1,000m horizontal section with up to 20 fracture stimulation stages, well above the 600m and 660m horizontal sections at the Tanumbirini-2H and Tanumbirini-3H wells with 10-11 stages.

Future wells could have horizontal sections of up to 3,000m and 80 frac stages.

Empire Energy (ASX:EEG) has also been enjoying successes with its Carpentaria-2H well in EP187 continuing to flow gas strongly at a rate of 2.6MMscfd over the first 13 days of flow testing.

A peak rate of 11MMscfd was achieved after a two-day shut-in to change wellheads and monitor pressure build up and the well is currently flowing at 2.5MMscfd with water flowback rate gradually declining.

Data from the flow testing will be collected and analysed before being incorporated into the design for the upcoming Carpentaria-3H well on the same well pad.