Gunnedah Basin Gas
Location
Gunnedah Basin, central New South Wales.
Overview of Gunnedah Basin Gas Exploration Project
Santos has interests in a number of Petroleum Exploration Licenses in the Gunnedah Basin, and is undertaking an 18-month exploration program for coal seam gas (CSG).
The area under exploration is approximately 63,000sq km (Santos & Eastern Star Gas combined), with exploration and initial testing limited to specific sites with minimal impact on the land. The area takes in the districts around Gunnedah, Coonabarabran, Scone, Quirindi and Boggabri.
Since the 1990s, other companies have explored for CSG in the Gunnedah Basin. Santos’ exploration program will be spread over a larger area than any previous programs. Exploration requires conducting tests within coal deposits, but exploration target is viable coal seam gas resources, not coal. To extract coal seam gas, mining is not required and other surface operations can usually continue with minimal disruption.
Participants
Santos has farm-in arrangements with Australian Coalbed Methane Pty Ltd and Macquarie Energy Pty Ltd. Farm-in agreements allow Santos to gain part-ownership of the resources in other businesses’ Petroleum Exploration License (PEL) areas by investing in exploration.
Current Status
The exploration program, which commenced in May 2008, involves seismic exploration to be carried out on roads and the drilling of exploratory core holes. Baseline studies on the local environment, including groundwater, will also commence. When the exploration program is completed, Santos will consider whether it is viable to continue exploration. If it is, more detailed testing will be done over a period of two to three years starting in 2010.
Before coal seam gas could be commercially extracted in the Gunnedah Basin area, several more years of testing, analysis and planning would be required. At the moment, Santos only has NSW Government approval to explore for coal seam gas. No approval has been sought for commercial extraction of gas.
On 2 July 2009 Santos announced the next major step in its Australian coal seam gas (CSG) strategy with the acquisition of significant additional acreage in the Gunnedah Basin in northern New South Wales and an investment in leading local CSG company, Eastern Star Gas Limited (ESG).
Key elements of the $476 million transaction include:
- the acquisition by Santos of Gastar Exploration Limited’s 35% interest in various Gunnedah Basin exploration permits and production areas operated by ESG for $300 million
- the acquisition by Santos of a 19.99% interest in ESG from Hillgrove Resources Limited for $176 million.
Santos and ESG’s combination of operated CSG permits in the Gunnedah Basin will cover a total area of around 63,000 square kilometres. The combination will consolidate the leadership position of both Santos and ESG among the 15 companies active in CSG acreage in NSW.