Despite the much-trumpeted potential of global unconventional hydrocarbon resources, the reality of getting them out of the ground is a much more methodical affair than the conventional oil rushes of history. As Falcon Oil & Gas CEO and executive director Philip O’Quigley comments: “The challenge of unconventionals is that you don’t have that big ‘eureka’ moment, it is more of a mining mentality, as step by step you build up your knowledge base.”
O’Quigley is aware of this process first-hand. In May this year, Falcon embarked on a major gas exploration programme in Australia’s onshore Beetaloo Basin, in the central north of the country. Together with partners Origin Energy (35%, also the operator) and Sasol (35%), the group will survey the 4.5 million-acre licence with a view to developing a commercial well programme in 2017.
“We’ve put a huge exploration programme together which is a methodical, very technically driven programme to cover the next 3-4 years of drilling in the Beetaloo,” O’Quigley says. “What it does is take the 4.5 million acres roughly and through a series of drilling, and different types of drilling – this year we’re drilling stratigraphic boreholes – that will give us certain technical information. We’re trying to identify thick horizontal sections where you can go after an unconventional play using horizontal technology.”
“We’ll then plan a horizontal programme for 2016, so each year we’ll enhance our understanding of how this play might work out,” he continues. Armed with this information, he is optimistic that the partners will have sufficient information to begin a drilling programme in 2017, with a view to developing commercial wells.
Such plans are business as usual for unconventional E&P firms, but he continues: “I believe if [the basin] produces, it’ll be the oldest producing rock in the world.” The Beetaloo may well mark a milestone not just for the sector, but for hydrocarbon development in general.
September saw the partners announce encouraging results from the Kalala S-1 well, and the beginning of drilling at the Amungee NW-1. According to a Falcon statement, the former reached a depth of 2,619 metres and encountered “a gross interval of over 500 metres shale gas with net pay exceeding 150 metres,” in addition to “excellent potential for gas-mature, gas-saturated and quartz-rich source rocks.” So far, so good then.
An update on Amungee, released on October 22, is similarly positive. Reports show continuation of the Middle Velkerri formation, 25 km east of Kalala, and indication of “a highly prospective gas mature depth window.”
The expertise and technology developed by the US shale industry is also aiding the company’s efforts. “Here at least, we have the benefit of a lot of the knowledge of what they’re doing in the US. There is a lot of new technology, such as [Diagnostic Fracture Injection Test] DFITS used as a precursor to doing fracks. Now, instead of a 1,000-m horizontal we can do a 2,000-m horizontal – all of that technology improves the chances of the Beetaloo of being successful,” O’Quigley says. “In terms of design, in terms of geo-steering, all the way to the compounds from which you design your frack material…”
Although it will be over a year before final decisions on Beetaloo production will be made, initial indications seem highly promising. Falcon, meanwhile, has plenty to be occupied with, as it hopes to move forward with other promising acreage – namely its 7.5 million acres in the southwest of South Africa’s Karoo Basin. It would seem that despite a gloomy outlook for some major producers, there is plenty to be excited about in the unconventional E&P sector.