Empire Energy Group says it has a “nationally significant resource” on its hands after an independent review of its wholly-owned EP187 site in Australia’s Top End boosted its estimated 2C contingent resource by 270 per cent to 1739 petajoules (PJ).
The company says the analysis also increases its conservative 1C contingent resource by 217 per cent to 304 PJ and its best-case 3C contingent resource by 129 per cent to 3507 PJ. The figure for the 2C resource represents an average estimated ultimate recovery (EUR) of 7.9 PJ per well. The respective 1C and 3C scenarios were 6.2 PJ and 9.3 PJ.
Management believes the analysis shows that due to the high calorific value of its EP187 gas in the world-renowned Beetaloo sub-basin, it has a higher energy content than equivalent dry gas volumes. Notably, this may allow it to attract a price premium for its product in gas sales scenarios, which it sees playing a vital role in terms of energy security, both nationally and internationally.
The volumes delineated in EP187 represent a nationally significant resource of low CO2 gas. Warnings abound from multiple sources that Australia faces material gas shortfalls in years ahead, a view that I share given the enduring role of gas. The Beetaloo and more particularly Empire’s resource has the potential to service domestic demand gaps and international sales via LNG. Empire Energy Group managing director Alex Underwood
With the momentum of a resource upgrade behind it, Empire is also gaining in enthusiasm about other key numbers underpinning the project.
“At an assumed gas contract price of $10/GJ, each development well in EP187 could produce between $62 million and $95 million of revenue over its life, compared to a development cost of about $20 million in the pilot phase and or roughly $15 million in larger development scenarios.” Mr Underwood said. “Netherland, Sewell and Associates has identified over 200 2C drilling locations, representing LNG scale development potential.”
Fresh from receiving the green light from the Northern Territory Government to shift into production, Empire is now charging ahead with a clear goal on the horizon.
“Our current capital resources allow us to proceed to a final investment decision on the pilot project this year without raising any further capital in the near term,” Mr Underwood added. “This will allow the team to focus on further value accretive work including field development planning, indigenous consultation, regulatory approvals and gas sales negotiations.”
Empire’s revised estimate of its EP187 resource includes technical results from its 2022 drilling, fracture stimulation and production-testing campaign.
Management believes the results from its Carpentaria-2H and Carpentaria-3H wells demonstrate that it can cost-effectively deliver 3km of hydraulically-stimulated horizontal wells utilising Australia’s existing rig and frack spread fleet. The wells represent Empire’s intended design for future development of its Carpentaria project at EP187.
The Australian Energy Market Operator, in its annual forecast for the nation’s gas supply that was released in March, identified continued risks of near-term shortfalls and a longer-term supply gap due to declining gas production in the southern States. It found that despite increased production commitments from the gas industry since its last update, ageing gas supply in the south was declining faster than projected demand.
That was leading to shortfall risks in the southern States, in part due to limitations on how quickly pipelines from Queensland could deliver gas support.
But despite gas falling out of favour in some quarters, it appears Australia’s demand for it will not be going away any time soon. With other supplies facing headwinds, Empire may soon find a growing crowd cheering them on from the sidelines as they push towards production.
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