In the midst of uncertainty surrounding future gas supply to Australia’s East Coast gas, coal seam gas explorer Comet Ridge has signed a Memorandum of Understanding (MOU) with APA Group to transport gas from the largely unexplored Galilee Basin to East Coast gas markets.
Comet Ridge Managing Director Tor McCaul believes the Galilee Basin, located 200 kilometres west of Queensland’s Bowen Basin, will play a big part in Australia’s future gas story.
The recently signed MOU with Australia’s largest natural gas infrastructure business, APA Group, further highlights the basin’s exploration potential.
APA Group has agreed to work with Comet Ridge to transport gas from Galilee to the East Coast via a new transmission pipeline and associated midstream infrastructure that APA will build, own and operate.
Mr McCaul said the main aim of the transportation project was to work with APA and its extensive network to connect Galilee to markets in Gladstone and Brisbane, but this could also extend to markets further south.
“We think Galilee is going to play a big part in the country’s gas story,” Mr McCaul said.
“It’s one of the few remaining places in Queensland where there’s actually large volumes of gas that can be gathered up and sent to industrial buyers or to places like Gladstone for LNG.
“What we do best is work on the subsurface, so having someone like APA in there means that we can potentially say to someone in Brisbane, you can sign up for a Galilee molecule, and APA’s got the capacity to actually get it to you. That’s what’s significant.”
The MOU provides a framework of cooperation between the two parties with the next steps involving confirmation of the pipeline’s exact route.
Mr McCaul said the two companies are currently working out what is the most logical route and what are the connection points that will take full advantage of the supply.
“I think logically the gas should come out of the basin south-easterly because that’s where the major market is, down towards Gladstone or Brisbane,” Mr McCaul said.
“We’re probably a little bit too far to the east, and too close to the coast to really be considering a westerly connection over to the Carpentaria line. APA’s got the Carpentaria line that runs up to Mount Isa in the west and because Galilee is such a big basin, for us, going west would just be the least practical.”
APA Managing Director Mick McCormack said the company was pleased to be working collaboratively with Comet Ridge to provide customers with a new gas transportation service.
“The interconnected nature of APA’s East Coast Grid enables potential new producers such as Comet Ridge to explore opportunities to market their gas in multiple domestic and international gas markets. Our infrastructure continues to connect more gas resources with more gas markets to proactively meet the needs of our customers,” Mr McCormack said.
Galilee’s CSG boom
Comet Ridge has been active in Galilee since 2010 with nine coal seam gas wells booking 1,870 petajoules of 3C contingent resource, as well as the completion of a detailed 250km 2D seismic survey. Production tests in the basin also focused on producing water flow from the coals.
“The basin’s actually quite large, it’s around 250,000 square kilometers and there’s only been a couple of hundred wells drilled in it since the 1920s,” Mr McCaul said.
“Compared to a lot of other places, it’s pretty underexplored.”
Mr McCaul said initially Comet Ridge focused purely on coal seam gas, but over the last year, conventional exploration for sandstone gas had become a more significant focus for the company.
“I see conventional gas and CSG as complementary, because they’re so close together – our resource bases are 3040km apart – so if you’re out there working on one, it’s tempting to go and get the other one going,” Mr McCaul said.
“All of our field focus over the last five or six years has been on CSG, and it’s really just in the last year where we’ve gone back to look more in detail on the conventional gas. I see the next wells out there being conventional, but the next set after that may well be back to CSG.
“Galilee has good solid potential in both CSG and conventional sandstone gas.”
Mr McCaul said there had always been an interest in the Galilee Basin among the exploration community, but it was often perceived as further away than it actually was.
“Where we are in Galilee is roughly the same distance from Gladstone to Wallumbilla along the pipeline. Everyone knows Wallumbilla as the Surat Basin hub and a lot of gas goes from Wallumbilla through to Gladstone, but Galilee is not that much further. We’re in the same sort of ballpark.”
With more pipelines and infrastructure now available, the demand for gas is increasing and Mr McCaul said Galilee’s significant resource volumes would be an asset in the future.
“The numbers are actually quite large so when you look at the unit cost of moving gas around, if you’re moving big volumes the unit cost becomes more manageable,” Mr McCaul said.
“Nothing has moved yet from the contingent resource category up into the reserves category, but we see this as the next step because there’s just not anywhere around Queensland where this sort of volume of gas is available at this stage.”
Putting the pieces together
While LNG projects like Santos’ GLNG in Gladstone have dramatically changed the demand picture in the sector, gas is becoming harder to get in Eastern Australia.
“Victoria and New South Wales have been difficult to get boots on the ground and get work done but Queensland has been the progressive state in terms of moving gas forward,” Mr McCaul said.
“People sometimes talk about the major demand in LNG, but there’s also good demand from industrial customers. There’s been industrials buying gas around this part of the world for nearly 50 years and part of our goal is to fulfil that demand and move gas from Galilee through to the customers, wherever they may be.”
Construction phases in unconventional and gas transportation projects generate a lot of interest and opportunities in the sector. Mr McCaul said this is only the beginning, not only for Comet Ridge and their project with APA Group, but for the basin in general.
“I have no doubt Galilee will have its day in the sun. It’s had people exploring for a long, long time, but no one’s yet been able to put all the jigsaw bits together to make it a producing project. Higher gas prices are also a major driving factor now as well.
“The ingredients are there; the volumes and contingent resource volumes are very large and we see a real demand for gas coming. Actually it’s here already, and I think it’s going to get stronger. So the pieces are all there, and with APA, we’re working to put them all together,” Mr McCaul said.