Chevron (NYSE: CVX) has descended on the Australian shale gas market with a $349 million farm-in for two shale prospects covering some 810,000 acres in central Australia's Cooper Basin.
Chevron will initially acquire a 30% working interest in block PEL 218 in South Australia, and an 18% working interest in block ATP 855 in Queensland. The blocks are controlled by Australia's Beach Energy.
The deal gives Chevron the option of later increasing its interest in PEL 218 to 60% and its interest in ATP 855 to 36%.
The Cooper Basin is expected to have as much as 85 trillion cubic feet of gas, but we're still up to 18 months away from commercial viability determinations at Cooper Basin.
Related article: Surging Australian Gas Prices Turn Asian Consumers Towards Russia
Earlier this month, PetroChina and ConocoPhillips also announced a shale gas exploration deal in Western Australia.
Australia's current annual domestic gas usage stands at 1 trillion cubic feet of gas.
We are now seeing a new trend in Australia that has foreign investors moving away from the focus on the country's large conventional gas reserves and increasingly towards the unconventional plays.
In 2012, Australia started talking about its shale gas resources, billing them as lower in liquids due to geological advantages. However, extraction and export will require significant investment in infrastructure. Cooper Basin, however, is one area where infrastructure is already largely in place because it has also been a focus of conventional production since the 1960s.
By. Charles Kennedy of Oilprice.com
Charles is a writer for Oilprice.com More