Developing gas in the Territory, as seen by an industry leader


p2422 Origin 1By ERWIN CHLANDA
The state of play of the Territory gas industry is described more cautiously by a resource executive at the Annual Geoscience Exploration Seminar in Alice Springs this week when compared to the hype of the Giles Government.
Even if the current fracking enquiry gives the green light, it will take up to eight years until it’s known how much of currently estimated deposits are actual reserves. And the industry’s future will depend on much more exploration, the market and politics.
“There is a lot of blue sky in terms of resource potential,” says David Close, Chief Geologist and Unconventional Exploration Manager of Origin, during an interview with the Alice Springs News Online.
And independent monitoring of operations still seems to be a work in progress.
Mr Close says the volume has emerged as less of a risk in business and commercial terms during this “early phase” of the exploration program.
“Origin’s resource in the Beetaloo basin may be viable.
“We’ve had two years of exploration and it’s gone well. Further appraisal will be the key step to go from a technical success to potentially a commercial project.”
He says social and environmental impacts of a full development would be assessed in the future through a thorough Environmental Impact Statement process.
p2422 David Close 1About gas in the Northern Territory generally Mr Close (pictured) says: “The potential range of value is really wide because we don’t have a lot of data.
“If it is viable as a commercial project it would be very meaningful in terms of gas supply for Australia.
“It is potentially of a comparable scale to some of the other major projects in Australia, the coal seam gas projects in Queensland that have gone to liquefied natural gas (LNG) over the last decade, and also supply substantial gas into the domestic market, as well as the Cooper Basin which for 40 years has been a major supplier of east coast gas.”
What percentage of the national energy supply – gas, coal, hydro, renewables – could NT gas represent?
“That’s almost impossible to answer. It will depend on so many factors but gas will play a part for a number of decades. Most energy transition plans from where we are today to a lower emissions future include gas as an important step.
“At the moment gas supplies in the order of 20% to 30% of the nation’s fixed electricity distribution. It is used in manufacturing extensively. Australia’s annual consumption is in the order of one to one and half trillion cubic feet (TCF).
“Currently very little NT gas is consumed throughout Australia.”
The opportunity for the Territory’s unconventional – fracked – gas would come with the scaling down of conventional gas in the east coast market.
The Tennant Creek to Mt Isa pipeline “is of course a fundamental part of that proposition,” says Mr Close.
The NT has a “very low reserve base at the moment.
“In the ASX release in February Origin announced a 6.6 TCF contingent resource.
“You would expect some of that to be converted to a reserve, not necessarily all of it.
“That is the key step that we need more data to be able to confirm – will any of it progress from contingent resource to a reserve? And if so, how much?
“And then we can answer those questions about how realistic is it that these resources will be part of the long term solution to the east coast supply gap and if the reserves are sufficient to underpin both domestic and export markets.”
At best NT gas would displace Cooper and Bass, as they decline: “There is no reliable way to  estimate how NT gas might displace other sources of gas and / or future generation options.
“More data, the free market and government policy of the day will dictate that.
“We want the [fracking] enquiry to run its course, we want that to be a robust process,  it is an independent scientific panel, they will report their findings in due course.
“If we are able to go back to continue our exploration program then we’ll talk with the regulator and ensure we have the work program in place to do that.”
If the green light is given, how long will it take to have certainty about the size of the actual gas resource? We heard fantastic figures from the last Chief Minister.
“There is a study from 2013 by the Energy Information Administration which estimated over 200 TCF for the Northern Territory. That number gets used a lot as a reserve number.
“It is inaccurate to describe it as that. To prove up what is there and how much is there would take anywhere from three to eight years. It won’t be instant.
“We have to get back on the ground to do some more drilling and testing. It will be a multi-year process.”
The News put to Mr Close that pro-fracking circles are claiming there have been 1000 fracked wells in Australia without any serious problems. Do we really know what’s going on, several thousand meters below the surface?
Says Mr Close: “Of course we do. Absolutely we do. The gas is coming from the reservoir into the well bore, and then up the well bore to our well head where we can monitor the exact rate, pressure and so forth.
“If anything different was happening we would understand that from what we produce at the well bore. We understand the pressures, the rock integrity. We understand in detail the entire system, our impact on it, both in the drilling stage and also the production stage.
“We monitor and we have decades and decades of data to show that there are no systemic environmental impacts from these activities.”
Even if they were under ground you would know? Contamination of the water table, for example.
“That’s very close to the surface. We have thousands of bores that go into aquifers, that people take water from, people drink it around the world – have done for decades.”
What could happen below, 4000 metres below, for example?
“The gas has been in that rock for hundreds of millions of years. It doesn’t communicate fluids outside that rock. If it did there wouldn’t be gas inside that rock. It is a fully-contained, self-contained system.”
But you puncture that system.
“We decrease the pressure. You are not flowing things into the earth. You are flowing gas out of the formation to the surface.
“So what you are left with is a rock as it was before, with less gas in it.”
We put to Mr Close that the safety related monitoring he describes is carried out by his staff. Tina Hunter says independent monitoring is essential. To what extent is that in place?
CLOSE: This has not been introduced in any Australian jurisdictions as far as I know. It does occur in NZ, I understand. We do have an internal independent technical authority, whose function is almost identical to that described by Dr Hunter.
NEWS: How is it being done?
CLOSE: Once under production all our wells are monitored in accordance with our Well Integrity Management System, which dictates frequency of physical inspection and in many cases continuously monitors indicators of integrity such as well head pressure and rates.
NEWS: Is every single operation the subject of independent monitoring?
CLOSE: Most of a well’s life cycle is spent in a production phase, during production it is becoming standard to continuously monitor data from wells and to be able to operate them remotely, that means wells can be shut in or turned off from a central control centre as well as at location.
NEWS: Is that 24/7?
CLOSE: The monitoring I have just described during the production phase is typically 24/7 yes. There are no proposals I know of to have independent monitoring of wells 24/7 as that would not be practical.
PHOTO at top: An image shown by Mr Close during his presentation at the seminar.


  1. Origin announced a 6.6 TCF contingent resource, clean, high quality gas.
    Very likely that will be increased to 8 TCF with further exploration but could be a lot more.
    The world class PNG LNG project is not much bigger in terms of reverses.
    Production workforce is 2,400.
    Around 1 billion cubic feet of natural gas turned into LNG every day.
    Produced over 7.9 million tonnes of LNG in 2016.
    Over 210 operations and maintenance technicians being trained, 25% whom are women.
    K12 billion spent on services provided by Papua New Guinean companies since 2010.
    More than 17,500 Papua New Guinean entrepreneurs assisted by the ExxonMobil established Enterprise Centre to help develop their business.
    1,500 Papua New Guinean businesses registered on the PNG LNG-established Enterprise Centre Supplier Database.
    Over 55,000 workers were involved in the construction of the project, with 21,220 employed at its peak in 2012.
    More than 10,000 trained for construction and operation roles.
    More than 2.17 million hours of training through 13,000 training programs were delivered.
    A major player is oil search it reported a net profit for 2016 of $US89.8m ($117m).
    Revenue from a PNG LNG sized plant in the NT that would flow to the NT Government is more than $30m per year for 30 years.
    From 2020 LNG prices are likely to increase by 20% which will result in even more revenue.
    The NT is a potential LNG giant on a world scale with existing resources and exploration is still in its infancy.

  2. They haven’t been unconventionally using horizontal fracturing techniques for decades … that’s about vertical fracking. Can Mr Close keep his comments focused on horizontal fracturing?

  3. The Eastern seaboard is currently experiencing a very significant weather event. It is highly probable that the heavy rain and high winds experienced are related to the higher evaporation from warming seas. This warming is related to CO2 and methane gas in the atmosphere coming from our current fuel sources.
    The economics of the renewable sources are now such that it is time to follow this path and to put the brakes on fossil fuel developments.
    We can have employment and economic growth without the risks associated with gas and coal. NT Frack Free for me.

  4. @ Phil Walcott: With regards to risk, as someone with much knowledge in this area, can you identify the difference between vertical and horizontal fracturing?
    To the uninitiated there wouldn’t seem to be much difference between a purely vertical well and one that Js off into the horizontal a few thousand metres under the ground.
    I’m sure the many who don’t have a lot of understanding of the difference would appreciate it.
    I know I will, because the two methods look almost identical in terms of process and risk to me.

  5. Note: The wells are monitored during the production phase.
    After that, they pack up, turn it off, pour some concrete in the hole and leave it up to the government and tax payer to deal with the long term consequences.
    Frack Free NT is the only way we can guarantee the protection of our aquifers and direct investment into the renewable energy economy.
    No mention of the fugitive emissions that burden this industry with emissions as high as coal.

  6. Contamination of aquifers from shale gas extraction is a reality.
    Many peer reviewed scientific papers have documented at the least a positive association with groundwater contamination and actual incidents of contamination.
    Aquifers have been contaminated with methane and heavy metals through mechanical failure and migration of substances taking advantage of increased connectivity between groundwater systems created through hydraulic fracturing.
    The groundwater dependent Territory cannot afford to take such a risk. If exploration continues into production it is only a matter of time before contamination occurs.
    Such a huge potential reserve has vast carbon implications.
    We are now at such a stage of warming that discovered deposits need to stay in the ground so we can prevent further catastrophic climate change.
    The cosy relationship between government and industry also leaves a lot to be desired. There is no social licence to operate and there never will be in the Territory.

  7. @ Harold: Vertical hydraulic stimulation of conventional gas wells is done under lower pressures, does not include the hundreds of tonnes of chemicals and is about displacing volume to increase pressure of gas.
    The horizontal, slick water fracking is done under very high pressure, uses tens of millions of litres of water and hundreds of tonnes of chemicals, many of which are untested for their biological impacts.
    The variables to control are much higher in number and risk due to the depths and lengths of wells combined with the uncertainty of how the geology responds.
    It is a stark difference between the two. One has been done at Mereenie for decades and one is new to Australia. It is a myth that we’ve been fracking for decades.
    You can choose to believe industry spin and myth or read wider and get closer to the truth. Your choice. But it’s our children’s future that you decide for.

  8. After years of research the US EPA has proven that fracking unconventional shales has contaminated water.
    It’s a shame we don’t have independent monitoring here in Australia.
    One specific comment on a quote by Mr Close, who says: “Most of a well’s life cycle is spent in a production phase.”
    Sorry mate, but the production phase can be as little as several years, up to a decade or two.
    But that well stays there as a potential contamination pathway until the end of time.
    Origin admitted at the formal hearing of the NT Fracking Inquiry in Darwin that their company takes no responsibility for what happens to those wells after they “plug and abandon” the well.
    The liability stays with the local landholder, the Government and the local community.

  9. I always find the use of the word “believe” interesting.
    It implies a fixed position that regardless of contrary evidence will not evolve.
    Anyway, you have partially explained the difference but not identified where the associated increase in risks. If the pressure is greater, is there not a resultant change in the construction of the well?
    Are you suggesting there isn’t?
    If you could identify a couple of places where the horizontal method has failed and resulted in significant environmental and water table damage it will afford a better understanding of the issues with the horizontal method .
    To a layman it just seems that given the distance between the target material and the water table and that the wells are effectively identical at that water table and for a great distance below it, there doesn’t appear much likelihood that the risks are meaningfully different.

  10. Good discussion, and a fair few issues raised – I won’t try and address them all and don’t want to get into a back and forth in the comments section. But I do want to just address the vertical vs horizontal discussion.
    It is certainly true that there are relatively few horizontal fracture stimulated wells in Australia (there are tens of thousands in the USA and Canada), but the activity is identical except for volume. And although the volumes are higher for horizontal wells, there are fewer wells needed. Overall horizontal wells are a much more efficient way of extracting gas for a given amount of input effort / material.
    It is not true that the pressures are higher necessarily in horizontal fracked wells. For example, vertical fracked wells in the Cooper Basin (which are more like Mereenie than the Beetaloo) require higher pressures to stimulate than a horizontal well in the Beetaloo.
    But that’s a bit of a red herring anyway, wells are designed for the expected pressure so the risks are managed regardless.

  11. @ Jimmy Cocking: Is there any chance that you could respond to either my post or refute that of David Close?
    Or is it normal for believers to go into hiding when finding themselves in a corner where they are required to provide facts?
    I’m still hoping that I have something to learn here and I’m sure a learned person like yourself or Phil Walcott are more than qualified to assist.

  12. @ Harold. You have a lot of good questions. Unfortunately there is no one to answer them.
    An untested resource to be accessed by an untested technology in an environment no one has studied.
    You are in the dark, as is this is “expert”, as am I.

  13. @ Harold: Sorry, I was interstate on business. My life doesn’t revolve around comment sections in online publications.
    Read this report. It is well researched with many published papers cited. It is probably the best document I have found to describe what is needed – the case for an urgent ban on fracking.
    Oil and gas companies will always say it is safe, even if it is not, there are numerous examples in other sectors of similar corporate deceit.

  14. @ Harold and others interested in the emerging body of research on the health impacts of shale gas fracking in the US.
    Compendium of scientific, medical, and media findings demonstrating risks and harms of fracking
    (unconventional gas and oil extraction by the Concernerned Health Professionals of New York).

    It is a very recent publication with the fourth edition published in November 17, 2016.
    If this and the previous post isn’t enough evidence for you, then I am not sure what you’re actually looking for.


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