Beetaloo could bring long-term gas supply to Australia's east coast market

According to research by Wood Mackenzie, Australia's Beetaloo basin is the only new gas resource with sufficient scale to supply the east coast market in the long term.

Australia's east coast market has seen a rapid transition from conventional gas resources to unconventional gas supplies. As legacy gas sources mature and decline, the race is on to seek alternative supplies to meet east coast demand. Last year, unconventional coal seam gas (CSG) accounted for two-thirds of total east coast gas production.

However, as CSG is mostly produced for LNG export, the answer to the east coast's supply squeeze could lie in the country's largest untapped unconventional sources – the deep coals of the Cooper Basin and Beetaloo shale.

"A tightening domestic market and rising prices provide strong incentives for operators to develop these stranded resources. In the case of Beetaloo, the potential multi-tcf scale of the play could offer long-term security of supply," said senior analyst Chris Meredith at the APPEA conference in Brisbane.

"To compete with the LNG netback price, unconventional plays will need to breakeven at between US$7 and US$9 (per mcf). For the Beetaloo, a development would need at least 5 tcf and significant associated liquids to meet this after accounting for pipeline costs," added Meredith.

And it is not just about cost. To progress the project, the regulatory process will need to be scalable to meet the number of wells required, the fiscal environment will need to be stable, and operators will need stakeholder support.

"There is also competition out there, including proposals to import LNG into the east coast market. We anticipate at least one import terminal progressing, but even so, the need for new sources of unconventional gas supply will continue to grow," concluded Meredith.