Beetaloo Energy high-stakes flow test to unlock first NT shale gas

It has been a busy few months for junior gas player Beetaloo Energy Australia as it moves towards a major milestone of flow testing ahead of production at the company’s Carpentaria-5H well in the Northern Territory’s massive Beetaloo sub-basin.

With a high-stakes flow test just around the corner and a crucial commercial green light on the horizon, the traders are piling in. Beetaloo Energy’s share price has roared to life, more than doubling from its May low of 15.5 cents to hit a sizzling 32 cents, signalling what could be just around the corner.

If the company can pull it off, it will be the first time that commercial quantities of shale gas have been produced in the territory. More importantly, it could also prove once and for all that the sub-basin has the muscle to eventually rival Australia’s mighty North West Shelf.

Adding to the high-stakes moment, the Northern Territory Government has signed a long-term offtake agreement with Beetaloo Energy and is banking on the emerging producer to deliver a minimum of 25 terajoules of gas a day – with an option to lift that to 35TJ if production fires as planned – to help plug a looming supply crunch.

A rapidly declining offshore supply of gas from ENI’s underperforming Blacktip field has forced the territory’s primary energy provider, Power and Water Corporation, to strike expensive emergency gas import deals with Queensland suppliers and it is now shelling out millions on pipeline upgrades. 

With more than 90 per cent of the territory’s power coming from gas-fired generation, a market hungry for supply is likely to seize on any positive news out of Beetaloo Energy.

Beetaloo Energy is sitting on a gas giant in the heart of the Northern Territory. Its acreage spans the thickest known section of the highly prospective Velkerri Shale formations in the Beetaloo Basin, with an average gross thickness of 300 metres, making it a geological sweet spot for shale gas development.

The company’s independently assessed contingent resource clocks in at a hefty 1.6 trillion cubic feet (TCF) of dry gas in the high-quality 2C category, meaning its discovery has been confirmed and is considered potentially recoverable with reasonable certainty.

Zooming out, the broader Beetaloo Basin itself is estimated to contain more than 200TCF of gas, positioning the company front and centre of what could be one of Australia’s most significant energy developments.

Beetaloo Energy picked up its pace markedly in May after its development activities were delayed three months by heavy wet-season rains. To get the ball rolling, a $35 million jumbo placement was put away at 16 cents a share before the company fired the starter’s gun to open up its massive horizontal Carpentaria-5H well.

Stimulation of the hole roared to life in mid-June. Oilfield heavyweight Halliburton rolled in with a monster 42,000 horsepower spread to punch more than 60 fracture stages into a 3.3-kilometre section of the Velkerri B Shale, making it the biggest fracture attempted in the Beetaloo sub-basin.

By early July, the program was hailed a resounding success, with Halliburton driving 67 slickwater fracks into the rock at breakneck pace. 

Water and sand were pumped underground at more than 100 barrels a minute, cracking open up to five stages a day. In total, a staggering 11,000 tonnes of sand was rammed into the shale - about 337,000 pounds per stage - to keep the fractures wedged wide open.

Beetaloo Energy says the well has now been cleaned out and allowed to soak for a month before the all-important flow testing gets underway. The tests are due to start any day now. 

They will run for 30 days with results expected by late September. A strong performance from C-5H would go a long way towards proving up the basin’s commercial potential, setting the scene for pilot production.

Beetaloo Energy has even more reason to be upbeat right now, after neighbour Tamboran Resources revealed a standout result from its Shenandoah South 2H sidetrack well. 

Tamboran’s 1671m horizontal well was drilled into the same Velkerri B shale and pumped out an impressive initial rate of 6.8 million cubic feet of gas a day over its first 60 days, easing only slightly to 6.4MMcf/d. In a dramatic twist, production ticked up to 6.5MMcf/d between days 60 and 90 – without a single downhole tweak and even as wellhead pressure eased.

In late June, Beetaloo Energy also secured another vital piece of the puzzle when the area’s traditional owners, the Mambaliya Rrumburriya Wuyaliya Aboriginal Land Trust, formally consented to the sale of appraisal gas at an on-country meeting convened by the Northern Land Council. 

If the flow test stacks up, this crucial consent will then unlock the territory government’s vital beneficial use of gas approval – the green light needed for a final investment decision. That decision in turn will trigger $30 million in Macquarie Bank infrastructure funding to build the pilot plant, setting Beetaloo on course for first shale gas production in the second quarter of 2026.

The company has locked in a weighty $65 million funding package, with $30 million earmarked for a research and development facility to supercharge its next growth phase. The cash injection will bankroll exploration, appraisal and development drilling – including the high-impact Carpentaria-5H well, while also covering the build-out of vital infield infrastructure to keep the project’s momentum rolling.

Of course, nothing is certain in the notoriously fickle oil and gas game. But should C-5H prove up commercial rates, it could spark a rush of interest from the majors – particularly United States shale veterans eyeing a basin some believe could host as much as 500 trillion cubic feet of gas.

For punters, the coming months promise to be pivotal. If the flow rates meet expectations, the company could lock in its place as the Northern Territory’s first onshore shale gas producer – putting it firmly in the national energy spotlight.

Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au