Buru banks $5m to fuel Rafael gas development
Buru Energy is $5 million richer after selling its remaining 25 per cent interest in one permit and three applications in the onshore Carnarvon Basin to the now sole owner – Mineral Resources’ wholly-owned subsidiary, Energy Resources.
The unconditional sale of Buru’s non-core petroleum assets signals its intention to focus on the development of its 100 per cent-owned Rafael gas-condensate field within the onshore Canning Basin, where it is aiming to achieve first production by 2027.
Management says the cash injection, in addition to the recent $4million it received from Origin Energy as a contribution for the Rafael seismic survey, will be used to progress the execution of the project’s phased development strategy revealed earlier this month.
Buru Energy chief executive officer Thomas Nador said: “The sale of Buru’s interests in the onshore Carnarvon Basin to MinRes represents another important milestone in focusing our portfolio, strengthening our balance sheet, and positioning for the future. As our current joint venture exploration partner in the Carnarvon Basin, MinRes is a natural acquirer of these interests, and the sale is a value adding outcome for Buru shareholders and the business. The sale will simplify the Company’s oil and gas portfolio and enable it to allocate additional capital and resources toward its strategic priority to develop the first proven significant conventional gas and condensate discovery in the Canning Basin of Western Australia.”
The company says its two-phased approach to the Rafael development will be contingent upon appraisal drilling and gas reserves. It will meet the energy needs of the Kimberley at low-case volumes during phase one and may also produce blue methanol and/or ammonia products, in addition to exporting liquified natural gas (LNG) as part of phase two if a high-side resource is proven.
At a low-case gas volume outcome of less than 59 BCF of gas and 1.2 million barrels of condensate, Buru will provide gas to the Kimberley by developing a small-footprint, scalable LNG supply stream, where gas and condensate will travel through underground pipes from Rafael to a mini-LNG plant, before being trucked to Broome and regional communities for power generation.
Planning for phase one is already progressing towards front-end engineering design (FEED) and Buru is aiming for first production in 2027, with a project lifespan of 20 years. As part of the plan, Buru will drill one to two appraisal wells, which will be completed as producing wells that are expected to deliver between 0.05 and 0.10 million tonnes per annum of LNG from a gas flowrate of 8 to 16 million standard cubic feet per day (mmscf/d) and 225 to 450 barrels of oil per day (bopd) condensate.
If, as a result of next year’s appraisal drilling, Rafael’s volumes firm-up at between about 400 and 800 BCF and can be converted from contingent resources to reserves, Buru will select concepts which involve the completion of phase one, in addition to the production of blue methanol and/or ammonia products as part of phase two.
“Blue” refers to a low-carbon method of production and in this case refers to methanol and ammonia derived from natural gas in a process where carbon dioxide by-product is reinjected into subsurface reservoirs. The process is known as carbon capture and storage (CCS) and vastly reduces “well-to-tank” carbon dioxide emissions.
Management says the phase-two plan will deliver LNG, condensate and blue methanol produced at a plant which will also support CCS. The plant will produce between 0.5 and 1 million tonnes per annum of blue methanol and be fed by gas from five to 10 appraisal wells in Rafael, flowing at between 55 to 110 mmscf/d.
Buru says its methanol plant could reach first production in 2029 and has a project life of 20 years. With methanol becoming more widely accepted as a cleaner option for marine fuels, the company may service the international marine power markets through export or use the product for regional bunkering in Australia.
Management is also considering plans to produce blue ammonia from Rafael during phase two by commissioning an ammonia plant, again supported by CCS, to meet the needs of the export market acting as feedstock for a global fertilizer industry that is undergoing rapid decarbonisation.
To address Rafael’s high-side contingent resource volume case of more than 1000 BCF of gas and 20 million barrels of condensate, the company will complete its phase-one plan, in addition to exporting LNG through a small-scale, permanently-moored floating facility in King Sound at the mouth of the Fitzroy River near Derby.
The facility is planned with a capacity of about 1.6 million tonnes per annum of LNG and will be fed by up to 12 appraisal wells to be drilled and completed within Rafael. The wells are modelled to flow gas at about 280 mmscf/d and the project has an estimated life of 10 years, kicking off in 2029.
Buru has sent a clear message with its divestment decision and the company seems set to deliver its first conventional gas and condensate project in the Canning Basin. Following data acquisition, it will interpret a fast-tracked 200-square-kilometre 3D seismic volume over Rafael later this year to inform appraisal drilling as its rig selection advances simultaneously.
Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au