Amidst new legislation aiming at curbing surging energy prices on the east coast, Empire Energy Group’s Beetaloo sub-basin gas assets in the Northern Territory have been made exempt from a temporary domestic price cap of $12 a gigajoule.
The new 12-month ceiling targets producers with new domestic wholesale gas contracts, however the directive only applies to in-operation gas fields – leaving Empire’s undeveloped holdings unaffected.
For other producers pushing gas from established operations, the regulation triggers a massive step down in potential revenue given the year’s average energy price of around $41/GJ.
The Federal Government’s bill was designed to remove some of the financial burdens levied on cash-strapped east-coast energy consumers that have seen their power bills rise from between 20 to 30 per cent in 2022. Its introduction follows a recent report by the Australian Competition and Consumer Commission, or “ACCC” which indicates that without mediation the nation’s east coast will suffer even more gas shortages and price hikes next year.
The ACCC’s report states east coast markets faced a 56 petajoule gas shortfall in 2023 with exporters sending the bulk of their inventory to overseas buyers.
The decision to omit underdeveloped gas projects from the proposal was intended to ensure the supply of new gas resources remained on track.
Speaking on the matter Federal Treasurer Jim Chalmers stated: “New sources of supply from undeveloped fields will be exempted from the cap, and instead be covered by the reasonable pricing provision, to ensure incentives to invest in new supply are maintained.”
Sydney-based Empire says the only way to soften price hikes sustainably is to boost supply to the east coast and claims its in-development gas plays in the Beetaloo could play a key role in answering the call.
Earlier this year the company declared its holdings in the area held a contingent resource of 554 billion cubic feet of gas and 3.5 million barrels of liquids.
Empire is currently working up a host of gas wells in the zone including the Carpentaria-2H, Carpentaria-3H and Carpentaria-4V bores.
The company says new drilling, particularly at Carpentaria-4V could lead to a massive increase in its independently assessed resources. The exploration program is aiming to determine whether the gas-bearing Velkerri-B shales in the Western part of Empire’s EP187 tenement area extend into its Carpentaria-4V ground position.
The assumption follows a fresh evaluation by the NT government that indicates the Velkerri-B layer could hold 500 trillion cubic feet of gas.
Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au
