New gas policy helps Rafael development, says Buru
Buru Energy says a surprise State Government policy update has fortified its development strategy for its 100 per cent-owned Rafael gas field in Western Australia’s onshore Canning Basin, confirming its right to export gas.
The updated “Domestic Gas Policy” revealed this week confirms that fields such as Rafael, which are not connected to existing pipelines, must reserve only 15 per cent of their gas exports volumes for the WA domestic market. The government said its new guidelines would “safeguard and secure WA’s gas supply and support long-term economic and industrial development in the State”.
The update follows-on from a WA Government announcement in 2020 that tightened the State’s domestic gas policy by preventing gas export through existing pipeline networks.
Buru’s phased development strategy for Rafael already plans to meet the domestic gas market reservation with its low-side contingent resource and the company plans to export gas and chemical products if mid or high-side resource volumes are realised following appraisal drilling.
Buru Energy chief executive officer Thomas Nador said: “Buru welcomes the added certainty the updated Domestic Gas Policy brings to its Rafael gas and condensate development. The Canning Basin is not connected to an existing pipeline network. By confirming the project is able to export gas in the future provides Buru with strategic optionality to develop Rafael, and significantly enhances the attractiveness of the project to potential development partners. This is positive for the development of Rafael and the Canning Basin, positive for the region and positive for our shareholders.”
Management says its phased development plan for Rafael, which is the first gas-condensate field in the Canning Basin, is viable for all contingent Rafael resource volumes as it moves ahead with de-risking subsurface uncertainties and firms up volumetric estimates, with a 3D seismic survey imminent and to be followed by appraisal well drilling next year.
Phase one of the development plan will address a low-case volume outcome of less than 59 billion cubic feet (BCF) of gas and 1.2 million barrels of condensate and will provide energy to the Kimberley through a small-footprint, scalable liquefied natural gas (LNG) supply stream. 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.
The plan 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, Rafael will require one to two appraisal wells, which will be completed as producing wells that are expected to deliver between 0.05 – 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 prove to be between 400 and 800 BCF, 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 by which 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 it will construct a CCS-supported plant which will produce between 0.5 and one 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. The plant could reach first production in 2029 and have a project life of 20 years, providing the international marine fuel markets with the cleaner option power source through export or use the product for regional bunkering in Australia.
Buru plans on producing blue ammonia from Rafael by commissioning an ammonia plant, again supported by CCS, to meet the needs of the export market. The ammonia would be piped to the mouth of the Fitzroy River at King Sound near Derby for export, acting as feedstock for the global fertiliser market 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 producing LNG for export through a small-scale, permanently-moored floating facility in King Sound.
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.
Earlier this week, Buru signalled its commitment to the Rafael development by selling its interest in one permit and three applications in the onshore Carnarvon Basin, to the now sole owner – Mineral Resources’ wholly-owned subsidiary, Energy Resources. Management says the move has simplified the company’s oil and gas portfolio and enables it to allocate additional capital and resources towards the commercialisation of Rafael.
Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au