Chevron’s move comes despite confirmation of a large gas resource strategically placed near the hub of the Australian east coast gas pipeline transmission network.
Chevron believes that the onshore Cooper basin no longer aligns strategically with the company’s global exploration and development portfolio, particularly as the exploration budget has been slashed for its worldwide operations.
There is some justification in that Chevron has access to trillions of cubic feet of natural gas offshore Western Australia in the North West Shelf, Gorgon-Jansz and Wheatstone projects from where it can easily target major international LNG buyers.
The move comes hard on the heels of Chevron’s announcement to quit its 50% interest in the Caltex downstream holdings in Australia (OGJ Online, Mar. 27, 2015).
The exit means that Beach and Icon now must find a new partner, or go it alone. In any event there is likely to be a slowdown of the Nappamerri Trough work program to a level that better matches current market conditions.
Beach now reverts to 100% interest in PRL’s 33-49 in South Australia and 64.9% in ATP 855 in Queensland with Icon holding the balance of 35.1% in that block.
Beach picked up the Chevron 18-30% interest for no consideration, thus increasing its 2C resources without Chevron holding any further claim on the gas. Icon’s interest holding is unaffected by Chevron’s withdrawal.
Beach and Icon are currently reviewing the data gathered in the Stage 1 exploration project and don’t expect to spend much more capital until at least the second half of 2016. Beach says the retention leases are all in good standing and the Queensland permit work program is on track.
Stage 1 achieved its primary technical goals, providing a better understanding of the geology, the delineation of target zones, and identification of additional targets beyond the original aim of the Roseneath-Epsilon-Murteree shale play.
The ability to fracture stimulate has also been proven and gas flowed to surface indicating adequate deliverability.
Total 2C resources across all the blocks are estimated to be 1.5 tcf.