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Slide 1Cooper Basin Shale Gas Review – October 2010
Cooper Basin Shale Gas Review
Unconventional Gas Plays Conference
London - 5th & 6th October 2010
Lindsay Elliott, Bronwyn Camac, Mark Pitkin
Slide 2Cooper Basin Shale Gas Review – October 2010
Presentation outline
• Who – Beach Energy
• Where – Cooper Basin Australia
• What – Technical overview of the play
• How – 2 well drilling program
Slide 3Cooper Basin Shale Gas Review – October 2010
Compliance statements
Disclaimer
• This presentation contains forward looking statements that are subject to risk factors associatedwith oil, gas, geothermal and related businesses. It is believed that the expectations reflected inthese statements are reasonable but they may be affected by a variety of variables and changes inunderlying assumptions which could cause actual results or trends to differ materially, including,but not limited to: price fluctuations, actual demand, currency fluctuations, drilling andproduction results, reserve estimates, loss of market, industry competition, environmental risks,physical risks, legislative, fiscal and regulatory developments, economic and financial marketconditions in various countries and regions, political risks, project delays or advancements,approvals and cost estimates.
• All references to dollars, cents or $ in this presentation are to Australian currency, unlessotherwise stated. References to “Beach” may be references to Beach Energy Limited or itsapplicable subsidiaries.
• Unless otherwise noted, all references to reserves and resources figures are as at 30 June 2010and represent Beach’s share.
Competent Persons Statement
• This presentation contains information on Beach’s Reserves and Resources which have beencompiled by Mr Gordon Moseby, who is a full time employee of Beach, is qualified in accordancewith ASX listing rule 5.11 and has consented to the inclusion of this information in the form andcontext in which it appears.
Slide 4Cooper Basin Shale Gas Review – October 2010
Presentation outline
• Who – Beach Energy
• Where – Cooper Basin Australia
• What – Technical overview of the play
• How – 2 well drilling program
Slide 5Cooper Basin Shale Gas Review – October 2010
Beach Energy Limited
• Huge Cooper Basin shale gas resource potential
• High potential East African rift oil exploration acreage
• LNG supply potential from existing portfolio
• ASX 200 Energy company
• Diversified global interests
• 2P reserves of 66 MMboe
• Sustainable long-term oil and gas production
• FY10 production was 7.3 MMboe
Strong base
business
Game changing
long-term growth
potential
At the forefront of Australian shale gas exploration
Slide 6Cooper Basin Shale Gas Review – October 2010
Presentation outline
• Who – Beach Energy
• Where – Cooper Basin Australia
• What – Technical overview of the play
• How – 2 well drilling program
Slide 7Cooper Basin Shale Gas Review – October 2010
• Strategically located to supply existing and emerging eastern Australian markets
• Extensive infrastructure networks in place
• Beach has an extensive acreage position in prime areas
Cooper Basin - Location
Slide 8Cooper Basin Shale Gas Review – October 2010
• Nappamerri Trough is highly prospective for shale gas
• Potential gas in place in is greater than 200 Tcf
• Beach was a first mover in targeting acreage specifically for shale gas exploration
• Beach is developing key relationships to deliver technologies and new markets
Cooper Basin - Nappamerri Trough
Slide 9Cooper Basin Shale Gas Review – October 2010
Presentation outline
• Who – Beach Energy
• Where – Cooper Basin Australia
• What – Technical overview of the play
• How – 2 well drilling program
Slide 10Cooper Basin Shale Gas Review – October 2010
Geology of the Shale Gas Play - Nappamerri Trough
Slide 11Cooper Basin Shale Gas Review – October 2010
Nappamerri Trough - Early Permian shale sequence
Roseneath Shale
Epsilon Formation
Patchawarra Formation
Murteree Shale
Resistivity
50 - 70m
90 - 140m
70 - 80m
Burley-2
SonicGR
‘REM’
Slide 12Cooper Basin Shale Gas Review – October 2010
Why is REM section so interesting for shale & tight gas
1. Thick and consistent target section
2. Gas prone
3. Presence of over-pressure
4. Favourable geochemistry
5. Highly mature / over-mature
6. Suitable lithotypes
Slide 13Cooper Basin Shale Gas Review – October 2010
REM Thickness – consistent across trough
Holdfast-1 Burley High
West-East Line
• Target depths 3000 – 3600m
• Tectonically quiet
Holdfast-1
Consistent section
Holdfast-1 Burley High
Slight thickeningoff-structure
North South
West East
Slide 14Cooper Basin Shale Gas Review – October 2010
Rock-Eval data - Roseneath & Murteree Shales
Regional data initially suggested poor source for both shale units
400 420 440 460 480 500 520
T-max (°C)
0
100
200
300
400
500
HI (m
g/g
TO
C)
0.5% Ro
1.3% Ro
TOC (%)
0.0 - 1.0
1.0 - 2.0
2.0 - 5.0
5.0 - 10.0
10.0 - 100.0
UserCol_0 (NA)
0 100 200 300
OI (mg/gTOC)
0
100
200
300
HI (m
g/g
TO
C)
Type I kerogen
Type II kerogen
Type III kerogen
Type III/IV kerogen
TOC (%)
0.5 - 1.0
1.0 - 2.0
2.0 - 5.0
5.0 - 10.0
10.0 - 100.0
General
Slide 15Cooper Basin Shale Gas Review – October 2010
Lithology / Mineralogy
0
20
40
60
80
100
Cla
ys %
020406080100
Carbonate %
0
20
40
60
80
100
Silic
a +
oth
er %
Nappamerri
Rock composition - mineralogy from XRD:
– High silica, but moderate siderite based on cuttings
– Clays predominantly illite
– Expectation of good frac results
– Changed interpretation of Rock-Evaldata
Slide 16Cooper Basin Shale Gas Review – October 2010
Rock-Eval - Roseneath and Murteree Shales
0 100 200 300
OI (mg/gTOC)
0
100
200
300
HI (m
g/g
TO
C)
Type I kerogen
Type II kerogen
Type III kerogen
Type III/IV kerogen
Pseudo-Van Krevelen Diagram
TOC (%)
0.5 - 1.0
1.0 - 2.0
2.0 - 5.0
5.0 - 100.0
Area
Nappamerri
Other REM
Shale carbonate facies
Shale clastic facies - not recognised in Nappamerri yet
Regional Data
0 100 200 300
OI (mg/gTOC)
0
100
200
300
HI (m
g/g
TO
C)
Type I kerogen
Type II kerogen
Type III kerogen
Type III/IV kerogen
TOC (%)
0.5 - 1.0
1.0 - 2.0
2.0 - 5.0
5.0 - 100.0
General
As Received
Carb RemovedNappamerri Trough Data
Only run after CO3 removal
• High OI raised concern about kerogen type, however siderite presence suggested lithology control on OI
• Samples re-run after CO3 removal showed consistent low OI
• Two shale facies recognised from Rock-Eval data
• Bulk of low HI values resulting from high maturity
• Overall initial good source potential
Slide 17Cooper Basin Shale Gas Review – October 2010
Maturity data
• Nappamerri Trough has variable maturity gradients in Permian section
• Overprinted by late fluid flow in overlying Eromanga section
• Prospective Roseneath-Murteree Section 2-4%Ro depending on location
• High maturity due to highly radioactive granites in basement
• Neighbouring Patchawarra Trough has sedimentary basement and much lower maturity/heat flow
0 1000 2000 3000 4000
Depth (m)
0.10
1.00
10.00
%R
o Lower maturity
gradient in
shallow section
Beach Acreage
Slide 18Cooper Basin Shale Gas Review – October 2010
Overpressure - Nappamerri Overpressured at REM level
0 2000 4000 6000 8000 10000
Pressure (psi)
0
1000
2000
3000
4000
De
pth
(m
)
SonicResistivity
Burley-2
GR
Sonic anomaly in shales indicative of gas and overpressure
m
Regional pressure data –
over-pressures confined to
Nappamerri Trough
Beach Acreage
Slide 19Cooper Basin Shale Gas Review – October 2010
Play comparison
0 10 20 30
TOC (%)
0
100
200
300
HI (
mg
/gT
OC
) AreaBarnet
Haynesville
Nappamerri
UserCol_0 (NA)
0 100 200 300
OI (mg/gTOC)
0
100
200
300
400
HI (m
g/g
TO
C)
Type I kerogen
Type II kerogen
Type III kerogen
Type III/IV kerogen
Area
Barnet
Haynesville
Nappamerri
TOC (%)
0.0 - 0.5
0.5 - 1.0
1.0 - 2.0
2.0 - 5.0
5.0 - 100.0
Largely
controlled by
lithology – CO3
• Following Nappamerri core availability - expectation of possible two lithology types as in Haynesville examples
• Nappamerri has similar TOC and HI as other plays
Lithology
Slide 20Cooper Basin Shale Gas Review – October 2010
Depositional environment
• Roseneath and Murteree shales are lacustrine
• Epsilon lacustrine deltaic
• Bulk lithology and geochemistry not significantly different to marine play examples
• Current data from cuttings only -Core from future wells will allow better definition of facies and facies distribution
Slide 21Cooper Basin Shale Gas Review – October 2010
Technical conclusions
• Lacustrine play with broadly similar lithological and geochemical parameters to North American marine plays
• Overpressured, high maturity
• Moderate - high organic content
• Carbonate is siderite rather than calcite or dolomite
• Beach has varying interests in the Nappamerri Trough covering an area of approximately 8000km2
• Potential gas in-place 20-100Bcf/km2
The Nappamerri Trough is highly prospective for shale gas
Slide 22Cooper Basin Shale Gas Review – October 2010
Presentation outline
• Who – Beach Energy
• Where – Cooper Basin Australia
• What – Technical overview of the play
• How – 2 well drilling program
Slide 23Cooper Basin Shale Gas Review – October 2010
Evaluation program
• Drilling commenced October 2010 - two vertical exploration wells. Encounter 1 now drilling. Extensive coring program. Holdfast 1 to follow.
• Gas in place (GIP) and flow potential are key deliverables:
– Evaluate gas content of shale
– Determine porosity and free gas
– Compositional analysis
– Fracture stimulate and flow test
• Results will assist in the design of future pilot well program:
– Evaluate mechanical properties and in-situ stress
– Well design (vertical / horizontal / multi-lateral)
– Completion design (liner / cement / stimulation)
Slide 24Cooper Basin Shale Gas Review – October 2010
• Holdfast-1 and Encounter-1 are targeting some of the thickest shale sections in the trough
• Over-pressured and high temperature regime
• Off-structure to determine if Epsilon Formation has ‘Deep Basin’ gas potential
• Will TD in PatchawarraFormation to see if gas charged off structure
Well locations
Top Permian Depth MapContour Interval: 20m
Slide 25Cooper Basin Shale Gas Review – October 2010
Challenges - Outcomes
Challenges:
• High formation temperature
• Overpressure
Knowledge outcomes required:
• Confirm gas outside closure
• Porosity and gas content - establish free gas component & OGIP estimates
• Stress regime – impact on stimulation program
• Flow rate potential
Slide 26Cooper Basin Shale Gas Review – October 2010
Conventional coring program - key objectives
To develop Core to Log relationships for:
• TOC%
• Mineralogy
• Sub-seismic fracture detection at both micro- and macro-scale
• Rock strength
• Porosity
• Water saturation
Ultimate aim of the vertical program is to:
• Determine Gas-in-Place volumes
• Design hydraulic fracture stimulation program
• Flow gas
• Book gas resource
HOLDFAST-1ENCOUNTER-1
Slide 27Cooper Basin Shale Gas Review – October 2010
Stimulation evaluation
• Tiltmeters to be deployed at both well locations
• Measures fracture induced tilt in the earth resulting from the hydraulic fracture treatment
• Is a direct measure of earth deformation with a high level of accuracy – in the order of nano-radians
• Evaluate fracture orientation and plane
• Approximately 44 holes drilled to about 12m depth with tools deployed
Slide 28Cooper Basin Shale Gas Review – October 2010
Shale gas exploration - Stage 1 indicative timeline
Proof of concept, 2010 - mid 2011
Drill and core Holdfast-1 & Encounter-1
vertical exploration
wells
Q4 2010
Fracture stimulate wells
~ 8 zones/well
Q1 2011/Q2 2011
Flow test
Q1-2 2011
BOOK GAS RESOURCE
Q2 2011
Review & Refine
Strategy
Slide 29Cooper Basin Shale Gas Review – October 2010
Then what?
With successful proof of concept:
– Design pilot horizontal wells targeting highest yield zone in REM
– Drill further vertical delineation wells across acreage
– Expand production pilot to multiple wells
– Seek to monetise early production via existing facilities
– Determine market potential and processing requirements
Encounter 1 well site
Slide 30Cooper Basin Shale Gas Review – October 2010
Thank You
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