Reg Nelson Beach Energy- Resources & Energy Symposium 2012

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Reg Nelson Beach Energy- Resources & Energy Symposium 2012

  1. 1. Beach Energy LimitedResource and Energy Symposium Reg Nelson – Managing DirectorBroken Hill Resource and Energy Symposium – 22 May 2012 22 May 2012 Slide 1
  2. 2. Compliance statements Disclaimer • This presentation contains forward looking statements that are subject to risk factors associated with oil, gas, geothermal and related businesses. It is believed that the expectations reflected in these statements are reasonable but they may be affected by a variety of variables and changes in underlying assumptions which could cause actual results or trends to differ materially, including, but not limited to: price fluctuations, actual demand, currency fluctuations, drilling and production results, reserve estimates, loss of market, industry competition, environmental risks, physical risks, legislative, fiscal and regulatory developments, economic and financial market conditions 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, unless otherwise stated. References to “Beach” may be references to Beach Energy Limited or its applicable subsidiaries. • Unless otherwise noted, all references to reserves and resources figures are as at 30 June 2011 and represent Beach’s share. Competent Persons Statement • This presentation contains information on Beach’s Reserves and Resources which have been compiled by Mr Neil Gibbins, who is a full time employee of Beach, is qualified in accordance with ASX listing rule 5.11 and has consented to the inclusion of this information in the form and context in which it appears. Resource and Energy Symposium – 22 May 2012 Slide 2
  3. 3. IntroductionResource and Energy Symposium – 22 May 2012 Slide 3
  4. 4. South Australia & Broken Hill – A strong resources link• Broken Hill was an early and important part of South Australia’s resources and energy sector• South Australia is in the midst of a resurgence in exploration activity, driven by: – The Lead-Zinc initiatives of the late 1980’s – The ‘Business Plan’/ aeromag flown over SA and financed by the state government – And further initiatives since, resulting in…..• Major capital investment programs, such as: Photo courtesy of DMITRE – Olympic Dam – Prominent Hill The unsung heroes of the resources and – Cooper Basin conventional and energy industries are the trailblazing unconventional drilling programs pioneers Resource and Energy Symposium – 22 May 2012 Slide 4
  5. 5. A new mining boom with critical energy needs • SA now at a critical energy point: – Alinta to shut down Playford brown coal power station – The distortionary effects of too much wind power What are the alternatives? • ‘Greener’ fuels such as wind, solar and geothermal are expensive and not as ‘green’ as many think • There is an increasing reliance on imports for diesel and jet fuel ……and growing demand for explosives and fertilisers ~ 40% increase to 2025Dwindling coal supply and demandwith ‘greener’ fuel challenges make GAS the future energy source Source: Core Energy Group 2011 Resource and Energy Symposium – 22 May 2012 Slide 5
  6. 6. The benefits of natural gas • High hydrogen, hence cleaner burning than coal • Reduced water demand • Able to provide flexibility to cover base and peak loads • Potential to underpin the development of a new and scalable petrochemical industry (explosives, fertilisers etc) • Possibility of building a new era for high purity diesel and jet fuel via gas to liquids • ….but, Eastern Australia is short gas Uncontracted demandSignificant increase in demand for gas expected from 2015 due to LNG export and east coast demand Source: Core Energy Group 2011 Resource and Energy Symposium – 22 May 2012 Slide 6
  7. 7. Can Australia replicate the North American shale boom?Resource and Energy Symposium – 22 May 2012 Slide 7
  8. 8. EIA – United States Gas Production Projection 2000 2012 US Natural Gas Production 1990-2020 US Natural Gas Production 1990-2035Sources: History: Advanced Resources International, Inc. (ARI). Projections: Source: US Energy Information Administration, AEO2012 Energy Information Administration, AEO2000, DOE/EIA-0383 (2000) Early Release Overview, 23 January 2012 (Washington, DC, December 1999), reference case In 2000, EIA projected EIA is now projecting shale conventional gas production would and tight gas will represent 70% dominate future supply of US supply by 2035 Resource and Energy Symposium – 22 May 2012 Slide 8
  9. 9. Gas options for Eastern Australia – a critical time Australian East Coast 2P Reserves* Non-LNG ~ 9k PJ East Coast 2P Reserves held by LNG proponents ~ 40k PJ * Adapted from Energy Quest, February 2012 ~ 80% of East Coast 2P reserves are owned by parties developing LNG projects or with LNG aspirations Resource and Energy Symposium – 22 May 2012 Slide 9
  10. 10. The Shale Gas Option – but what to look for? • In 2007 Beach, understanding the success of US shale gas developments, reviewed Australian basins for opportunities • Beach identified technical key contributors to success – Shale thickness – Organic content – Mineralogy – Maturity – Over-pressure – Ability to take high equity position – Proximity to infrastructure/market access Resource and Energy Symposium – 22 May 2012 Slide 10
  11. 11. The Shale Gas Option – key technical attributes Parameters for gas in place Parameters for deliverability • Shale thickness • Overpressure (drive) • Lateral continuity • Mineralogy (brittleness) • Organic content • Maturity (hydrocarbons) • Maturity Cross- Drainage Bulk Permeability sectional areaGas in place area density GIP = A * h * ρ * GCt Q = k * A * ΔP Pressure Gradient μ Volumetric Reservoir Total gas flow rate thickness content Viscosity of flowing fluid Resource and Energy Symposium – 22 May 2012 Slide 11
  12. 12. Primary focus: Cooper Basin - Nappamerri Trough• Primary focus was to find the best shale acreage in Australia• All regions in Australia were considered• Key factors considered in identifying the primary target: – Rock quality, i.e. organic content, brittleness – The right environment, i.e. thick, overpressured, thermally mature – Ability to take high equity position – Proximity to infrastructure/market The Nappamerri Trough Permian section access under-explored off-structure Resource and Energy Symposium – 22 May 2012 Slide 12
  13. 13. Nappamerri Trough- geological setting• The deepest and largest of the northeast-southwest trending troughs in the Cooper Basin• Thick Permian section of coals, siltstones, sandstones and shales• Roseneath Shale, Epsilon Formation and Murteree Shale (REM) were the initial focus for shale gas Shale gas target Basin centred gas target Resource and Energy Symposium – 22 May 2012 Slide 13
  14. 14. Over-pressure • Over-pressure created by hydrocarbon generation • The pressure gradient in the Nappamerri Trough is ~0.72 psi/ft • Over-pressure necessary for gas drive • Preservation of pore throats during compaction enhancing permeability Pressure (psi) 0 2000 4000 6000 8000 10000 0 1000 Depth (m) 2000 Top Overpressure 3000 REM Depths ΔP ~3,000psi 4000 Resource and Energy Symposium – 22 May 2012 Slide 14
  15. 15. Maturity for deliverability• With increasing maturity expect enhanced dewatering and dehydration of clays• Loss of capillary water enhancing permeability• Fluid viscosity is a function of maturity• Methane is less viscous than wet gas and all things being equal, methane will flow better• High level of maturity enables abundant gas generation creating over-pressure Source: Tucker.M, Sedimentary Petrology, 1998 Resource and Energy Symposium – 22 May 2012 Slide 15
  16. 16. Fluid viscosity is important for higher flow rates • Dry gas will flow better than gas with high liquids content in thick homogeneous shales • If liquids are present, interbedded (mixed) lithologies (e.g., sandstones) are better • Beach’s focus for liquids-rich plays are in basins with these potential attributes (e.g., Bakken – North Dakota, Otway Basin (SA and Victoria) and Bonaparte (NT)) Resource and Energy Symposium – 22 May 2012 Slide 16
  17. 17. Cooper Basin versus successful US plays Cooper Basin PEL 218 Permian REM HaynesvilleParameter (Beach 100%) Barnett (Texas) (Louisiana)TVD (ft) 9,500 - 11,500 5,400 - 9,500 10,500 - 14,000Thickness (ft) 550 - 800 100 - 500 60-350BHT (degF) 390 - 410 150 280-380TOC (%) 2-4 4-8 2-5Pressure Gradient (psi/ft) 0.72 0.52 0.85-0.93Maturity (Ro %) 2-4 0.6-1.6 1-1.2Quartz, % (brittle) 30-40 40-60 25-52Calcite % (brittle) 0 5-30 13-44Siderite % (brittle) 5-10 0 0Swelling clays (%) - 1-5 -Source: McKeon. M, Halliburton Presentation, Horizontal Fracturing in Shale Plays Similar properties to successful major US shale plays Resource and Energy Symposium – 22 May 2012 Slide 17
  18. 18. A summary of Beach’s commanding Cooper positionPEL 218 ~1,600 km2• Beach 100%* (Permian)• 2 Tcf of contingent resource booked in the PermianATP 855P ~1,670 km2• Beach 60% (operator), Icon Energy 40%• First dedicated shale well in 2012SACB JV ~7,100 km2 (Moomba, etc)• Beach 20.21%, Santos 66.6% (operator), Origin Energy 13.19%• 0.7 Tcf (net) of unconventional contingent resource booked to date• Shale well recently fracture stimulated• 3 Nappamerri Trough unconventional wells proposed Multiple targets to be addressed by operated and non-operated drilling programs * Beach currently holds 99.99%, in the process of acquiring 100% Resource and Energy Symposium – 22 May 2012 Slide 18
  19. 19. Shale and beyond - program highlights to date• Results from Encounter-1 and Holdfast-1 exceeded expectations due to: – Gas saturated target zone potentially over one kilometre – ~2 MMscfd initial flow rate from Holdfast-1 – Booking 2 Tcf contingent resource – 480 metres of core recovered assisting technical analysis – Gas flows up to 750,000 scfd from one frac stage in the Patchawarra from Encounter-1• Moonta-1 vertical well completed with mud logs indicating gas saturation throughout Permian section• Streaky-1 vertical exploration well has spudded300+ Tcf of gas in place estimated for PEL 218 Resource and Energy Symposium – 22 May 2012 Slide 19
  20. 20. What is shale and basin centred gas? Source: Amended from Schenk and Pollastro, 2002 Thick and consistent gas saturation across a basin Resource and Energy Symposium – 22 May 2012 Slide 20
  21. 21. Advantages of Beach’s Cooper Basin acreage• Good working relationship with pastoral owners and other stakeholders• Co-operative not competitive land use• Semi-desert country• Relatively flat topography• Well established oil and gas infrastructure• Raw and sales gas pipelines cross PEL 218 and ATP 855P• Multiple commercialisation options Good relationships and well established infrastructure Resource and Energy Symposium – 22 May 2012 Slide 21
  22. 22. 2012 proposed Cooper unconventional drilling program Resource and Energy Symposium – 22 May 2012 Slide 22
  23. 23. Summary• Decisive and aggressive exploration• Confirmed shale gas and basin centred gas objectives• Unique shales• Substantial multi-level resource play• Fast paced and comprehensive forward exploration program Resource and Energy Symposium – 22 May 2012 Slide 23
  24. 24. An opportunity for AustraliaResource and Energy Symposium – 22 May 2012 Slide 24
  25. 25. Sovereign risk now a real issue for Australia• Need to remove uncertainties and disincentives, i.e. the carbon tax and PRRT• First five years are critical for a nascent industry• Technical advances through Beach’s unconventional program will aid ‘Greener’ power, such as geothermal• Unconventional gas and oil has the ability to power mining production, supply the domestic power market and LNG export market• Enhanced gas production is critical for explosives manufacture and fertiliser production Downstream producers should be pushing government for removal of upstream tax impediments to free up gas production Resource and Energy Symposium – 22 May 2012 Slide 25
  26. 26. Contact information Beach Energy Limited – Head office 25 Conyngham Street Glenside SA 5065 Tel: +61 8 8338 2833 Fax: +61 8 8338 2336 Website: www.beachenergy.com.au Chris Jamieson Investor Relations Manager Tel: +61 8 8338 2833 Mob: +61 8 (0)487 173 244 Email: chris.jamieson@beachenergy.com.au Resource and Energy Symposium – 22 May 2012 Slide 26

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