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Tuesday 20 September 2011

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WA equipment deal could be close

Friday, 24 June 2011 James McGrath

[SECTION] - General News - Drilling [REGION] - Australia [COMMODITY] - Shale Gas News [RELATED STORY] - Brown sees the demise of the coal industry [OTHER] - Printable Version

THE Western Australian government could announce a plan to bring a rig capable of drilling for tight and shale gas into WA during the third quarter, Department of Mines and Petroleum executive director Bill Tinapple said.
The government has been in consultation with drilling companies in the Perth and Canning basins since October last year about helping to bring in another rig capable of drilling to the depth required to access unconventional targets after the Weatherford 826 departs. Tinapple responded to claims made to EnergyNewsBulletin from a source close to negotiations that we should hear something within three to four weeks, saying that while a final deal was close, nothing concrete had been worked through. Were close, but its really up to the companies now to come to the party. Theyve said that theyd be willing to sign off on a deal, but until we get the piece of paper to them and they sign on the dotted line the deals not done, he said. He did confirm that one rig would be brought in, and the government was looking to pay for mobilisation costs, thought to be in the $3-5 million range, conditional upon the oil and gas companies concerned forming a drilling club.
Gas drainage at Tahmoor.

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Weatherford Rig 826 on location at Arrowsmith-2, courtesy Norwest Energy

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Tinapple also confirmed that the technical requirements of the rig had been agreed upon by all parties, and an expression of interest had been floated in front of rig suppliers, a process he said was going well at this stage. A shortage of equipment in the state, particularly the prospective Perth Basin, has hampered efforts to commercialise tight gas resources. The only rig capable of drilling at depths required to crack unconventional reservoirs in WA, the Weatherford 826 rig, is slated to go interstate within months. Fraccing equipment is in short supply as well, with operators having to source the equipment from interstate before they can frac, adding considerably to project economics. Scottish-based junior tight gas explorer Warrego Energy has previously told ENB that it was part of the consultation process, but was looking at sourcing its own equipment and had grown frustrated with a lack of progress made. Access to infrastructure in WA for the type of work were trying to do is a barrier of entry for all of us really, director Duncan McNiven said. What we have to look at is bringing in a rig ourselves. Thats something that weve talked to the [state] government about and the government is talking about having a proposal to fund the mobilisation costs and introduce infrastructure into the state. Its in the nature of government that its not moving as quickly as government would like. The WA government sees unconventional gas resources in WA as a vital cog in getting more supply to the domestic gas market, where despite the plethora of LNG projects in the state, gas prices remain higher than the eastern states. Tinapple told ENB back in October last year that the exploitation of the states unconventional resources was vital.

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EnergyNewsBulletin.net - WA equipment deal could be close

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Despite the large gas resources off our coast, were projecting that there may be a risk of having a domestic gas shortage over the coming years until the big LNG projects get up and operating and their domestic gas commitments come into play, he said. Given that, weve been trying to stimulate domestic gas sources and unconventional and geothermal are really the two energy sources that weve been focusing on. We want to facilitate this embryonic industry of unconventional gas and weve looked at what are the problems, what are the hurdles to get over to try and get exploration demonstration projects off the ground. It seems like the gas prices are enough to make it worthwhile but we dont have equipment. Were trying to get out and see what we can do about that as a government.

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