OilVoice - New Standard Energy to Open Australian Shale Gas Province

New Standard Energy to Open Australian Shale Gas Province

Wednesday, March 10, 2010

New Standard Energy (New Standard) will accelerate the progress of its shale gas exploration acreage in Western Australias Canning Basin following an internal and external review of the shale gas prospectivity in its exploration acreage.

Highlights
• Shale gas project in the Canning Basin to be accelerated
• Ongoing work with independent shale gas consultant endorses New Standards initial assessment that the Goldwyer shale formation in the Canning Basin is prospective for shale gas
• Goldwyer shale predominantly covered by New Standard exploration permits
• Exploration acreage holdings currently being refined based on shale gas potential
• Strong potential for shale gas emergence in Australia as has been seen in the US and now developing in Europe

The companys decision to accelerate shale gas exploration follows encouragement received from ongoing work with New Standards independent shale gas adviser that supports the view that although early stage, the Goldwyer formation in New Standards Canning Basin permits exhibits many of the necessary geological prerequisites for shale gas.

New Standard Managing Director Sam Willis said the decision to accelerate its shale gas exploration project would ensure New Standard Energy was well positioned at the forefront of shale gas exploration in Australia.

'Shale gas is rapidly becoming one of the biggest sources of gas production in the United States, and analysis of New Standards Canning Basin acreage indicates although early stage, it is highly prospective for shale gas exploration success in Australia,' he said.

'Our decision to accelerate the progress of our shale gas opportunity is the culmination of 12 months research and assessment of shale gas opportunities in New Standards Canning Basin exploration area, to identify the potential for large resources typical of shale gas plays.

'That preliminary work, undertaken largely since the company secured 100% control of the acreage through corporate transactions last year, has placed New Standard in an enviable position to progress its shale gas exploration program.'

Mr Willis said although shale gas exploration was still relatively new in Australia, shale gas exploration and production was commonplace in the United States, with a recent succession of large, high profile shale gas transactions emerging.

It is estimated that shale gas currently comprises approximately 15% (>2.0 TCF/year) of daily gas consumption in the US, and some analysts predict that unconventional gas production, including shale gas, will comprise as much as half of all total natural gas production in North America by 2020. A number of analysts predict a similar profile for shale gas may emerge in Europe.

'The enormous growth and success of the industry in the US has spread quickly throughout Europe and in our view it is only a matter of time before Australia follows suit,' Mr Willis said.

'Thirty per cent of all new gas discoveries in the United States are now shale gas, and many geological characteristics of gas bearing shales that exist in the US also exist in the Goldwyer shale of the Canning Basin. It is an early stage project but it is potentially very large and deserves additional attention to advance it further.'

'Improved international expertise in shale gas has pushed drilling success rates for shale gas higher than for conventional gas, and drilling costs are also coming down as expertise improves.'

Most shale gas discoveries contain significant quantities of gas, which helps offset increased drilling and production costs resulting from the need to drill horizontally and fracture stimulate (or frac) the shales to access contained hydrocarbons.

As a result of New Standards decision to accelerate its shale gas exploration project, New Standard will refine the next phases of work to be undertaken to advance the project further. A report from the independent shale gas consultant is expected in the next two months. It will provide third party assessment and assist New Standard to develop a focused work program to evaluate the rock properties of the Goldwyer shale and provide information for potential gas in place calculations and targets.

New Standard has also been actively assessing other shale gas opportunities outside the Canning Basin, with a view to adding to the shale gas portfolio if the appropriate opportunity arises.

History of New Standard's shale gas exploration
New Standard commenced formal assessment of its Canning Basin exploration permits for shale gas prospectivity in early 2009. Based on the limited existing exploration database, it found the Goldwyer formation had attractive shale gas properties including:
• blanket marine shale of Ordovician age
• black to dark grey shales and claystones with inter-bedded silty intervals
• 4 distinct units with total thickness of between 200m and 500m
• depths to top of the Goldwyer range from 1,000m to 3,000m
• appropriate maturity, TOC levels and free gas

Netherland and Sewell and Associates (NSAI), a US-based company which provides independent reserve reporting and shale gas exploration and production consultancy, was then engaged to provide a peer review of the results, and to assist with the development of a shale gas exploration work program.

Based on the limited database available, an internal regional study of shale gas prospectivity was commenced and identification of the most prospective portions of New Standards exploration acreage for shale gas also began in the middle of 2009. Current acreage positions are being refined based on prospectivity and additional exploration acreage containing shale gas prospective formations have been targeted for acquisition.

'The overall Goldwyer shale formation in the Canning Basin is about 600km long and 300km wide, and New Standard controls a large portion of this through its 37,000sq km of exploration acreage on a 100% equity basis,' Mr Willis said.

'Based on the early stage information we have, our research indicates that the most prospective gas window in the Goldwyer shale lies within New Standards 100% owned exploration acreage'.

Shale gas exploration in the Canning Basin will complement New Standards continued exploration for conventional hydrocarbons, which includes the planned completion of the Lawford-1 well in late 2010.