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Real To Get Real on Frac Job?
2 minute read
It is thought Real Energy (ASX:RLE) could be close to announcing a contractor for a vital five-stage frac job on its Tamarama-1 and Queenscliff-1 wells in the Cooper Basin.
At the start of the month RLE announced that a previous independent study on the two wells at ATP927P had found that a five-stage frac would be most effective for maxiumum flow from the wells.
It subsequently told the market that it had opened up a tender process for contractors to compete for the job, which could potentially see a further firming up of the resource at the permit.
Independent experts DeGolyer and MacNaughton, based on the drilling of the un-fracced wells, said that the permit had an oil and gas in place resource of 13.76 trillion cubic feet of gas, up 141% on previous estimates.
The experts also said the permit has a contingent resource of up to 672 billion cubic feet.
However, getting the gas to flow following a frac job at the wells would firm up the numbers further and show the market that the gas can be produced.
The permit is at the centre of a Letter Of Intent inked with major industrial player Incitec Pivot for the supply of gas to the industrial major for ten years , or 110 petajoules of gas.
While the deal isn’t sealed yet, it gives Real Energy more confidence to develop its resource in the Toolachee and Patchawarra Formations, prolific geology in the Cooper Basin.
The LOI was signed on the back of an expected tight gas market in years to come thanks to the export of gas from LNG projects in Gladstone, Queensland.
While the proponents of the project are basing their projects off coal seam gas reserves in Queensland, they have also had to dip into the third party gas market for additional supply.
This has increased the pressure on the existing gas supply, which industrial manufacturers such as Incitec Pivot would normally tap for their projects.
However, with a comparative lack of supply coming on, the manufacturers are keen to play a role in bringing on new supply into the market, attempting to tie down long-term gas supply deals with early-stage explorers such as RLE.