TOP end focussed Central Petroleum believes it has successfully achieved a plan to become the largest onshore gas producer in the Northern Territory.
Commenting on the company’s achievements in the June quarter, Central Petroleum’s managing director, Richard Cottee, said the recent finalisation of the $45 million acquisition from Santos of a 50% stake in the Mereenie oil and gas had complete “a strategy commenced three years ago to transform the company from an explorer with small oil production to the largest onshore gas producer in the Northern Territory.”
Mr Cottee said that strategy was aligned with plans for the Northern Territory to be interconnected with the east coast gas markets to take advantage of the tightening domestic gas market – which is now on track with the award of the Northern Gas Pipeline (“NGP”) tender to Jemena.
The Mereenie interest acquisition and move to project operator in June 2015, also made the common operator across all three conventional gas fields producing in the Amadeus Basin.
According to Mr Cottee, there is nearly 60 TJ/day (over 20 PJ p.a.) available to be contracted to meet potential demand on the east coast, with the Amadeus Basin producers being the only existing onshore producers with the potential of contracting this load.
However, he added that there is a “substantive barrier preventing our entry into the east coast market” through backhaul tariffs on pipelines built around 20 years ago.
“The company believes that these high tariffs should be unsustainable if, as a result, there is economic dislocation in five of the six Australian states, quashing incentives for exploration and reserve development at the same time as starving east coast customers of competitive gas supplies,” Mr Cottee said.
“If the present spot pricing signals are able to be equitably transmitted to gas producers so as to increase the supply of gas, Central has the potential to substantially increase supply into those states.
“The recent results of West Mereenie 15 in the Stairway Formation indicates that, with an appropriate ex‐field price, a further 200 PJ plus of reserves could be available for the eastern states by the time of the commissioning of the NGP.”
Mr Cottee said the NT market also offered opportunities for Central.
“The sale by Power and Water Corporation (“PWC”) of 31 TJ/day into the NGP has further tightened the Northern Territory gas market, removing a substantial overhang; meaning Central’s opportunity to contract further gas sales is not wholly dependent on the east coast market,” he told shareholders.