After years of persevering with exploration in the Canning Superbasin the oil and gas veteran and Buru Energy managing director is feeling more confident than ever that the potential of the region is finally within reach.
Eric Streitberg can sense the shift.
After years of persevering with exploration in the Canning Superbasin, which stretches through the Kimberley, the oil and gas veteran and Buru Energy managing director is feeling more confident than ever that the potential of the region is finally within reach.
Buru is in the early stages of a 2011 exploration program that will feature two drilling rigs and up to 10 wells, with the company’s understanding of the basin set to have advanced significantly by the end of the process.
The market appears to be increasingly convinced that Mr Streitberg’s persistence with the Canning is justified, with the stock having rallied from less than 28 cents a share last September to around 64 cents.
The hope is that, by the end of this exploration season, Buru will have firmed up the reserves needed to underpin the construction of a $500 million gas pipeline that will connect the Canning to WA’s domestic gas network.
The milestones have come thick and fast in the past 12 months. The company secured Japanese giant Mitsubishi as a partner in the hunt for unconventional gas reservoirs such as tight gas and shale gas, which has the potential to dwarf the conventional gas reserves of the basin several times over.
The company also ran a successful fracture stimulation of its Yulleroo tight gas well that paved the way for a recent resource estimate.
And, with more than $25 million in net cash to its name, Buru is fully funded for the year ahead.
“It’s really starting to get some momentum now,” Mr Streitberg told WA Business News.
“Getting the contingent resources signed off at Yulleroo has made a big difference and has really given us the platform to take the whole thing forward.”
Mr Streitberg, one of Australia’s most respected oil and gas men and the chairman of the Australian Petroleum Production and Exploration Association, has long been fixated on the potential of the Canning.
He has been focused solely on the basin since he spun the assets out of Arc Energy as part of the deal that saw Arc – where he was also managing director – sold to Sydney-based oil and gas player AWE.
His Canning Basin quest has at times been a lonely effort. In late 2008, as shareholder support evaporated around the global financial crisis and Buru’s market capitalisation fell below its cash holdings, Mr Streitberg launched what was an ultimately unsuccessful management buyout of the group.
With that tumultuous period behind him, Mr Streitberg is focused on getting into gas production as quickly as possible.
Aluminium giant Alcoa has already signed up as a customer for Buru’s gas and the company has already had ‘a lot’ of approaches from existing pipeline operators interested in joining it in constructing the pipeline that would connect the Canning into the WA domestic market.
The wildcard is the basin’s unconventional gas potential, which attracted Mitsubishi on board as Buru’s joint venture partner last year.
While the conventional resources in the basin promise to be a good near-term earner for Buru, the tight gas and shale gas reserves could be of sufficient scale to ultimately support liquefied natural gas (LNG) exports.
And Buru is relatively close to the proposed James Price Point industrial hub, where the Browse LNG plant is planned.
Recent studies by Buru and industry consultants Netherland Sewell and Associates identified potential recoverable unconventional resources in the Buru acreage of 66 trillion cubic feet of gas and 4 billion barrels of oil.
Mr Streitberg says the amount of potential gas alone is the equivalent to half of all the gas ever found off WA’s coast.
There’s a lot of work to be done and a lot of money to be spent before Buru can prove up and exploit even a portion of that huge number, but it illustrates the potential that is there for those with patience.
“[The conventional gas] won’t get us enough to build an LNG plant, but the unconventional certainly can,” Mr Streitberg said.
“If we can get the pipeline, get the cash flow, and we can quantify the unconventional, we can get a route to export.”
The sudden growth of the unconventional gas industry in the United States on the back of improved drilling and reservoir stimulation techniques has turned that nation’s energy market on its head, with the US – until recently seen as a major growth market for LNG imports – now so swamped with gas that companies are looking to begin exporting LNG.
Perhaps, unsurprisingly, the Buru story has been well received on recent roadshows into North America.
“Investors in North America tend to take a longer-term view and they’ve seen the companies that have had success with the kind of things we’re trying to do, both in North America and other countries. They understand the vision,” Mr Streitberg said.
Buru seems to be coming increasingly close to converting that vision into reality.
