A fun fact is that Empire’s landholdings in the Beetaloo are roughly similar in size to core areas within the Marcellus shale. Notably, not even the leading producer of gas in the Marcellus shale, the US$16b EQT Corporation, comes close to the scale of Empire’s holdings with its 1m net acres.

Importantly, Empire’s four stacked shale reservoirs amount to a net thickness of more than 300m in the Carpentaria project, five times thicker than the prolific Marcellus shale suite at about 60m.

All of which begs the question, will the Beetaloo flow commercial gas because if it does, it will have a global impact on gas markets.

Empire says it does. The company has now drilled and stimulated two horizontal wells in the Beetaloo, its Carpentaria 2H and 3H wells. Normalised gas flows came in at 3.5 terajoules per day (TJ/d) per 1000m during testing – a number that Empire describes as “excellent.”

Management says after recent basin-wide appraisal drilling by its own field team in addition to industry heavyweights Origin, Tamboran, Empire and Santos, the project is assessed as being commercially viable.

The next big hurdle that all wanna-be gas producers face is infrastructure – i.e. how will they get their gas to market?

Empire’s Carpentaria project is fortunate when it comes to infrastructure. Its holdings basically smother the gas spur line that runs out to the McArthur River Mine to Empire’s east and Empire has already appointed energy infrastructure firm APA Group to commence pre-engineering studies to hook into the pipeline.

This connection would establish a link from the Beetaloo Basin through to APA’s Amadeus Gas Pipeline that pumps gas into Darwin, Alice Springs and regional centres in the Northern Territory.

The grand plan being developed by Empire and APA is to eventually work out how to connect the Beetaloo to the gas-hungry East Coast markets.

Before that happens however, Empire needs to build a pilot plant to commercially operate its 2H and 3H wells at Carpentaria. In December last year the company acquired a pilot plant from AGL who had no further use for its Rosalind gas plant after winding up its Camden Gas project.

Empire paid $2.5m to AGL for the plant that it says would likely have cost $100m, giving it a massive advantage when it comes to commercialisation. That plant has a maximum capacity of 42 TJ/d, albeit the initial plan is to produce 25 TJ/d from the 2H and 3H wells.

It will still have to spend money getting it to site and hooking it into the McArthur River pipeline and the company says a financial investment decision on that scope of work is now imminent.

Management says the 2H and 3H wells cost about $25m each to build however that number will likely be halved when it starts drilling wells at scale. Each well will produce about $80m worth of gas over its life and the company expects to pay the capex down for a well in just two years.

The opportunity for Empire to scale up its Beetaloo gas production is immense if gas flows end up coming out as expected from the early wells. Empire essentially has a three staged plan; initially produce up to 25TJ a day in phase 1 with first revenues of $110m a year expected by 2025 at plateau.

Phase two will see the company pump out 200TJ/d to supply the east coast of Australia that many say is currently experiencing a gas shortage crisis. The goal from phase 3 is to churn out 1BCF of gas a day and supply the LNG export markets. The company reckons it can land LNG in Tokyo Bay for just US$6.50 MMBtu.

And the rub? Well, Empire’s preliminary financial modelling shows a project net present value for phase 2 coming in at A$2.5b and phase three is showing an NPV of wait for it……A$14.5b.

And with the Marcellus shale’s biggest producer in the USA, EQT Corporation, currently valued at around $16b, maybe that phase three NPV is not so mind-boggling, albeit Empire has a lot of drilling and investing to do first and it will need to have its fair share of lady luck on its side when the gas starts to flow.

One thing seems certain however, if gas does successfully flow at commercial rates out of the Beetaloo, with its foot on 3m acres, Empire will have plenty to sell.

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