Dennis Morton, Doug Battersby and David King had sown the seeds of what has become Eastern Star Gas back in the 1980s when they all worked for the now-defunct Hartogen Energy.
At one stage Hartogen Energy was doing handsomely, making a good fist of producing 1500 barrels of oil per day (bopd) and 20 million standard cubic feet of gas per day (mmscfd).
The good times eventually ended and the company was liquidated. But in short time (and with the help of other industry players) the three executives salvaged the exploration licence, PEL 238, in the Gunnedah Basin and "kept the bit turning to the right" with their own money.
The three then assembled a portfolio of exploration properties in NSW and Victoria, and eventually vendored their working interests into what became the Eastern Star Gas float.
ESG then went to work drilling some early shallow wildcat wells which produced reasonable gas flows. At less than 700m they were more to prove the geology and production characteristics than being fully drilled to the basement depth of around 1000m.
Hence, according to managing director Dennis Morton, it was the Coonarah-1 well – flowing at 0.5 mmscfd - which gave ESG its first runs on the board.
Within the last fortnight ESG has turned the Coonarah gasfield -- NSW’s first commercial gasfield – into the cornerstone of a power generation deal with the largest regional energy player in the country.
Country Energy and ESG have signed a cooperation agreement whereby the two companies will develop and market natural gas projects together on an exclusive basis into the power generation sector. Coonarah has independently accredited proven and probable (2P) gas reserves of up to 11.3 petajoules
Underpinning the deal is the agreement for the two companies to establish a power station utilising the Coonarah Gasfield as the energy source, near the northern NSW town of Narrabri.
Potentially the project will see two 3MW generators established near the Coonarah gasfield and connected to the Country Energy electricity network. Combined, the generators would produce enough energy to power more than 6000 homes.
“The Coonarah project is potentially the first of many located across the Country Energy footprint”, Morton said. “Our partnership with Country Energy will give us the infrastructure required to open up the gas market in the area.”
Country Energy's network covers 72% of NSW and supplies over 750,000 customers in both regional and metropolitan areas and ESG hopes to leverage off this customer base to bring all available gas production on line.
ESG already has four production wells on the Coonarah field after having re-completed and deepened Coonarah-1 and drilled three new development wells. Morton is happy that they haven’t yet seen any sign of a water-gas contact, and the four wells look sufficient to drain all the gas reserves.
The Coonarah field is located about 20km west of Narrabri and would involve the construction of a steel pipeline into the town.
“Landing the gas into town – with the gas gathering system, dehydrator and pipeline - would cost about $3 million, and depending on whether we actually purchase the gas engines for electricity or not, there’s probably another $6 million worth of capital costs associated with the project,” said Morton.
Continued Part 2.