Existing operations: Santos’ Fairview coalbed methane project in Queensland’s Arcadia Valley area.Photo: SANTO
Verbrec studying potential of early production scheme for Mahalo North to supply east coast gas market
Australian engineering services company Verbrec has won a front-end engineering study for compatriot Comet Ridge’s planned Mahalo North gas development via a joint award from Denison, the infrastructure of which is being eyed to handle Mahalo North’s coalbed methane.
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Early exploitation of Mahalo North would be a welcome addition to Australia’s east coast gas supply. On Monday, Denison said the jointly funded FEED work is to prepare a design, project schedule and budget to upgrade its production infrastructure to accommodate 10 terajoules per day of gas from Mahalo North.
“The FEED study will determine process design, equipment selection, plant layout, project scope and budget in order to upgrade our existing infrastructure to accommodate the supply of 10 TJ per day of gas production from the Mahalo North project,” Denison said.
“Once results of the FEED study are finalised, Denison and Comet Ridge intend to finalise and execute commercial arrangements under which Denison will compress, dehydrate and transport Mahalo North gas production for delivery into the east coast market.”
Australia-listed Comet Ridge focuses on developing gas resources for the nation’s east coast market. Comet Ridge plans to transition its Mahalo Gas Hub assets into “meaningful” gas supply, beginning with the Mahalo North early production scheme, in partnership with Denison, the latter company said.
This will be followed by the larger Mahalo gas project, also in Queensland’s onshore Bowen basin, where Australia’s Santos will act as development operator on behalf of partners including Comet Ridge.
Denison’s existing production and pipeline infrastructure capacity plus potential scale upgrades not only allow the company to ramp up its own output but also offer the potential for aggregating third-party volumes, such as Mahalo North.
FID to be evaluated
“Our development plans with Comet Ridge are a great opportunity to boost gas supply for the east coast market and further utilise our gas infrastructure capacity. Denison has the potential for further economies of scale to be realised by aggregating new gas supplies in the region where appropriate,” Denison chief executive Benson Wong said.
“Gas demand in the east coast market continues to be strong, as a result we remain focused on initiatives to drive higher production levels. Recent changes to the regulatory environment have created some uncertainty for gas producers and while the full effect of these changes remains unclear at this time, Denison will consider their implications over coming months, prior to making its final investment decision for the infrastructure upgrade,” Wong said.
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Denison, an Australian gas producer and exploration company, has both conventional gas and CBM resources — the latter within its Denison Trough tenements.
The company’s facilities include two gas processors, four gas compression facilities and a 200-kilometre gas pipeline network connected to the Jemena-operated Queensland Gas Pipeline.
Following the restart of its Denison North project in early 2020, Denison embarked on a programme to bring its remaining proven plus probable conventional gas reserves into production to fill its available processing capacity, to meet its executed sales agreements through to 2025, and to allow for the contracting of new sales.