The recently acquired financing package is a major step towards Empire’s goal of starting gas production in the Beetaloo and will fund the drilling, completion and flow testing of Empire’s Carpentaria-5H (C-5H) pilot development well and installation of its gas plant.
Empire is nearing a final investment decision for C-5H and aims to begin gas deliveries by 2025, having signed a 10-year binding gas sales agreement with the Northern Territory government and received approval for its environment management plan.
The final regulatory approval the Carpentaria project needs is the sale of gas under the NT Petroleum Act’s Beneficial Use of Test Gas provisions, for which Empire has consulted with Traditional Owners to seek their consent.
The Beetaloo basin in the Northern Territory has extensive gas resources estimated to be more than 100 trillion cubic feet of recoverable shale dry gas, with a liquids upside and strong potential to boost future east coast Australian energy supplies as well as grow LNG exports through Darwin’s expanding terminals.
The new credit facilities established with Empire’s long-term partner Macquarie Bank include a new $30-million midstream infrastructure facility, as well as refinancing of Empire’s existing research and development (R&D) and performance bond facilities.
Upsized to $30 million from the existing $2.25-million R&D facility, Empire will have additional liquidity for its Northern Territory exploration, appraisal and development activities, including C-5H and constructing infield infrastructure, while the performance bond facility is unchanged at $5 million.
Alex Underwood, Managing Director of Empire, said the financing package followed an extensive competitive tender process and provided the business with the best terms currently available in the debt market.
He said: “This represents a key milestone in Empire’s stated goal to move into pilot production from the Beetaloo Basin commencing in 2025 to meet demand for gas in the Northern Territory and, ultimately, Australia’s supply constrained east coast market.
“The terms of the financing package demonstrate Macquarie’s innovative approach to provision of capital to the upstream oil and gas industry, with significantly reduced dilution of shareholders’ interests in the company compared to raising additional equity capital for the Carpentaria pilot project.”
Empire began drilling at C-5H mid-November using the Ensign Rig #965, with the well to form part of the Carpentaria pilot project in the company’s wholly-owned and operated Beetaloo Basin permit EP187. C-5H will be Empire’s longest drilled and stimulated horizontal well with a target of 3,000 metres, and the well’s surface section was successfully drilled and cased by the end of November, effectively isolating the Cambrian limestone aquifer.
At the beginning of December, Empire was drilling the vertical section of the intermediate hole at a depth of about 770 metres, with the well path soon to begin building and turning towards the Middle Velkerri B shale target interval.
The well’s design incorporates a larger well bore diameter to increase stimulation horsepower, proppant concentration, and water concentration, targeting higher gas flow rates, as well as a longer lateral length allowing for a longer section of the shale to be stimulated and produced. It will also feature a single slickwater design across the well’s entire horizontal section, unlike previous Carpentaria wells.
Underwood explained this was Empire’s first full-scale pilot development well, utilising learnings from the four wells it had successfully drilled in the EP187 area. He said: “Empire is rapidly progressing up the technical learning curve, with a focus on increasing well productivity. “This is consistent with the lived experience of the shale gas fields of the USA, and the coal seam methane fields of Queensland, where productivity consistently increased and costs consistently fell, with increased drilling activity.”
Empire’s fifth environment management plan recently received NT government approval, covering the establishment of up to four new well pads; drilling, hydraulic fracture stimulation and completion of up to nine new wells; and installation of gas plant, water handling station, and gas and water/wastewater flowlines. They also include operations and maintenance of up to 12 gas wells, including the existing Carpentaria-2H and -3H wells, new and existing well pads, the CGP, WHS, gas and water/wastewater flowlines and camps, as well as production of gas from up to 12 wells through flowlines and CGP to the McArthur River pipeline for export to markets.
Underwood said the regulatory approval aligned with the NT government’s support for Empire and the development of the broader Beetaloo Basin, which is expected to create thousands of jobs, put downward pressure on energy prices across the NT and eastern Australia, and has the potential to drive a resurgence of manufacturing in the NT.
He added: “The Empire team continues to progress towards pilot production from the Beetaloo Basin, which will provide much needed gas supply for the people of the NT under the gas sales agreement Empire signed with the NT government earlier this year.”
