Empire signs up drillers for NT gas well spud date

Empire Energy Group has locked in contractors to start drilling its Carpentaria-5H well next month, with an aim of supplying 25 terajoules a day for 10 years under a new agreement with the Northern Territory Government.

The company has today confirmed it has signed deals with Ensign Australia for drilling services and Halliburton Australia for fracture stimulation at the pilot project that sits 650km south-east of Darwin.

The rig that will be used to drill C-5H, once it completes its current contract, is the Ensign Rig 965. Management says it the rig is known for its efficiency and track record in Australia and expects it to significantly reduce drilling time and support a 60-stage fracture stimulation plan.

The well will be developed horizontally across a 3km-long stimulated section targeting the Velkerri B Shale, which is the same target as the company’s previous C-2H and C-3H wells. It will also be drilled using the same well pad as those wells.

Although Empire was encouraged by the results of both C-2H and C -3H two years ago, particularly the relatively low decline rates, it has taken its experiences from those programs to make some changes that will focus on improving production rates. They will include completion with a bigger 5½-inch casing (previous wells used 4½-inch) and utilisation of greater stimulation horsepower to maximise pumping rates.

Additionally, management believes that using a single optimised fluid system as opposed to multiple types will yield better results when fractured.

While Ensign will take responsibility for the enlarged casing as Empire’s chief driller, it is Halliburton – one of the world’s biggest energy service providers – that the company has turned to for its fracturing operations. To provide more stimulation, Halliburton is mobilising a high-powered 44,000 hydraulic horsepower (HHP) fleet that is significantly more powerful than equipment used in earlier phases of the project.

It will be the longest horizontal shale well drilled by Empire to date and is expected to be a critical component of commercialising gas resources from the Carpentaria pilot project in the Beetaloo Basin.

Empire is now entering an exciting phase, targeting commencement of sales from the Beetaloo. Following the recent successful capital raising, the team has been progressing design and execution planning for the C-5H pilot development well and engineering works for the installation of surface facilities to allow for the sale of test gas into the McArthur River Pipeline.

Underwood says all of the company’s drilling plans remain on track and expects initial flow test results to be returned in next year’s first quarter. Engineering work on the surface facilities is continuing and installation is due in the second quarter of 2025.

Pilot production sales are then anticipated to begin mid-next year.

In July, Empire signed a binding long-term gas sales agreement (GSA) to supply the NT Government with up to the 25 TJ of gas per day for a decade starting from next year. A further 10 TJ per day or more for up to 10 years will also be made available at the option of the government if production levels from the Carpentaria project exceed 100 TJ per day.

As an ex-field take-or-pay basis contract it is based on market competitive gas prices, escalating at 100 per cent of the Consumer Price Index. The option supply would be at a slightly lower price than the initial supply, providing the potential for long-term affordable energy supply for the NT if bigger-scale development occurs.

A “T-junction” has already been installed into the McArthur River Pipeline operated by the Power and Water Corporation to provide the entry point for the pilot production of the C-5H gas.

With more than $50 million in the bank, according to Empire’s June quarterly numbers, a long-term offtake agreement now in place with the NT Government and drilling operators and rigs all locked in for an October spud date, the company appears to be rapidly ticking the boxes on its journey to sustainable cash flow.

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