Tight gas explained

Tight gas is a term used to describe unconventional natural gas that is held in low permeability sandstone reservoirs that do not naturally flow gas to the surface. Unlike conventional gas reservoirs, the rocks must be coaxed through fracture stimulation to yield their gas.

Reservoirs of tight gas have been discovered all over the world. In the United States 20 per cent of the domestic gas supply is obtained from low perm reservoirs. In Australia, the industry is in its early but promising stages of development.

Tight Gas in WA

Substantial tight gas reserves are known to exist in the southwest and lower midwest of Western Australia but have not previously been thought to be economically viable as the extraction process has been prohibitively expensive and complicated.

Recently, Western Australian Minister for Resources Francis Logan said “We are fortunate in Western Australia to have large reserves of easy-to-access gas, so our tight gas resources have been largely ignored. But with the market doing so well and the looming domestic gas shortage, tight gas is looking more favourable.”

The West Australian Government released the state’s first tight gas permit in November 2007. The Warro Gas Field, located 200 km north of Perth, was discovered in 1977 by West Australian Petroleum but was considered uneconomic at the time. However recent advances in drilling and completion technology combined with higher domestic gas prices have changed this outlook. The 1977 wells established a substantial gas resource of over 5trillion cubic feet (Tcf) in tight sandstone reservoirs at a depth of approximately 4,000 m.

Developing tight gas at Warro

The Warro Gas Field is only 30 km to the east of both the Parmelia Pipeline and the Dampier to Bunbury Natural Gas Pipeline. The field contains high quality gas suitable for domestic supply and is expected to provide a substantial, secure and long term supply to Western Australia.

Latent Petroleum and Alcoa have formed a joint venture to appraise and develop the Warro Gas field. If commercially viable, it will be the first tight gas supply in the state. The project is in the final stages of selecting contractors. A spokesperson for the company anticipates that drilling will begin in October or November, with fracture stimulation to begin before the end of the year.

Latent Managing Director Stephen Keenihan said that depending on the outcome of the drilling program, Warro could be in production by early 2009 at an initial rate of 20 million cubic feet per day (MMcf/d) of gas, climbing to 100MMcf/d.

Mr Keenihan said that while tight gas, such as that at Warro, has not previously been economic to develop in Western Australia, the recent price rise in the domestic gas price will bring the gas field into production.

Latent Chairman Charles Morgan said that the Warro field fitted the State Government’s publicly announced support for the development of tight gas in Western Australia.

“Warro will provide the southwest with an alternative and new supply of gas to keep up with the increasing demand for energy for the domestic market. Events in recent days have highlighted the importance of an expanded range of sources for domestic supply,” said Mr Morgan, referring to the disruption at Varanus Island.

Warrego Energy is also exploring the possibility of developing a tight gas acreage block at West Erregulla, east of Dongara in the Dandaragan Trough in Western Australia.

Future tight gas development for WA

Late last year, Minister Logan said that if enough gas is discovered for commercial rates and if the approval process goes smoothly, it is possible that gas could be supplied to the domestic market within two to five years.

He added “This is positive for WA, with the expected shortage of domestic gas between 2008 and 2014.”