"In AWE's view, the strong commercial drivers apparent in the Perth Basin could allow this shale gas opportunity to provide Australia's first commercial venture in ... shale gas production," the company said in a statement.
AWE estimates the middle interval of its Carynginia shale gas target in permit area EP 413 may contain 13-20 trillion cubic feet of gas in place.
"The US shale industry estimates recoveries of greater than 20% of gas in place and therefore in the event of successful flow testing, the recoverable reserve potential of this key area could be higher than 4 Tcf of gas," AWE said.
The company said it has been reviewing the prospectivity of shale gas in three shale sequences in the Perth Basin area for two years and has "substantially progressed the understanding of the potential" in the region.
"From the results of the Woodada Deep-1 core data, the Carynginia shales of the Perth Basin demonstrate a reasonable correlation with successful commercially developed US shales, based on a number of key parameters, particularly depth, target thickness and mechanical (ability to fracture) properties," the company said.
Further study was underway to assess other key parameters such as porosity and organic carbon content, AWE added.
The company said it was working with Norwest Energy, the operator of EP 413 in which it holds a 44.14% interest, to design a well to test the potential of the shales of the Arrowsmith area in the second quarter of 2011 and was also planning a test fracture stimulation of the middle Carynginia
shale in 2011.
AWE holds around 1 million gross acres of prospective shale gas acreage in the Perth Basin, with varying levels of equity in the permits and licenses it spans.
"AWE also operates the majority of this prospective acreage and will therefore manage the pace of future activity across the prospective play," AWE said in the statement, noting the basin is located "in close proximity to one of Australia's key domestic gas markets."
Shale gas development in Australia has been largely overshadowed by the rapid commercialization of coalseam gas in the eastern states of Queensland and New South Wales, which is cheaper to produce. But development in the west has been attracting increasing interest in recent months due to high local gas prices.
India's Bharat PetroResources, a wholly owned upstream arm of state-owned Bharat Petroleum Corp. Ltd., farmed into two exploration permits in the Perth Basin -- one of them EP 413 -- in August, providing up to A$15 million to Norwest for drilling programs targeting shale gas and oil.
EP 413 is located near two pipelines linked to industrial and domestic gas markets in the state of Western Australia's more populous southwest corner and produced natural gas in the 1960s.
AWE's share of oil/condensate and gas production from its onshore interests in the Perth Basin was approximately 36,000 barrels of oil and 420 Tj of gas in the three months to September 30, the company said in its most recent production report.
The company, which changed its name from Australian Worldwide Exploration in November 2009, produced a total 1.56 million barrels of oil and gas in the quarter.
It has five main producing assets: a 42.5% stake in the Tui oil fields offshore Taranaki basin in New Zealand, a 57.5% stake in the BassGas project offshore Tasmania, a 25% stake in the Casino gas field in the Otway basin offshore Victoria, a 57.5% stake in the Cliff Head oil field in the offshore
Perth Basin and 33-100% stakes in several permits and licenses onshore in the Perth Basin. It also has stakes in a number of exploration projects in Australia, New Zealand, Indonesia and Yemen.
