Central Petroleum Limited (“Central”) (ASX:CTP) is an oil and gas explorer and conventional producer with a focus on supplying the domestic gas market. Central is the largest onshore gas producer in the Northern Territory and operator of the only producing onshore conventional gas fields in the Northern Territory at Mereenie, Palm Valley and Dingo. Being conventional fields, Central’s fields are not caught within the moratoria on fraccing for unconventional exploration announced by the recently elected Northern Territory Government. Central is in a position to pursue several reserve growth programs across what is regarded as the biggest package of proven and prospective oil and gas acreage across Central Australia. Our exploration permits cover 56,522,900 acres (228,740 km²), 88% of which is gas prone and 47% of which have received native title clearance.
The Australian gas industry is in a state of flux and change. The recent ACCC analysis of the Australian gas market confirms the thesis that by 2018 over 250 PJ of domestic demand is uncontracted and that without new capital being invested there will be a major shortfall in supply. The reason is that the eastern seaboard market of 700 PJ now has to compete for supply of gas with the 1400 PJ of new annual demand in the form of exports out of Gladstone. This is at a time of an onshore exploration moratorium in New South Wales, Victoria and Tasmania, and a moratorium in the Northern Territory on unconventional shale fraccing. The Northern Gas Pipeline (“NGP”) is under development and remains on schedule for gas to flow to east coast markets from 2018, with 60 TJ/d of pipeline capacity available for new sales.
Central aims to become a significant domestic energy player and has positioned itself to grow from current production of over 11 TJ/d of gas and 340 bopd (equity accounted). In addition, Central has substantial existing uncontracted gas reserves and identified gas exploration and appraisal targets. Central’s significant gas resources can be explored and developed for sale into the east coast market subject to appropriate ex-field pricing signals. Alternatively, Central may commercialise its gas resources through sales into the domestic Northern Territory and/or the growing Northern Territory LNG export market.
Commercial Strategy: The commercial strategy of the company is “to unlock and commercialise the vast energy potential within Central Australian basins in a sustainable and environmentally responsible manner at a critical time in Australia’s domestic energy supply”. The company aims to achieve this commercial strategy by:
- Consolidation of proven and prospective acreage
- Focusing on big targets
- Early target monetisation via existing infrastructure
- Application of value adding technology – Micro LNG etc
- Farmouts/joint ventures
- Simultaneous development of multiple options
- Maximising utilisation of existing established infrastructure.
Core Values: Central’s commercial strategy is supported by the company’s core values and revitalised operating philosophy, specifically:
- Unlocking Australia’s vast energy potential in a sustainable and environmentally responsible manner
- Clear focus on producing oil and gas reserves in Australia
- Developing expertise through exploration and operation in Central Australia’s basins
- Making a positive difference in the communities where we operate.
These core values aim to make Central a corporate leader and attractive partner as we strive to make a positive and long-lasting contribution to Australia’s energy future.
Positive Community Contribution: Central continues to make a positive contribution to the communities in which we operate. Central’s employment philosophy, for example, consists of three key employment strategies to sustain its Northern Territory operations:
- Family Values for Working Families – Central maximises the number of employees who can commute daily from their homes in Alice Springs.
- Northern Territory for Northern Territorians – Central needs to employ people at remote locations. To the maximum extent possible those employees will be based at Alice Springs and “bussed” in from there rather than depending on Fly In Fly Out workers from elsewhere in Australia.
- Traditional Values for Traditional Owners – Central is committed to training and employing people on whose land we operate and indigenous employees generally. Already, nearly 30% of our operational employees are indigenous.
Central’s focus on positive community contributions allows our current operations to achieve:
- 60% of our staff are locally employed
(if Central sells the available capacity in the NGP, this figure may rise to 75%)
- 30% of our staff are indigenous
- 40% of Alice Springs’ electricity generated using our gas
- $1.5M extra local economic activity annually
- Over $2.5M in Northern Territory and CLC Royalties this financial year
(only onshore gas pays royalties to the Northern Territory).