Australia’s great fraccing contender

Blair Price – Energy News Premium

AUSTRALIA’s first home-grown fracture stimulation company will start a two-year contract for Beach Energy in July. Condor Energy managing director Christian Lange shares his views on the opportunity and the Cooper Basin’s unconventional potential.

Under the master services contract Condor will provide fraccing and coiled tubing services with the initial program to cover four drilled wells in the Nappamerri Trough-based ATP 855 permit just within the Queensland border of the Cooper Basin.

Similar services for the South Australian permit next door to the west, PEL 218, are expected to follow.

While this is Perth-based Condor’s first contract and recruitment efforts remain underway, the founding management team behind the public unlisted company have worked towards it for the past two years.Lange, well-known as a former CEO of Neptune Marine Services, outlined how Condor secured Beach’s Nappamerri shale work. “We stand out by being the only domestic company in the space, however, more importantly, by engaging with industry to develop our primary thesis on equipment, expectations and our aspiration to deliver a higher standard of service quality, and perhaps being a little more flexible. Our equipment is being built in the US specifically for Australian conditions” he told Energy News.
“And I think we have taken a fairly unique approach to our fracture stimulation equipment spread in terms of its size and capabilities.”

Lange said the equipment was effectively designed for what he called the “severe duty conditions” expected in the Nappamerri Trough.
The customised blenders, pumps and other equipment will also form a fraccing setup he believes is unmatched.
“We are bringing in 40,000 horsepower so it will be the largest single frac spread in Australia,” Lange said.
“Halliburton has the largest amount of total horsepower in the country, but we will have the largest single spread. We have certain redundancies built into the spread so when the inevitable failure occurs we will be able to respond to that pretty quickly without experiencing an awful lot of down time.”
The Condor founder said this equipment cost the best part of $40 million.

“We’ve had to bring in outside investors, which we have done, and we have spent a lot of time working not only on equipment specification but also on selecting the right partners in terms of our suppliers and the people that we work with for our fluids technology,” Lange said.
“So it’s been a long work in progress. We have spent a lot of time doing a fair bit of homework.”
Condor only recently moved its office to premises in Mount Pleasant as it aims to expand its workforce from the handful of people it had in April to 60-70 by the end of this month.
Lange, a former Schlumberger executive, said Condor’s existing management team also included staff with significant stints at Schlumberger, Halliburton, Santos and Baker Hughes, who all had a “nice mix of skills and experience within and outside of Australia. They all come with a network, and we’ve certainly tapped into those”.

He said staff movements were inevitable within the industry while he also believed that multinational companies had human resource challenges due to their size.
“My view is that talent retention is extraordinarily important,” Lange said.
“We have found that many of our new staff are excited to be a part of a young dynamic company that isn’t overly shackled by process and where there is a genuine opportunity to influence the building of a positive corporate culture.
“The challenge will be to ensure that we build the right culture to retain our staff and keep them suitably challenged and rewarded. I think Condor is small enough to be pretty proactive and flexible in dealing with our people.
“The management team here has a long history with working with the large multinationals so I think we understand the challenges as well the good things. Our aim is to deliver a more flexible and balanced approach to talent management.

“We are trying to take things back to where they were 20 years ago when companies were more inclusive and everyone knows and respects everyone at all levels, more of that family feeling.
“That’s certainly a priority focus for us. To make it a company that people want to work for.
“We achieved that at Neptune. One of the key strengths of Neptune was that most people walked in the door in the morning because they wanted to – it was a vibrant young enthusiastic group of people and that’s what we are putting together at Condor.”

Unlocking the Cooper Basin

While the US Energy Information Administration has estimated that there are 342 trillion cubic feet of gas-in-place shale resources in the Cooper Basin, no game-changing unconventional wells have been drilled in the region to date.
However, Lange believes it is only a matter of time before the Cooper Basin’s unconventional mix of shale, coal or tight sand-based plays are understood enough to be commercialised.
“There has been a reasonable amount of work over the past couple of years principally by Santos, Beach and more lately by Senex and Drill Search and I think early results are certainly encouraging enough to move things ahead,” he said.
“Once they unlock the methodology for economically producing unconventional wells, the next phase is extensive horizontal wells and pad drilling which Santos has already commenced.
“So I’m cautiously optimistic that over the next few years the Cooper Basin rocks will give up their secrets and we will find a methodology for commercial production. I think the next couple of years will be pretty exciting times really.”
In any event, industry-shaping unconventional breakthroughs are first expected in the Cooper Basin. “Relative to other basins – the Canning, Perth, Amadeus and others – the Cooper will probably give up its secrets a lot faster simply because the long history of oil and gas exploration and production in the area means the area is better understood,” Lange said.

“Another factor that puts the Cooper Basin ahead of the curve is the existing infrastructure such as roads, pipelines and supporting services, which have been built up over the past 60 years and significantly reduce the capital investment required to making these plays a commercial success.”
After the Cooper’s unconventional plays were proved up, Lange said the next drive would be around reducing well head costs and improving operational scale, which would no doubt drive price-lowering competition.
While he did not reveal which wells would be first targeted by Condor’s fraccing services, Lange did say the Holdfast-2 well was certainly a candidate.

The results from this well have so far disappointed previously-high expectations from the broker community.
Lange said analysts needed to consider that Australia’s unconventional scene was still in a trial and error-based stage that was very much in exploration and moving towards appraisal.
“We are drilling vertical wells and we are fraccing multiple zones of interest in order to analyse which of those reservoirs are going to be the best candidates and the easier to unlock. Once that’s been confirmed, the plan will be to move into horizontal pad drilling on an extensive basis and that takes time.