AGL Energy Limited · ASX:AGL
AGL Energy — Technical Presentation (October 2010)
54 slides from AGL Energy's technical presentation, Oct 25, 2010
Slide 1: ASX statement
AGL Energy Limited Locked Bag 1837 Level 22, 101 Miller St T: +61 2 9921 2999 ABN: 74 115 061 375 St Leonards NSW 2065 North Sydney NSW 2060 F: +61 2 9921 2552 AUSTRALIA AUSTRALIA www.agl.com.au ASX statement 25 October 2010 Attached is a presentation by AGL’s Upstream Gas management team at an Anal
Slide 2: Upstream Gas Strategy Overview
Upstream Gas Strategy Overview Mike Moraza | Group General Manager Upstream Gas | October 2010
Slide 3: Presentation Agenda
2 Presentation Agenda g › Upstream Gas Strategy Overview Mike Moraza,, Group p General Manager g Upstream p Gas › Near Term Field Development Priorities Mike Roy, Head Gas Operations (Aft (Afternoon tea) t ) › Future Development Priorities Andrew Falkner, Head Exploration › Gas Storage Business Oppo
Slide 4: Upstream Gas Strategy
3 Upstream p Gas Strategy gy Create significant value for AGL shareholders › Targeting 2 2,000 000 PJ (2P) gas reserves for domestic market use › Creating optionality for natural gas self supply › Building skills and capabilities in exploration and production › Management of future volume and price
Slide 5: Gas Reserves Position
4 Gas Reserves Position Significant growth in AGL’s CSG gas reserves › Initial Hunter g gas reserves booked › 2P reserves at Gloucester increased by 58% at mid-year › Total 2P CSG reserves entitlement has increased by 31% AGL share of CSG reserves As at 30 Sep 10 As at 30 Jun 10 As at 31 Dec 09 PJ 2
Slide 6: AGL's Long Term Gas Supply Strategy
5 AGL’s Long g Term Gas Supply pp y Strategy gy Flexible and competitive 300 Supply Optionality › additional equity gas production 250 › additional gas contracting 200 New wholesale gas contracts › contract extensions J pa 150 › potential new gas suppliers PJ 100 Equity gas projects › known cost of
Slide 7: Project development schedule
6 Project j development p schedule Schedule driven by portfolio and market needs › allow a realistic exploration and appraisal lead time; › provide adequate time for reserves certification; › ensure prudent and measured personnel and investment allocation; › timing to ensure sales can meet AGL’s gas
Slide 8: Moranbah ATP364P Update
7 Moranbah ATP364P Update p Future growth in the Bowen Basin › Arrow operated assets › Gas supplied to Yabulu CCGT, QNI, Dyno Nobel and CRL › Activities ramping up following Shell/ PetroChina acquisition › Reserves growth targeted at LNG export project » Upstream Gas Briefing » 25 October 2010 » AGL
Slide 9: Value creation drivers
8 Value creation drivers Prudent acquisitions and exploration success drive value creation › Low risk, targeted exploration driving organic reserves growth › High level of control in permits and joint ventures » mostly 100% owned and/ or operated by AGL › Gas reserves position close to markets » ent
Slide 10: Near-term Field Development Priorities
Near-team Field Development Priorities Mike Roy | Head of Gas Operations | October 2010
Slide 11: Overview - NSW Projects
2 Overview - NSW Projects j Camden Gas Project › In development phase since 2001 › Produced in excess of 25 PJ gas for the Sydney market Gloucester Gas Project › Exploration phase is nearing completion › Final Project Application submitted, awaiting Conditions of Consent › Gas reserves recently upgr
Slide 12: Camden Gas Project
3 Camden Gas Project » Presentation Title » February 2008 » AGL Internal
Slide 13: Camden: Overview
4 Camden: Overview A valuable starting point Commenced production in May 2001. › Strategic position – next to one of largest gas markets in Australia » Located in a semi-urban area » Successfully co-existing with land owners and local councils » Strong level of community engagement and support › Geo
Slide 14: Camden: Overview
5 Camden: Overview Potential to expand production. › Rosalind R li d P Park k gas plant l » Currently producing ~ 17 TJ/d » Existing E i ti configuration fi ti can expand d to t ~ 27 TJ/d › Second coal seam now being targeted (Balgownie) › Modification to gas plant configuration with infield nodal c
Slide 15: Camden: Development plan
6 Camden: Development p p plan » Upstream Gas Briefing » 25 October 2010 » AGL External
Slide 16: Camden: Well production profile
7 Camden: Well p production p profile › Water is pumped to decrease pressure for producing gas › Water production at Camden is about one tenth that of some Qld Q CSG assets » Upstream Gas Briefing » 25 October 2010 » AGL External
Slide 17: Camden: Development priorities
8 Camden: Development p p priorities Focussing on production expansion › Continuous drilling program, program drilling horizontal wells » 3 to 5 weeks per well depending on single or dual lateral › Additional core and stratigraphical wells completed September 2010 » Gas composition, perm testing and
Slide 18: Camden: Horizontal drilling
9 Camden: Ca de Horizontal o o ta drilling d g Accessing potentially stranded reserves › Dewatering of horizontal wells without the vertical intersect has proved challenging › Completion techniques deployed that reduce technical risks › Major advantages: » Reduced land access » Reduced capex » More
Slide 19: Camden: Horizontal drilling
10 Camden: Ca de Horizontal o o ta drilling d g Dedicated rig secured › 20 wells now drilled horizontally without the requirement for a vertical intersect well. » 1400 to 2100m in-seam » Targeting 2 seams from the one build well when the 2nd seam is greater than 2m in net thickness » Multiple wells
Slide 20: Camden: Horizontal drilling
11 Camden: Horizontal drilling g Enhanced drilling techniques for semi rural and populated areas Note sound walls » Upstream Gas Briefing » 25 October 2010 » AGL External
Slide 21: Camden: Horizontal drilling
12 Camden: Horizontal drilling g Wells designed to maximise gas recovery AGL Well Design 9 5/8” surface 12 1/4” open hole casing to 120m Hole size 12 1/4, casing g size 9 5/8” Hole size 8 1/2”, casing size 7” 8 1/2” open hole to 7” production ~800m TVD casing Open hole 5 7/8” inseam sections through
Slide 22: Camden: Gas production facility
13 Camden: Ca de Gas production p oduct o facility ac ty Site selection minimises visual impact and noise on local community » Upstream Gas Briefing » 25 October 2010 » AGL External
Slide 23: Gloucester Gas Project
14 Gloucester Gas Project » Presentation Title » February 2008 » AGL Internal
Slide 24: Gloucester: Overview
15 Gloucester: Overview Developing a commercially viable project. › Exploration activity in 2010: » Five cored wells; » Three stratigraphic wells; » 2D seismic acquisition (72 km); » 3D seismic acquisition (50 km2). › 12 Production test wells drilled and tested › Substantial increase in 2P reserves
Slide 25: Gloucester: Development priorities
16 Gloucester: Development p p priorities Focus on expanding reserves and securing project approval › Project de-risked de risked with comprehensive 3D seismic and exploration program › Investigate fracture stimulation optimisation for multiple zone completions › Future Field Development Planning »
Slide 26: Gloucester: Development program
17 Gloucester: Development program De-risking project development › Complete 3D seismic interpretation › Undertake hydrogeology study › Cooperation agreements with overlapping coal tenure holders › Develop completion strategy » Cased and fracced wells » Barefoot underream wells » Upstream Gas Briefi
Slide 27: Gloucester: Vertical drilling and fracturing
18 Gloucester: G ouceste Vertical e t ca drilling d g and a d fracturing actu g Fracture stimulation technology enhances production in multiple coal seams › About 12 producing coal seams at depths from 200m to 1000m › Production rates up to 1.4 TJ/d tested » Upstream Gas Briefing » 25 October 2010 »
Slide 28: Internal Services Group
19 Internal Services Group » Presentation Title » February 2008 » AGL Internal
Slide 29: Internal Services Group
20 Internal Services Group p Developing strategic internal capabilities › AGL operate an in-house in house field services function to support field development activities › An independent service capability is critical given CSG industry growth › Functions include workover rig, rig automated pipe ha
Slide 30: Summary
21 Summary y Camden › Operating successful in a semi-urban area for 10 years in compliance with regulatory conditions and minimal disturbance to the local communities › Good relationship with local Councils, Landholders and Landcom with active involvement in the Community Consultative Committee › St
Slide 31: Future Development Priorities
Future Development Priorities Andrew Falkner | Head of Exploration | October 2010
Slide 32: Exploration portfolio
2 Exploration p p portfolio Diverse portfolio of assets › Coal seam gas (CSG) › Conventional petroleum » Gas » Condensate and LPG » Crude oil › Geothermal » Hot dry rocks (HDR) » Conventional magmatic » Upstream Gas Briefing » 25 October 2010 » AGL External
Slide 33: Exploration portfolio
3 Exploration p p portfolio Extensive experience across multiple basins › Eastern Australia onshore focus near core markets › Close to infrastructure › Sydney, Surat, Bowen, Galilee, Cooper Eromanga Basin permits › G Geothermal h l permits i and d 10% stake in TEY » Upstream Gas Briefing » 25 Octobe
Slide 34: Hunter CSG Project
4 Hunter CSG Project » Presentation Title » February 2008 » AGL Internal
Slide 35: Hunter: Strategically located
5 Hunter: Strategically g y located » Upstream Gas Briefing » 25 October 2010 » AGL External
Slide 36: Hunter: HB1 & HB2 Pilot production testing
6 Hunter: HB1 & HB2 Pilot p production testing g Gas flows confirmed and reserves booked › Hydrogeological study HB01 & HB02 Production Rates confirmed aquifer isolation 600 90 and integrity 80 500 70 Water Rate (Bbl/d) ) › Testing commenced late May ate (Mscf/d) ) 400 60 › Gas flow at both wells se
Slide 37: Hunter: Initial reserve assessment
7 Hunter: Initial reserve assessment Small footprint delivers encouraging reserves Bulga gas prospect reserves and resources estimates ((as at 30 September p 2010)) › 142 PJ (2P) › 271 PJ (3P) Bulga, Loder and Belford prospects 2P reserves target › 450-500 PJ » Upstream Gas Briefing » 25 October 201
Slide 38: Hunter: Development program
8 Hunter: Development p p program g Prove additional reserves and delineate resource › Continue exploration and appraisal drilling program › Investigate beneficial use of produced water › Upgrade reserves › Hunter field development may comprise a number of smaller pods of wells across delineated pro
Slide 39: Galilee Project
9 Galilee Project » Presentation Title » February 2008 » AGL Internal
Slide 40: Galilee: Location and key infrastructure
10 Galilee: Location and key y infrastructure › Potential access to Mt Isa, Qld coast and southern Australia markets » Upstream Gas Briefing » 25 October 2010 » AGL External
Slide 41: Galilee: Farm-in program
11 Galilee: Farm-in program p g AGL achievements: Pilot project well advanced › Drilled, completed and Drilled currently testing a 5 spot production pilot at Glenaras › Commissioned 350 ML holding pond for produced water › Acquired 540 km of 2D seismic › Drilled and tested 7 core wells » Upstream Ga
Slide 42: Galilee: Work program
12 Galilee: Work program p g Pilot design addresses reservoir risk Galilee resource features: › High water make from adjacent aquifers; › High reservoir temperatures; › Undersaturated reservoirs. › Glenaras pilot designed to address risks: › Closely spaced 5 spot wells; › Upper aquifer section cased
Slide 43: Summary
13 Summary y Diverse portfolio of valuable exploration acreage › Eastern Australia onshore focus near core markets › Targeted locations close to electricity and gas infrastructure provides access to market › Experience across multiple oil and gas basins › Geothermal permits to identify future source
Slide 44: Gas Storage Opportunities
Gas Storage Opportunities Paul Ashby | General Manager Commercial & Finance | October 2010
Slide 45: Strategic rationale
2 Strategic g rationale Infrastructure bottlenecks creating a new business opportunity › Infrastructure supply bottlenecks imminent › Management of peak gas demand (daily and hourly): » Peak supply during high demand » Supports development of peaking power stations » Short Term Trading Market (STTM)
Slide 46: Peak gas demand and supply
3 Peak g gas demand and supply pp y NSW pipeline constraints expected by 2014 TJ Winter peak day demand for NSW 800 › AEMO forecasts f t based b d on a 1-in- 1 i 750 20 probability of exceedence 700 (POE): 650 » NSW peak winter gas demand 600 will exceed pipeline capacity by 2010 2011 2012 2013 2014
Slide 47: Silver Springs Gas Storage Project
4 Silver Springs p g Gas Storage g Project j Underground gas storage business opportunity › Mosaic’s fields ideally located to Wallumbilla gas hub › Project well advanced › Execution utilising in-house expertise › Underpinned by QGC/BG agreement: » 7-year contract » Initial I iti l storage t capacit
Slide 48: Torrens Island Energy Park
5 Torrens Island Energy gy Park Ideal location adjacent to TIPS › Scope: » LNG gas storage facility » ~700 700 MW gas peaking ki power generation › Development Application: » Lodged with SA Government » Draft conditions received » Anticipate consents by end of year » Upstream Gas Briefing » 25 Octob
Slide 49: Newcastle Gas Storage Facility (GSF)
6 Newcastle Gas Storage g Facility y (GSF) ( ) Significant potential investment in core market Newcastle GSF operating profile › Scope: 120 1,500 » Liquefaction rate 10 TJ/d /d) 100 1,250 orisation (TJ/ » Vaporisation rate 120 TJ/d orage (TJ) (5 TJ/h) 80 1,000 » LNG tank capacity 1.5 1 5 PJ Availabl
Slide 50: Newcastle GSF location
7 Newcastle GSF location » Upstream Gas Briefing » 25 October 2010 » AGL External
Slide 51: Example: Terasen Gas, Vancouver Island
8 Example: p Terasen Gas,, Vancouver Island Shown with the permission of Terasen Gas and CB&I (EPC contractor) » Upstream Gas Briefing » 25 October 2010 » AGL External
Slide 52: Newcastle GSF value equation
9 Newcastle GSF value equation q Cost avoidance, risk minimisation and market opportunities › Examples of avoided costs of standard services (MDQ and haulage): » TRU Iona storage: $160-240/GJ pa of MDQ (values 120 TJ/d at $19.2-28.8m pa) » Jemena EGP: $1.12/GJ haulage (values 120 TJ/d at $49.1m pa)
Slide 53: Newcastle GSF project milestones
10 Newcastle GSF p project j milestones Final investment decision subject to government approvals › Land secured: July 2010 › Project Application on NSW Govt website: October 2010 › Environmental Assessment on exhibition: February 2011 › Investment decision 2Q 2011 › Facility operational: winter 201
Slide 54: Summary
11 Summary y › Gas storage is a significant new business opportunity for AGL › Diversify exposure to upstream and pipeline constraints › Prudentially manage market risk and avoid rising costs › Support AGL’s upstream gas and power generation developments › Potential first mover advantage in core mar