BRISBANE, Australia - Armour Energy says favorable gas supply and demand economics coupled with an LNG-hungry market make commercialization opportunities for its vast shale resources in northern Australia much more attractive than what was previously the case.

Speaking at the recent DUG Australia conference, Armour executive chairman Nick Mather told delegates he was bullish when it came to market opportunities that were arising in Australia’s domestic gas market.

“There’s been billions of dollars sunk into LNG facilities around this country and there is a strong view of demand that the world, as it rapidly urbanizes over the next 25 years, is going to need gas and LNG is the most efficient form of fusel fuel,” he said. “We think the gas market is going to escalate very rapidly as the demand comes on stream for those LNG facilities.

“LNG is here to stay, the gas markets are here to stay and we need more resources for it and that is what’s driving our exploration effort,” he said.

Armour holds vast shale oil and gas resources in northern Australia, mainly in the McArthur and South Nicholson basins, with the Brisbane-based company having spent about $65 million to date proving up those resources.

“We’ve had six discoveries in our first seven wells in northern Australia,” said Mather, co-owner of Arrow Energy. “Data is our currency and we now know what has to be done to put successful frack laterals into some of these very gassy formations that we have in the Basins.”

Armour is the largest single tenement holder in the McArthur Basin, a position Mather says is very strategic.

In addition to the deep oil and gas plays the company has identified in the Northern Territory, Armour has also had some luck with shallow conventional plays, namely the Glyde discovery located 90 km south of the McArthur River zinc mine.

Mather said Armour was planning to put seismic across ultimately 4,000 km of ground and follow up with about 30 wells. The company would also further test Glyde-1 in addition to de-risking drilling targets.

Mather is fundamentally upbeat on the potential of the McArthur Basin and went on to compare the area with the established Cooper Basin.

“We ultimately think it will be oilier,” he said of the McArthur Basin.

In Q&A time, Mather said the McArthur Basin appeared to have “the same potential endowment in our view as the Cooper Basin, or bigger.”

It’s a lot to live up to, and with a market capitalization of about $15 million, Armour is aware it cannot realize the basins potential on its own.

Mather said the company is open to farm in partners but was adamant that it did not want to hand over a big equity position of its Northern Territory acreage.

“Of course we are interested in partners but we’re not going to throw the baby out of the bathwater and do a bad deal that leaves us with a small interest,” he said.

Mather said the proposed development of a pipeline linking the Northern Territory to the eastern states gas market would bode well for future commercialization of its resources, but stressed successful project development was not contingent on the pipeline going ahead.

Lauren Barrett can be reached at lbarrett@hartenergy.com.