Proving that it does not feel weighed down by $US81 billion ($78.8 billion) of LNG projects under way in the West, Chevron has staked a claim in the Cooper Basin that could see the US giant become a feedstock supplier to Queensland's coal seam revolution.
Chevron says it will spend as much as $US349 million earning a 60 per cent stake in two Cooper Basin permits that operator Beach Energy believes are highly prospective for shale gas.
In doing so, Chevron becomes the latest multi-national oil and gas giant to be attracted to Australia's potential for unconventional hydrocarbon riches.
Both the Beach permits - one in South Australia, the other in Queensland - are near Moomba and existing pipeline infrastructure to east coast markets including Sydney and the Gladstone home of Queensland's three coal seam LNG processing plants.
Although the proving up of Cooper Basin shale riches remains in its infancy, the area is already being talked about as a possible supplier of gas to the three Gladstone LNG proponents in the event their own coal seam volumes fall short. It is a scenario the Gladstone proponents - the BG-led QCLNG, Origin's APLNG and Santos' GLNG - have repeatedly dismissed in the face of some investor nervousness.
Chevron and Beach yesterday would not discuss the potential to supply the Gladstone LNG sector.
However, Beach managing director Reg Nelson noted the increase in east coast domestic gas prices, driven by the development of the Gladstone projects, which will introduce LNG competition into the local market for the first time.
East coast gas prices are tipped to soar to as much as $9 a gigajoule, compared to a long-term average of $3.50. Prices in WA are already between $6 and $9, much to the chagrin of local users such as Alcoa, which had used the east coast's previously low prices as a centrepiece of its campaign against WA's gas producers.
Beach shares soared 6 per cent to $1.37 yesterday.
Under the terms of the farm-in, Chevron will pay Beach $US95 million and commit a further $US95 million on exploration to earn a 30 per cent interest in permits PEL 218 and ATP 855.
Chevron will earn another 30 per cent by spending a further $US124 million before a $US35 million bonus payment falls due.
Beach expects to announce a contingent resource for PEL 218 in coming weeks.
"It's very much at an exploration phase," Mr Nelson said of the two permits. "We know there's gas there but we need to understand how to unlock it in an economic and viable sense, and that is the next challenge.
"We have to get an idea of the recoverability of volumes and of gas flows. At the end of that phase we will sit back and look at what we have got."