Australian junior Tamboran Resources (ASX: TBN) and energy major Santos (ASX: STO) are joining forces to investigate the potential of adding the world-class gas assets of the Beetaloo Basin to a possible Darwin LNG (DLNG) Train 2 expansion.

The companies have signed a non-binding memorandum of understanding to undertake technical studies on the jointly-owned (Santos 75%, Tamboran 25%) Beetaloo Basin EP 161 permit to evaluate development options.

Located at Middle Arm, the Santos-operated DLNG is approved for a nominal 10 million tonnes per annum of LNG, with this expansion opportunity increasing capacity by up to approximately 6Mtpa.

Shale gas potential

Santos is one of the pioneers of the Beetaloo Basin, which is considered to offer one of the largest undeveloped unconventional petroleum plays in the world.

Tamboran holds approximately 2 million net prospective acres across the Beetaloo Basin.

The EP 161 permit has been assessed to contain Marcellus Basin-type decline curves from two Tanumbirini wells that were drilled and flow-tested in 2022.

Long-term supply

Tamboran chief executive officer Joel Riddle says the Tamboran acreage is capable of supplying the NT and Australia’s east coast gas market for decades.

“With multiple commercialisation pathways via LNG markets at Darwin and Gladstone and the east coast domestic gas market, Tamboran is well positioned to assess opportunities to accelerate value for our shareholders,” he said.

“Tamboran and Santos have been partners in the EP 161 acreage, which hosts the Beetaloo East area, for more than a decade.”

“We believe the shale within the deepest Beetaloo East region is on par with some of the high-quality formations we have successfully unlocked in the Shenandoah South area in the Beetaloo West.”