Nangwarry Carbon Dioxide Project

13.10.2021

The Nangwarry Carbon Dioxide Project is 50% owned and is operated by Lakes Blue Energy. The project is centred on the Nangwarry-1 gas well, located within Petroleum Retention Licence 249 (PRL249) near Mt Gambier, South Australia.

The Nangwarry-1 well, drilled in late 2019, discovered a carbon dioxide rich (greater than 92%) gas resource. Following extended flow testing during March 2021, the independently estimated sales gas volume of carbon dioxide recoverable from Nangwarry is as follows (net to Lakes Blue Energy):

Net CO2 Sales Gas (Bscf) 50% LKO 

LowBestHigh
4.512.932.2

The independent estimate was prepared by ERC Equipoise Pte Ltd (ERCE) using a probabilistic methodology. Under the June 2018 Society of Engineers Petroleum Resources Management System, (PRMS), volumes of non-hydrocarbon by-products cannot be included in any Reserves or Resources classification.  However, the method used by ERCE is consistent with that prescribed by the PRMS. 

ERCE is an independent consultancy specialising in geoscience evaluation, engineering and economic assessment. ERCE has the relevant and appropriate qualifications, experience and technical knowledge to appraise professionally and independently the assets. 

ERCE’s work was supervised by Mr Adam Becis, Principal Reservoir Engineer at ERCE, who has over 14 years of experience in the oil and gas industry. He is a member of the Society of Petroleum Engineers and also a member of the Society of Petroleum Evaluation Engineers. Mr Becis has consented to the form and context in which the estimate of carbon dioxide sales gas is presented. 

Lakes Blue Energy, with joint venture partner Vintage Energy Pty Ltd, has a non-binding Memorandum of Understanding (“MoU”) in place with Supagas Pty Ltd (“Supagas”), an Australian based distributor of gases for domestic, industrial, medical and other applications. Under the MoU, Supagas will fund work associated with the preliminary design and production and delivery of food grade carbon dioxide. In return, the joint venture will afford Supas the opportunity to submit a formal proposal to develop and/or purchase gas from the Nangwarry resource. 

The Australian carbon dioxide market has annual turnover of around $267m (2019/20), with gas used in food (35%), beverage (32%), medical (10%), chemical manufacturing (9%), other industrial (8%) and construction (6%) sectors. Since closure of the Caroline-1 project periods of tight supply have occurred. 

Carbon dioxide production requires around 17.5 Mscf of gas for each tonne of carbon dioxide. Based upon 20 operating years, the Nangwarry resource lends itself to supply of the order of 150 to 200 tonnes of carbon dioxide per day, a quantity that should be readily marketable. Overall market size is estimated to exceed 3,000 tonnes per day.

The carbon dioxide purification process involves:

  • vaporisation of the carbon dioxide, which will flow from the well as a liquid at very high pressure;
  • purification of the carbon dioxide, using activated carbon and other media;
  • drying of the product, using silica gel;
  • reliquification of the carbon dioxide, by cooling;
  • distillation, to remove nitrogen and hydrocarbons; then
  • storage and loading.