How U.S. know-how is fracking Australia into a gas boom, from Texas oilmen to Trump’s energy secretary

As the U.S. shale oil and gas revolution took off two decades ago, Australia took notice and wondered whether the boom could be replicated down under.

In September, the effort began to pay off, thanks to the arrival of American oilmen. The first commercial natural gas deliveries from the Beetaloo Basin started flowing to the energy-hungry Northern Territory. The potential is far greater, and little-known Tamboran Resources and Daly Waters Energy had to clear years of roadblocks to get here.

Sydney startup Tamboran first hired an American ExxonMobil and Chevron veteran as its CEO in 2013. In 2014, Texas oil legend Scott Sheffield joined the board of Aussie natural gas player Santos. He was intrigued by the prospect of bringing shale drilling and fracking expertise to the outback, particularly the sparsely populated reserve with a peculiar name: the Beetaloo Basin.

Sheffield saw the Beetaloo’s upside, and its similarity to the Appalachia’s Marcellus Shale. He brought it to the attention of his son, Bryan, also a Texas oil CEO. Bryan was interested but too busy taking his company, Parsley Energy, public. A few months later, shale pioneer Aubrey McClendon took a small land position in the Beetaloo and Bryan read about it.

“I just remember feeling deflated,” Bryan Sheffield told Fortune. “He got into the Beetaloo really early and cheap. I remember thinking to myself, ‘He’s just running circles around me.’”

McClendon died in a car accident a year later, and more setbacks would soon befall the basin. Amid the global pushback to fracking, the Northern Territory imposed a moratorium from 2016 to 2018. Santos and others had drilled with limited results but couldn’t replicate the American formula. COVID-19 then tanked global exploration budgets and most companies’ interest in the Beetaloo. Parsley suffered in the pandemic and was sold to Scott’s company, Pioneer Natural Resources, for $4.5 billion. Two years ago, ExxonMobil bought Pioneer for $60 billion, the largest U.S. oil deal of the century.

After the pandemic, Bryan Sheffield’s top geologist from Parsley again raised the Beetaloo. This time, Sheffield, armed with his own startup private equity firm, Formentera Partners, took the lead.

“This play keeps coming up. This is three times,” Bryan Sheffield said. It felt like a sign.

After investing heavily in the small Aussie gas players, Tamboran and Beetaloo Energy, Sheffield also started his own Australian subsidiary, Daly Waters Energy.

Fast forward four years, partners Daly Waters and Tamboran announced the first natural gas sales ever from the Beetaloo in September. The milestone shows the basin can deliver, but it still must prove it can become economic over the long term.

“This is a total gamechanger,” Sheffield said. Five wells are now ramping up. “We created revenue. This whole time, the past five years, we have not had $1 coming back to us.”

The timing matters, both for the money-losing companies and for Australia, which could face natural gas shortfalls in the coming years. The U.S., Australia, and Qatar are by far the top liquefied natural gas exporters. Qatar is largely offline now because of the Iran war, and more of Australia’s offshore gas fields are drying up. The answer may lie onshore, in Beetaloo shale.

Sheffield’s capital influx was critical, but so was recruiting top American oilfield services........

© Fortune