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Texas billionaire bets big on Australian gas

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Billionaire Brian Sheffield, a third-generation Texas oil and gas executive, has made a $110 million bet that the Bitalu Basin in the Northern Territory will be one of the world’s next big shale gas developments.

Sheffield, who spent part of his early career as an investment banker in Sydney and whose father, Scott Sheffield, runs a $60 billion oil and gas company, bought stakes in ASX-listed Tamboran Resources and Empire Energy last year.

Since last November, Brian Sheffield has spent $102 million to acquire a 15.2 percent stake in Tamboran, making him the company’s largest shareholder. In September, Tamboran acquired Origin Energy’s Beetaloo assets, positioning it as the largest player involved in gas exploration in the basin.

In June of this year, Sheffield spent nearly $8 million to become a shareholder in Empire, prompting speculation that he may try to consolidate Tamboran and Empire. “He made a big play at Beetaloo,” said Empire chairman Paul Espy, who also heads the Liberal Party’s Menzies Research Centre. “What his endgame is – you can do it yourself.”

In 2020, Texas oil and gas executive Brian Sheffield sold his Parsley Energy business to his father’s company, Pioneer Natural Resources, for $4.5 billion.

Tamboran chief executive Joel Riddle said Sheffield was lining up its bids. “Brian shared with me that he was interested in the whole pool. He wants to spread his bets around.”

The Bitalu Basin was earmarked by former prime minister Scott Morrison for $220 million in public investment as part of his government’s plan to revive the gas-fuelled economy, which included public funding to support exploration and drilling by companies such as Tamboran and Empire at Bitalu .

A federal Senate inquiry is currently looking into whether taxpayer funds should be used to support private investment in Beetaloo.

“He made a big play at Beetaloo.”

Paul Espy, Chairman of Empire Energy

Sheffield joins a number of the wealthy on the Empire share register, such as Tasmanian billionaire Dale Elphinstone and Paul Fudge, who is worth almost $770 million.

Following the acquisition of Beetaloo’s gas assets, Origin Tamboran and Sheffield also partnered with Russian oligarch Viktor Vekselberg. Vekselberg is the largest shareholder in Falcon Oil & Gas, which remains a non-operating partner in Origin’s assets.

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Empire and Tamboran have attracted the interest of wealthy investors who believe Beetaloo’s gas reserves have the potential to unlock wealth and redefine Australia’s energy market, which is in the midst of a crisis.

Despite being one of the world’s largest gas exporters, Australia is experiencing a shortage of gas to supply the country’s east coast, which has led to a sharp rise in domestic gas prices, putting pressure on business and household spending.

Last month, the federal government signed a deal with gas exporters Shell, ConocoPhillips and Santos to increase domestic supplies for next year after the Australian Competition and Consumer Commission (ACCC) warned the country faced a significant shortage of gas for local industry in 2023.

The Northern Territory Government estimates that Beetaloo may contain more than 200,000 petajoules of gas, although not all of these reserves will be recoverable if the projects prove viable. The reserves exceed Australia’s annual energy consumption of 5,790 petajoules in the financial year to June 30, 2021, according to federal government figures.

First gas production from Beetaloo, if it happens, will not be until 2025. However, there remains strong public and environmental opposition to gas fracking in the Northern Territory and, more broadly, to further investment in fossil fuel projects.

Pressure to address climate change by reducing the country’s dependence on fossil fuels has also led some pension funds and banks to refuse to lend or invest in gas and coal projects. In turn, this led to the growth of private capital in these sectors.

Despite​​​​ opposition to investment in fossil fuels, both the federal government and the opposition agreed that gas remains essential as the economy transitions to renewables and a clean energy future.

The role of any gas from Beetaloo in solving Australia’s supply shortfall was questionable, according to Grattan Institute energy program director Tony Wood, a former chief executive of Origin Energy. He said the first challenge would be to transport gas from Beetaloo to the east coast of the country. “Most people would say the most likely destination for this gas is Darwin, followed by export. There is some potential to upgrade the northern Jemena gas pipeline between the Northern Territory and Mt Aisa, but it is quite limited.”

“The government has made it clear that it is not going to put public funding into any gas infrastructure in the long term because that would create a political challenge if nothing else. It is clear that the government’s goal is to gradually think about the fact that gas does not have a long-term future.”

“The government has made it clear that it is not going to put public funding into any gas infrastructure in the long term because that would create a political challenge,” says Tony Wood, director of the energy program at the Grattan Institute.credit:Oscar Coleman

Joel Riddle, chief executive of Tamboran, said the Sheffield family’s interest in Bital was linked to the fact that Brian Sheffield’s father Scott was a Santos board director from 2014 to 2017. sub-basin.

“When Scott Sheffield was on the Santos board, he knew about Beetaloo and it was still in the early days of the drilling programs and the first data was coming in,” Riddle said. “What Brian shared with me was that his father was really high on the early results, to the point that some people from Santos would fly to Dallas and sit with his team at Pioneer. Scott has previously acknowledged that Beetaloo could be the world’s next big shale company.’

The mystery came last week ahead of a Senate inquiry into oil and gas exploration and production at Beetaloo. Its chairman, Senator Sarah Hanson-Young, accused Riddle of failing to respond to repeated requests to appear.

“There was an early recognition from Scott [Sheffield] that Beetaloo has the potential to be the next big shale company in the world,” says Tamboran Resources CEO Joel Riddle.

“There was an early recognition from Scott [Sheffield] that Beetaloo has the potential to be the next big shale company in the world,” says Tamboran Resources CEO Joel Riddle.

“Mr. Riddle, you said at the outset that you were flattered by the committee’s interest in your campaign,” Senator Hanson-Young said. “Refuse to appear at a Senate hearing and ignore a Senate subpoena doesn’t really seem like a way to respond to being flattered. It’s very unusual for a Senate committee to issue a subpoena and, in previous situations where there’s been a refusal, it could end up in the High Court.”

Political and regulatory issues will now be on the radar of Tamboran’s largest shareholder, Brian Sheffield.

Sheffield didn’t immediately follow his family into the oil and gas business, which his grandfather Joe Parsley started in the 1960s. Instead, an avid tennis player, he trained at John Newcomb’s tennis ranch in Texas before deciding to study business at Southern Methodist University.

After graduating in 2001, he took a job at an investment bank in Sydney; later worked as a commodities trader in Chicago and then traded interest rates in Europe before returning to work for his father at Pioneer Natural Resources when he was 29.

In 2008, he founded his own company, Parsley Energy, named after his grandfather. He was joined in this company by one of his father’s Pioneer executives, and they initially took over the operation of the 109 original wells that Joe Pursley had owned since the 1960s in west Texas.

Brian then expanded Parsley’s investments into the oil and gas sector. In October 2020, Scott Sheffield-led Pioneer Natural Resources acquired his son Parsley’s company for US$4.5 billion.

Brian, who once told a reporter that Sydney was his favorite place to travel, is now managing partner of energy-investing private equity firm Formentera Partners. He was unavailable for comment for this article. He is expected to visit Australia and Bitala later this year.

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