A GIANT American corporation has bought a controlling share in a Territory Outback oil and gas project that could be five times bigger than Inpex.

New York-based Hess Corporation paid $17 million for a 62.5 stake in massive Beetaloo Basin exploration tenements held by Falcon Oil & Gas Australia.

The move is a giant step forward for one of Australia's more unusual ventures.

If the project was brought into production, gas would be piped to a LNG plant in Darwin or near Borroloola and oil would be sent north by train to a refinery in Darwin.

Under the agreement, Hess will spend $40 million on a seismic program this year.

After completion, processing and interpretation of the data, the corporation can elect to continue to the next phase of the work campaign, which includes conducting a five-well drilling program.

Meanwhile, Falcon will test the Shenandoah-1 wellbore in the third quarter of this year and Hess will pay $2 million for the data.

Falcon chief executive Robert Macaulay said he was looking forward to developing the Beetaloo Basin.

"Not only does Hess bring to the table their vast international experience in both conventional and unconventional plays, but they are also a well-established, trusted and successful company in Australia," he said.

Falcon has spent more than $20 million exploring Beetaloo in the past five years.

An independent report by major international resources analyst Ryder Hunt said last year that the basin - a 30,000 square kilometre tract of land surrounding Daly Waters, 600 kilometres south of Darwin - holds 18 billion barrels of oil and 63 trillion cubic feet of shale gas.

That's five times more gas than the $30 billion offshore Inpex project.

The oil and gas is deemed "unconventional" because it is held in shale.

Technology was developed only recently to bring it to the surface.

There are several big shale oil and gas operations in the United States.

Hess is a global energy company engaged in the exploration, production, purchase, transportation and sale of crude oil and natural gas, as well as the production and sale of refined petroleum products.

Falcon Oil & Gas is an international exploration and production company with its headquarters in Denver.

It is incorporated in Canada and trades on the TSX Venture Exchange under the symbol FO.

The company specialises in unconventional and conventional oil and gas exploration and production and holds interests in prospective properties in Australia, Hungary, and South Africa.

http://www.ntnews.com.au/article/2011/05/12/232041_ntnews.html