Adelaide-based companies Somerton Energy and Beach Energy hope to scour almost 2000 square kilometres of land, predominantly extending west of the town to the South Australian border.

The joint venture partners must receive permission from local native title claimants before part of the proposed tenement can be cleared for use.

Somerton Energy managing director Hector Gordon told The Standard he was hopeful administrative requirements could soon be addressed.

"The area that's covered by the licence has been explored in the past, and it's been re-gazetted by the government," he said.

"We put in a bid last year; we've been offered the tenement and we've accepted the offer, but it won't be awarded I would say for probably six to 12 months.

"Exploration would start after that. There has been some previous exploration on the tenement, and we'll be following that up."

In a recent statement Somerton said independent analysis and its own internal estimates suggested the Casterton formation within the Otway Basin could contain more than 25 trillion cubic feet of gas and significant oil volumes.

"That's the main initial attraction of the area ? conventional oil and gas, like what's been done in this region in the past," Mr Gordon said.

"In the medium to longer term there is a shale play; whether we can evaluate it and whether it's compatible with the land use and whether you can exploit it without any environmental concerns are all things that have to be addressed down the track."

Shale gas is natural gas that is trapped within shale formations. It is more difficult to extract than gas from other types of rock, prompting the use of hydraulic fracturing, now the subject of some controversy, particularly in the USA.

Mr Gordon said the Casterton tenement represented a mix of Crown and freehold land and state reserve, with much of it presently used for grazing.

"From our point of view, I guess the perspective is that we've been working with landowners in the conventional oil and gas business for as long as I've been involved," he said.

"Ninety-nine per cent of our experiences are positive. There has been a low level of petroleum activity in this area in the past, and we'd expect that with goodwill on all sides that that will continue in the future."

Mr Gordon said Somerton hoped to focus on seismic testing during the second half of next year before sinking a well within the tenement during 2013.

aweaver@standard.fairfax.com.au

Companies are typically given exploration licences for a five year period and often have the option of pursuing a renewal.

Melbourne-based Mecrus Resources is seeking licences to explore for gold, silver, mineral sands and other resources within the south-west but has excluded coal and coal-bed methane from its plans.