Eastern Star announced the start of the project earlier during the year and has concurrently increased its equity in the Coonarah field and ploughing through the legislative and stakeholder approvals process to bring a gas field into production.

In early October ESG said it was about to formally lodge the 'Coonarah Gas Field Development Application' with the Narrabri Shire Council after favourable responses from early rounds of discussions with the local community.

The company has also been increasing its stake in the project. Legal negotiations between the former owners and the ESG directors, who privately had kept the leases in good standing while the ESG corporate shell was being assembled, prevented the entire acreage being vendored into the ESG float.

With those negotiations successfully concluded, ESG now lays claim to 81.5% of the Coonarah gas field after directors Dennis Morton, Doug Battersby and David King sold the newly unencumbered 61% slice of the field into ESG in August for 30 million shares.

The 9100 square kilometre license area in the Gunnedah Basin also includes the Bohena and Wilga Park gas fields.

"This move gives Eastern Star Gas shareholders control over a highly strategic exploration area covering 9,100 square kilometres in the Gunnedah Basin and positions the company well to advance its plans for a power station to provide clean energy to the nearby population centre of Narrabri," said Eastern Star Gas chairman, Dr Wyn Davies.

Direct gas sales to local industrial customers are also anticipated when the construction of a 150mm steel pipeline to transport the gas from the Coonarah field to Narrabri is completed.

The other major play in the ESG portfolio is the Oak Park brown coal bed methane project approximately 45 kilometres west-southwest of Melbourne. The CBM sector has attracted a great deal of interest on the east coast of Australia and ESG is maintaining exposure to it through its 100% owned project.

Previous coal exploration drilling in the Melbourne Trough indicated a resource of 10-12 billion tonnes of brown coal in the so-called Maddingly Seam, which has properties similar to the prolific Powder River CBM production area in the United States.

ESG plans to conduct a five well pilot gas production trial at Oak Park, targetting a 17metre thick seam at around 100 metres depth.