Current production from the CH4/BHP-owned Moranbah project (50% held by each partner) was exceeding obligations under gas sales agreement with Enertrade and Ergon, according to CH4 managing director and CEO Louis Rozman.

“We have achieved record production levels and are strategically positioned to capitalise on the significant growth in demand for gas in the North Queensland market,” Rozman said.

“CH4 now has the financial strength to pursue the diverse range of new market opportunities in northern and central Queensland, including the rapidly expanding markets of Townsville and Gladstone. We have a renewed focus on exploration and business development activities having recently established a full time and dedicated exploration team with a mandate to significantly increase our gas reserves.”

During the quarter Moranbah delivered gas to Enertrade for use in the 220MW Yabulu Power Station and by Xstrata for use in the Townsville Copper Refinery. CH4 also delivered gas to Ergon for use in the 6MW Moranbah power station.

CH4 said it would soon start work on degassing a portion of the Moranbah North Coal Mine following the completion of contracts during the quarter. In addition, the company was in the final stages of negotiations with Enertrade on increasing gas sale volumes above those currently provided for under the sales agreement for Townsville.

Meanwhile, Queensland Gas Company (QGC) has reported record gas flows at its Berwyndale South, Argyle East and Lauren coal seam gas test sites in Queensland’s Surat Basin.

Since November 2004, QGC has drilled nine wells using its current well completion technique, evaluating the Upper and Lower Juandah coal seams. Of these, five wells each tested the full Juandah coal sequence, but in two cases twin holes were drilled to test the Upper and Lower Juandah coals separately.

These wells can be equated to seven wells, each accessing the full Juandah coal sequence; and on this basis the wells were now producing an average weekly flow rate of 720,000 cubic feet per day (cfd) per well – an increase of 16% on the 622,000 cfd reported just two weeks ago.

“Last week, these wells were producing at an aggregate rate equivalent to two petajoules per year which would represent a quarter of the productive capacity required to meet the Incitec contract in the early years” said QGC managing director Richard Cottee.

“These high flow rates can be expected to translate into lower capital and operating costs as QGC gears-up for first gas sales in early 2006”, Cottee said.