The Department of Primary Industries and Resources SA permits provide Strike with the rights to evaluate the coalbed methane (CBM) and in-seam gasification potential of the coal, and also evaluate the coal deposit.

Strike has opted to take the permit itself rather than have its sister company, Comet Ridge, prospect for the CBM. Strike formed Comet Ridge Limited in 2003, a dedicated CBM company, which was publicly listed in 2004.

Having Strike own both the petroleum and mineral rights over an existing coal deposit was a first in South Australia, managing director Simon Ashton said.

The arrangement will allow the resource’s evaluation without overlapping permits with different ownership.

Strike will spend about $100,000 in the first year to evaluate various options including CBM extraction, in seam gasification, coal-to-oil conversion and coal extraction for power generation.

The project is located close to major power transmission lines and the South East Australian Gas Pipeline, connecting the energy needs of both South Australia and Victoria.

This is a strategic move by Strike Oil which initially recognised the deposit for its CBM potential, Ashton said.