“Five wells are now on pump and are averaging flow rates of 3000 barrels of water per day per well,” the company said.

“Gas breakthrough has commenced. Commissioning of the plant is on track for October and first sales gas is scheduled for November 2005.”

The Kogan North CBM project is located in PL 194 in the Surat Basin about 40km west of Dalby, Queensland.

This 30-35 well project is intended to supply 4PJ of gas per annum for 15 years to CS Energy’s Swanbank ‘E’ power plant near Ipswich in south-east Queensland. Gas will be transported to Swanbank via the Roma-to-Brisbane Pipeline.

Arrow’s partner, Queensland government-owned CS Energy, is to spend up to A$10.8 million towards the Kogan North Development Project to increase its share of the project to 50%. The Australian Pipeline Trust is to fund the downstream processing (CGPF) facilities 100% and will toll the Kogan North gas through these facilities.

Arrow estimates its share of the total Kogan North development capital of approximately A$25 million will be about 10%.

Meanwhile in ATP 790/PLA 230, immediately to the south of the Kogan North project, the Daandine-3 CBM production well has been completed and is onstream.

“The well is currently pumping at 1600 barrels of water per day with gas breakthrough,” Arrow said.

“Pressure responses have already been seen in nearby Kogan North wells. This is a pre-requisite for reserve certification and the data from the field is being forwarded to reserve certifiers.”

Arrow owns 100% of the Daandine Project and is in advanced stages of planning for a power generation project to be fuelled by gas from the acreage.

A power purchase agreement with New South Wales retailer Country Energy is close to completion and a connection agreement with grid operator Ergon Energy is under negotiation, according to Arrow.

In addition, terms for the purchase, operation and maintenance of the power generation facilities are under negotiation with an equipment supplier; and several financing alternatives with various parties are under negotiation.

Arrow said it aimed to reach financial close on the project by October 2005 and to achieve first electricity sales in August 2006.