But the drilling of the Mahalo-2 well has been delayed until a different rig is sourced.

Joint venture partner Comet Ridge said it now expects Mahalo-2 to spud mid-year.

“Santos has indicated that it has access to rigs that are better suited to the task and that efforts will be made to expedite the drilling of this well,” managing director Andy Lydyard said.

Mahalo-2 will initially be drilled to a point immediately above the Bandanna Formation coals to assess its productivity and provide initial reserves for the project, Comet Ridge said.

Meanwhile, the Mitchell Drilling Contractors Rig 120 is currently drilling Mira-1, which has a planned total depth of 243m.

After drilling is completed, the rig will move to drill a second corehole, Humboldt-1, to a depth of 248m.

Cores will be cut across the Bandanna coals and Santos will conduct gas desorption analyses.

“Both wells will be drill-stem tested to gather information on coal permeability – a key parameter that governs how well water and gas flows through the coals,” Lydyard said.

Both wells are expected to take seven days to drill and test.

Comet said the three wells – Mira-1, Humboldt-1 and Mahalo-1 – would fulfil its earning obligations, entitling the company to a 40% interest, with Santos and Origin Energy each owning 30%.

In March last year, Santos determined potential volumes of gas in place, ranging from a minimum 181 billion cubic feet up to 990 BCF.

But Comet Ridge said the most likely volume was estimated to be more than 400 BCF. After considering a 40% recovery rate, the company said between 70 and nearly 400 BCF of gas might be recovered.

But recovery factors of 60% to 70% have been recorded in several US coal seam methane (CSM) developments, it said.

Gas reserves developed within the ATP are well positioned to be transported into the significantly increasing Gladstone gas market, Comet said in an earlier report.

The Mahalo Project, about 100km north along a structural trend, is targeting the same productive coal seams as those produced at the Spring Gully and Fairview CSM gas fields in central Queensland.

The Spring Gully and Fairview CSM gas fields contain 1300 petajoules of 1P reserves and 1947PJ of 2P gas reserves.

The Northern Denison Trough gas pipeline – part of the Wallumbilla-Gladstone pipeline – passes through the western edge of ATP 337P.