The plant will treat formation water from the Tipton West field converting it into potable water for domestic use within Dalby.
The Australian and Queensland governments have each agreed to fund $3.3 million, constituting $6.6m out of a total project cost of $10 million.
The company said the initiative, which also involves the Dalby Council, was recently commended by Prime Minister John Howard.
At the Tipton West field, Arrow said 15 development wells have finished drilling, while a further two wells were currently being drilled.
The company, which holds a 60% interest in the PL 198 project, plans to bring the first 10 wells on pump and producing water in the next week. A further 10 wells should be added for dewatering by the end of June, it said.
Seventy-five wells are planned for the initial 10 PJ per annum Tipton West development program, with first sales gas due in the first quarter of 2007.
Beach Petroleum will earn a 40% equity in the project by funding the first $35 million of the upstream development program. A heads of agreement has also been signed with the Australian Pipeline Trust (APA) for funding the downstream (processing and pipelines) facilities.
Meanwhile at PL 194’s Kogan North project, Arrow says dewatering is continuing, while gas production is ramping up as predicted. The latest field production rate is 4.4 million cubic feet per day and 28,000 barrels of water per day.
The highest individual well production rate to date is 760,000 cubic feet of gas per day, while three other wells are currently producing more than 400,000 cfd.
“Some of the wells in the north of the field that were the last to be brought on stream, are now starting to produce gas illustrating the continued spread of the dewatering process,” Arrow’s company secretary Paul Marshall said.
“The full field reservoir simulation model predicts a build up to full contract volumes by early 2007.”
At Daandine in PL230, a drilling rig has returned to complete development drilling. With the tenth well currently being drilled, Arrow forecasts that all 15 wells will be completed by the end of July. Welding and installation of the surface gathering system is also underway.
Six wells are expected to be on stream and pumping water by mid July and the remainder by the end of August.
The Daandine upstream project is designed to provide 2PJ per annum to a 27.4 MW power station, to be built on site by Australian Pipeline Trust. Arrow will toll the Daandine gas through the plant and then sell the electricity to Country Energy under a long-term power purchase agreement. First electricity sales are planned to occur before the end of 2006.
In the 100% Arrow-owned Dundee Field in PLA 85, the company says two wells have been on production for more than two months.
“The purpose of this mini-pilot is to prove that the coals have the level of permeability already seen in three earlier exploration wells and that gas will begin to desorb from the coals in the same way as has been demonstrated using cores in the laboratory,” Marshall said.
“Both of these factors are now being confirmed with the wells producing water and gas.”
The Dundee field is south of the town of Chinchilla, about 350km west of Brisbane. Subject to the ongoing pilot production and gas quality analysis, Arrow is targeting gas reserves certification in the next few months.
