Christchurch-based L&M Coal Seam Gas has won its first North Island CSM permit - a 3920 square kilometre area over Waikato coal fields - to complement its four South Island permits.

McDonald Investments Ltd (MIL) and Chartwell have won a further West Coast Basin permit, covering 8722sq.km, and a Waikato permit covering 3667sq.km.

Last year MIL and Chartwell were awarded New Zealand's first CSM mining permit over a 170sq.km area around the West Coast coal mining town of Greymouth. They said then that if initial investigations confirmed the presence of thick and gassy coals they intended building a production pilot sometime during 2008.

MIL declined to comment but L&M managing director Greg Hogan was more forthcoming.

"The next step is to get a gas pilot program running at Kaitangata, either late this year or early next," he told PNN.

L&M has two CSM exploration licences in Southland (Ohai and Winton), two in Otago (Kaitangata and Hawkdun) and one in south Waikato.

L&M and MIL are targeting CSM reserves in the order of 100-300 petajoules, with any commercial developments likely to feed gas to local industries, including dairy factories, small electricity generation schemes or even fertiliser companies.

According to Crown Minerals, the companies' work programs include completing detailed studies, interpreting available seismic, and drilling and logging exploration wells within the first year.

There are also obligations to drill further exploration wells to confirm the presence of suitable coals in each of the next two years, before drilling and testing production pilots.

Meanwhile, New Zealand's third major CSM player, Government-owned Solid Energy, is investigating gasifying coal by controlled heating of coal in deep seams at one of its Waikato licences.

Solid Energy and partner Denver-based Resource Development Technology have drilled four deep appraisal wells on the Huntly coal field 10km west of the town of Huntly.

They have also flared some gas to establish possible test flow rates, and expect to make a decision late this year on the commercial viability of the project. Chief executive Don Elder has said Solid Energy could be sitting on a resource of up to 300PJ.

Resource Development Technology managing director Steve Stepanek told the 2008 New Zealand Petroleum Conference in Auckland last month that CSM could supply up to 10% of New Zealand's gas needs, about 150-170PJ per year.

In addition, L&M Coal Seam Gas's sister company, L&M Petroleum, is undertaking a review of the coal seam methane potential in its onshore Western Southland permits and is planning a multi-well CSM drilling program to unlock the value in the prospects.

Yesterday, the company told its annual general meeting in Wellington that up to 300 billion cubic feet of CSM from Southland could become available to fuel local industries in the future.

Chairman Geoffrey Loudon said potential CSM markets included the dairy industry, domestic users or even Rio Tinto's aluminium smelter at Bluff.