Using nitrogen drilling techniques, Churchie 1A flowed up to 400 percent more than its namesake Churchie 1 - drilled just 200m away with traditional mud drilling methods (a flow of 1.3 mmcfd in 2001).

"The success of Churchie-1A proves two things", said Mosaic's jubilant chief executive officer, Dr Howard Brady.

"It proves Mosaic's belief that there is a considerable gas field within the Permian leases Mosaic holds in the Surat Basin, and two: that nitrogen drilling is making a hugely successful difference to drilling in these Permian Sandstones structures."

Last week, Mosaic announced construction of the Churchie pipeline will begin in January with gas sales from Churchie-3 flowing in the first quarter of 2003. Churchie 1A will be production tested and logged in the New Year and also be connected to the new pipeline, the company said.