ESG said Australia's first brown coalbed methane pilot production project, Oak Park, kicked off last weekend with the start of drilling of 5 wells in the Victorian permit area of EL-4507.

"The aim of the pilot production project is to establish the viability of natural gas production from the extensive brown coals which occur at shallow depths in the company's Victorian licence areas (EL 4507, EL 4392 and EL 4510)," the company said.

ESG said the Melbourne Trough area covered by ESG exploration licences contain the second largest brown coal deposit in Australia with an estimated 10 to 12 billion tonnes of coal in a single seam - the Maddlingly seam.

The pilot program comprises of drilling five wells into the Maddingly brown coal seam, with four wells 300m apart surrounding a central well. The five wells are expected to be drilled, completed and placed in production by January 2003.

"The wells will then by dewatered using electric submerisble pumps for an initial six month trial production period," ESG said.