The JV was formed when the US subsidiaries of Sun Resources and Victoria Petroleum farmed into Kestrel Energy’s 33,000-acre Green River Basin leases.
Its first well, Dines CBM-1, has a target depth of 1,458m and is scheduled to spud in the second week of December. It is targeting 24 metres of Fort Union and Lance age coals revealed by well logs from the nearby Dines-2 gas well.
All coals of interest will be cored for lab work to assess CBM potential. If a subsequent testing program is required and is successful, the well could be tied to the Dines pipeline for immediate delivery to the interstate pipeline and local markets, according to Sun Resources director Brad Farrell.
“The infrastructure is good and the demand is huge, so there is an instant market,” Farrell told EnergyReview.Net.
“Gas prices are high and they will stay high, because the demand is enormous. Gas is about A$10 in the US compared to $2.50 to $3 here [in Australia].”
Wyoming produces about 384bcf a year of coalbed methane compared to the Australian total of 35-40bcf, Farrell said.
“The Powder River Basin is the main producing area, but the Green River Basin has been flagged as having big reserves – however it has different characteristics and is in an early stage of development,” he said.
The farminees have committed to spend up to $3 million over a four-year period to evaluate the potential for CBM gas on Kestrel owned lands. Kestrel will have a 10% free carry and the option to increase its interest by a further 10% by paying $300,000 and interest of 10%.
Interests are Sun Delta Inc 45% (operator), Victoria Petroleum USA Inc 45%, and Kestrel 10%.
