Drilling is proceeding at the first well in Sydney Gas’ five-well coal-bed methane project 25km south of Singleton, and Molopo Australia is planning to resume production testing at its Gloucester LMG-03 well, about 100km north of Newcastle..

Sydney Gas Ltd (SGL) spudded its Hunter-Bulga HB-1 well at the Bulga mine site last week. The well planned to intersect the Piercefield coal seam at a depth of about 430m and to reach a total depth of about 510m.

The HB wells are being drilled to delineate a high production fairway within the Hunter Gas Project.

Once drilled, they will be fracced and completed. After being dewatered, the wells will be put on a production flow test program. SGL plans to test the wells for at least six months to determine the reservoir’s production potential.

SGL aims to secure a cost-effective supply of gas to the Hunter Valley region sourced primarily from waste mine gas.

It argues that the project would be a ‘win-win’situation for mine safety, shareholders and the environment as studies have shown that burning the methane and harnessing its energy would actually reduce the region’s greenhouse gas emissions.

“Currently, the gas is simply vented off into the atmosphere for the safety of coal mining operations, which is not only a lost opportunity to generate energy, but is also harmful to the environment,” an SGL statement said.

“Using coal seam methane as a fuel source reduces the greenhouse impact by around 87%.”

SGL’s acreage is located adjacent to the large and growing markets of Sydney, Newcastle and Wollongong.

“The strong market presence on the doorstep of SGL's Projects and the competitive

advantage of negligible transport costs will help promote the profitable exploitation of coal seam methane from the projects, compared to other producers of natural gas currently supplying the markets from the Cooper and Gippsland basins,” SGL said.

Meanwhile elsewhere in the Hunter, Molopo plans to resume production testing at its LMG-03 well at Gloucester in the next 10 days.

Initial production testing was suspended because gas production from three nearby coal exploration holes had not been grout sealed by previous coal license holders. Testing will resume once 11 nearby boreholes have been grout sealed.

At the time of suspension LMG-03 was producing over 280,000 cubic feet a day of gas despite the coal seams being mostly below the water level, according to project manager David Casey.

“Although production testing had been delayed as a consequence of gas produced from nearby boreholes, this indicated good reservoir connectivity and has provided additional information about the reservoir which would reduce the number of wells required to appraise this area,” Casey said.

In another coal-bed methane project, this time in the US, Australian company Planet Gas Limited has said the first well in its Cherokee Basin, Kansas tenement had intercepted gassy coals, which boded well for the project. But the well itself was determined to be wet and not economic and had now been plugged and abandoned.

Planet Gas plans to drill up six more wells in this acreage.