The company yesterday said the third well, EM34, intersected the Upper Permian Bulli seam at a measured depth of 904m.

Total length of the well is about 1965m, with about 1061m drilled horizontally through the coal seam and average thickness of the Bulli seam is about 3.5m, Sydney Gas said.

EM34 has been drilled to test the in-seam production potential of the Bulli coal in an area on the boundary of the mapped high production fairway in the Camden development.

Sydney Gas said the well, in an area somewhat removed from previously drilled vertical ones, should provide insight into the utility of horizontal well completions in more marginal areas.

“In-seam wells have shown relatively higher productivity in other locations, where coal seams exhibit low permeability with higher gas content,” the company said.

“Depending on reservoir heterogeneity, a higher flow rate and hence higher ultimate recovery is expected from an SIS well compared to a vertical well due to the larger drainage area to be swept by an SIS well.”

Sydney Gas said if EM34 is commercial, it will provide the opportunity to review the potential for the technology in areas where fracture stimulated vertical wells are “economically unattractive”.

It said where applicable, application of this drilling technique may allow commercial exploitation of gas reserves that may otherwise be difficult to access.

After installing the completion on well EM34, it will be dewatered and production tested along with the previous two SIS wells, before being tied into the gas-gathering system to produce gas to the Rosalind Park Gas Plant.

The JV proposes to drill up to a further three SIS wells this financial year.

AGL Energy is operator of the Camden gas project in a 50:50 JV with Sydney Gas.