Yesterday, WestSide said it had signed a heads of agreement with PT Bumi Resources subsidiary PT Kaltim Prima Coal (KPC) regarding the evaluation and development of CSM prospects located in KPC’s 90,700 hectare coal production permit in eastern Kalimantan.

Bumi is a major shareholder and cornerstone investor in WestSide, holding 27.5% of the shares on issue.

The joint venture permit area, which also includes the Sangatta and Bengalon mines, is estimated to contain more than 4 billion tonnes of coal in several well-defined deposits.

“The KPC operation is a world-class mining facility sitting on a potentially significant, but untested, gas reserve,” WestSide chief executive Stephen Cullum said.

“This represents a rare opportunity to participate in the development of what could be a major coal seam gas resource, just 50km from one of the region’s largest gas markets.”

The permit area is also 50km north of the Indonesian city of Bontang, a major centre for liquefied natural gas processing as well as ammonia and urea production facilities to supply both domestic Indonesian and international markets.

The partners will initially conduct a project definition study of the CSM prospects within the production permit area using data from KPC’s coal mining operations.

Cullum said an appraisal program would be designed to fully assess the CSM resources available for development following an analysis of KPC’s data.

“In the short term, the potential inseam gas resources within the mining permit area could be harvested to supply the energy requirements of the mining operation itself,” he said.

“It may also be possible to supply some of this demand from appraisal operations.”

The deal also provides for WestSide and Bumi to look at other Indonesian CSM opportunities.

As well as this partnership, WestSide has also partnered with Sunshine Gas for a nine-well appraisal program in the Bowen Basin.