The MOU relates to PELs 8, 422 and 424, which cover more than 17,000 sqkm. ESG said the permits are strategically located abreast of the Moomba-Sydney pipeline, and are frontier petroleum areas with the potential for high rewards upon successful exploration.
The company said each license contain a very thick section of marine and non-marine sediments ranging in age from Cambrian to Permian. Meanwhile, the postulated Devonian and Cambrian petroleum systems present are untested by modern exploration, it said.
Seismic data acquisition and interpretation by the company has delineated large to very large structural closures in each of the three licence areas, with some associated surface gas-seep anomalism, ESG said.
The company is also currently finalising conditional farmout arrangements with a third party to share the risk of drilling wells in each of the three licence areas at the earliest opportunity, targeting more than one trillion cubic feet of gas resources.
As operator of the Gunnedah Basin coal bed methane joint venture, ESG has also secured a drilling rig to start drilling a nine-well program in February.
ESG says successful production tests of these wells would provide the joint venture with certification of an initial volume of 2P gas reserves from an estimated resource of 8.5 trillion cubic feet.
“The certification, subject to well performance, would enable the joint venture to proceed to development of the coal seam gas field and commit to gas sales contracts,” managing director Dennis Moreton said.
“Gas markets continue to grow with various third parties already showing strong interest in pipeline construction and gas transport from Bibblewindi and surrounds to regional and markets further a field, as well as for local and regional gas fired power generation.”
The 2006 program includes:
· Establishing a confined production pilot by drilling 8 closely spaced new production wells in proximity to the existing Bibblewindi-1 production well. The confined pilot is designed to accelerate dewatering of the 6.5 to 12metre thick Bohena coal seam and therefore achieve commercial gas production rates in a shorter period than would be possible for isolated (unconfined) wells or for wells drilled on larger spacing. The target date for establishing commercial rates is the fourth quarter of 2006.
· Drill a pressure monitor well at some distance from the production pilot. The aim of the monitor well is to increase the area over which reserves can be attributed by demonstrating that the requisite coal reservoir performance extends well beyond the production pilot area, i.e. to demonstrate pressure communication between wells spaced further apart than that being used for the eight new production wells.
On satisfactory completion of the work program and production tests, it is intended, subject to the agreement of all Joint Venture Partners on pricing and gas gathering expenditures, to connect all production wells within the Bohena Project Area, including the eight new wells, to the Wilga Park Power Station for electricity generation and sale.
