The Undulla Nose feature encompasses the Berwyndale South, Argyle and Lauren Gas Fields, in addition to a substantial area of QGC’s exploration tenements beyond.
QGC said the high flow rates from the Berwyndale South Gas Field suggest the Undulla Nose could evolve into a world-class CSM resource.
“This is the product of thick coal seams (over 29m net), high permeability and high gas saturation; but added to this is the all-important ingredient of a drilling and completion technique designed by QGC to optimise gas production from these particular CSG targets,” the company said.
“However, the Berwyndale South Gas Field occupies only a small part of QGC’s acreage over the Undulla Nose. In QGC’s opinion, well data from the Argyle and Lauren Gas Fields suggest that they may potentially hold comparable resources,” QGC said.
Under the accelerated drilling and testing program, QGC aims to increase proven and probable reserves to 1000 petajoules (equivalent to 1 trillion cubic feet of gas).
QGC’s original gas in-place estimate for Walloon coal CSM within its tenements in the Surat Basin was 25,500PJ (in excess of 24Tcf). Of this, 12,700PJ (QGC share 7800PJ) has already been converted to certified proven, probable and possible reserves or resources.
Looking further ahead, in a bid to make future gas sales easier, QGC and Sentinent have agreed to contractually unitise their investment in the Undulla Nose tenements.
As a result, QGC and Sentinent will participate in all reserves from the gas or electricity produced from Surat Basin permits ATP610P, 620P, 632P and part of 648P equivalent to a fixed percentage of 90% and 10%, respectively.
To enable the unitisation to occur, Sentinent has agreed to pay $A9.5 million to QGC.
“This money will be re-invested in our acreage to fuel further growth,” QGC managing director Richard Cottee said.
Cottee said the reorganisation of interests in the Undulla Nose tenements would make marketing more flexible and decrease its contractual complexity.
“This will facilitate the marketing in that in future contracts, our customers need not be concerned as to which particular area the gas is produced,” he said.
“A further advantage of this arrangement will be that it will enable Sentinent and QGC to participate in the same project financing arrangements, which should lower the costs of the financing because of the simplification.”
As a result of this arrangement, both parties have agreed to use QGC Sales as their marketing agent, which will become the counter-party to future sales agreements.
“With sales now running over 75% above the daily rate expected for July when Berwyndale South Project was commenced, it was considered important to have a simplified marketing structure to capitalise on the stellar production rates,” Cottee added.
Already at Berwyndale South, QGC has 11 wells each producing over 1 million cubic feet per day, four of which are producing over 1.5MMcf/d with two producing in excess of 3MMcf/d; and 40% of the producing wells on the gas field do not require pumping.
The average well flow rate of the wells drilled at Berwyndale South Gas Field is now approaching 1MMcf/d. Typically, CSM wells peak after six to 18 months, and most of the Berwyndale South wells have been producing for less than five months.
But none of the wells on the Berwyndale South Gas Field have shown signs of peaking or plateauing. To the contrary, well data has demonstrated an increase in flow rates, QGC said.
QGC believes that the gas production from the individual wells – and more generally from the gas field – can be expected to further increase.
