NZ Government-owned Solid and Denver-based RDT have drilled and tested seven deep appraisal wells in the Huntly coal field.

Solid Energy's general manager new energy, Brett Gamble, says encouraging results so far point to the likelihood of a positive final investment decision late this year.

He says the joint venture has been producing from the first four wells only and - following some fracture stimulation - initial water and gas flows have been encouraging, with steady increases in gas production over the past six months.

Current gas flows, if converted to the equivalent electricity, would power about 1000 homes, he adds.

The linked wells have been equipped as full-scale production wells, with project economics looking favourable if produced flows match those modelled.

They are also close to the main Taranaki-Auckland gas pipelines and to Genesis Energy's dual-fuelled (coal and gas) Huntly power station.

Gamble adds that given a positive decision for the development of the first four wells, the timing for bringing the additional three wells into production will be linked into the development of market opportunities.

Solid Energy and RDT are the most advanced players in New Zealand's fledgling CSM coal seam gas (CSG) industry and have been at work in the Waikato for more than a year.

Solid Energy chief executive Don Elder has said the Waikato CSM resource could prove to be as large as 300 petajoules - comparable to the offshore Taranaki Kupe gas field, with its estimated recoverable reserves of 254PJ of gas, along with 14.7 million barrels of condensate and 1.1 million tonnes of LPG.

RDT managing director Steve Stepanek believes the Solid Energy-RDT project could make a significant contribution to New Zealand's gas supplies, of 150-180PJ per annum, if developed.