"This gas and water is being produced unassisted. No pump has yet been fitted and at present the water is being produced from the well by a combination of reservoir pressure and natural gas-lift resulting from the release of gas from the coal," QGC said.

"On the basis of the initial performance of this well, the Berwyndale South pilot is forecast to produce gas at high rates as the coals continue to dewater."

Berwyndale South-3 is one of five wells drilled by QGC as part of the Berwyndale South pilot development in its wholly-owned ATP 632P and is the first of these to be completed for production.

QGC said the Berwyndale South pilot is located close to the Roma-Brisbane gas pipeline in an area of structurally enhanced permeability. The company estimates that the single block of ATP 632P in which the pilot is located contains a resource of 1,100 bcf (approximately 990 petajoules) of gas-in-place.

Other nearby exploration and appraisal wells have also produced gas at high rates, notably the Argyle wells (QGC: 50%) which flowed gas at up to 1 million cubic feet per day.

"We are delighted with this unexpected result. The immediate gas production confirms that the thick coal encountered in the well is gas saturated and the high water flow rates confirm excellent permeability within the coals," said QGC managing director, Rob Crook.

"These are the prerequisites for successful CBM production and the performance of this well further reinforces that the Berwyndale South project is an outstanding candidate for an early CBM development. We are very confident that this project will be brought into commercial development during 2003."