The company has drilled five wells at South Walker and three at Annandale and it plans to start drilling in the Coxendean area in the next few weeks. In each area the drilling is targeting several seams of the Rangal Coal Measures, which overlie the Moranbah Coal Measures.

Drill results from Annandale are currently being tested but results from South Walker, 40 km east of Moranbah, are already available and are promising.

Two thick seams have been intersected – the Leichhardt seam and the Vermont seam.

Drill hole SW002 intersected the Leichhardt seam at a depth of about 200 metres, finding a seam thickness of 6.2m and a gas content of 13.6 cubic metres per tonne of coal. The Vermont seam was intersected at about 250m with a seam thickness of 7.5m and a gas content of 11.5 cubic metres per tonne of coal.

Drill hole SW003 intersected the Leichhardt seam at 186m with a seam thicknesss of 9.3m The Vermont seam was intersected at about 227m with a seam thickness of 7m.

Preliminary gas content testing indicates these seams too have similar gas contents to those in SW002. Permeability testing of these seams will be conducted during November 2004 with initial indications of depth and coal quality suggesting good permeability levels are likely, said CH4 managing director Louis Rozman.

“We are very excited by these excellent results at South Walker,” Rozman said.

“We have not seen results as good as 14 cubic metres per tonne at these shallow depths before. These results confirm our strategy of developing satellite projects that can provide additional gas for delivery to our established facilties at Moranbah.”

CH4 is delivering 10TJ of gas per day to Enertrade, a wholesale energy trader owned by the Queensland Government. Enertrade has entered into a 15 year Gas Sale Agreement with CH4. Enertrade is also responsible for constructing the 391km gas pipeline from Moranbah to Townsville and upgrading the Townsville Power Plant to become a gas-fired facility.