2008 programme

Within PEL 238, ESG is presently conducting NSW’s largest ever twelve month CSG exploration and appraisal programme. The programme has been designed to build upon the success of work carried out during 2007 and to achieve gas reserves upgrades in an accelerated timeframe. It incorporates the following key activities:

• Up to 20 coreholes will be drilled, the first of which has been drilled at Dewhurst (to the east of Bibblewindi)
• 180 km of seismic will be acquired, and
• additional pilot production projects trialling multi-lateral well designs will be developed

Capital expenditure

A fully funded capital expenditure programme of circa A$70.5 million (ESG $45.8million) is in progress at PEL 238 for the year to 31 December 2008.

Permit detail showing 2008 reserves upgrade programme

Source: ESG

Narrabri CSG Project – Near Term Resource Prediction

Reserves upgrade programme

The pilot production projects to be developed during 2008 will be horizontal multi-lateral in nature, as illustrated below. The multi-lateral wells will be drilled on an under-balanced basis, utilising the semi-artesian nature of target coal seams within PEL 238 to avoid formation damage during drilling.

Each of two lateral wells will intersect a common vertical, pressure-relief well and a second vertical production well. After completion, the pressure-relief well can also be used for dewatering and gas production.

Schematic of lateral pilot production project

Source: ESG

In the future, after perfecting drilling techniques, it is expected that three (or potentially more) lateral wells might be drilled from each location.

Key advantages of the multi-lateral well design, compared to vertical, fracture-stimulated wells as used previously, include:

• The lateral can be drilled roughly perpendicular to the natural fracturing system of the target coals, thereby taking advantage of geological conditions to maximise communication and, hence, gas production potential;
• By maximising gas production (both rate and cumulative) capital cost for full development of PEL 238 will be reduced; and
• Environmental impacts will be minimised since drainage areas per well will be increased

ESG anticipates the productivity of multi-lateral wells will be 5-10 times greater than the productivity of vertical, fracture-stimulated wells.

The first two multi-lateral wells will be drilled at the Bibblewindi 11-C corehole location, south of the existing Bibblewindi production pilot. The Bibblewindi 11-C corehole, drilled during 2007, confirmed the target Bohena coal seam to be around 20 metres thick with exceptional permeability and saturated with gas. The Bibblewindi 11-C corehole free-flowed gas and water to the surface.

The third and fourth multi-lateral pilots will be drilled at Dewhurst, where the first two coreholes of the 2008 reserves upgrade programme have already confirmed the Bohena coal seam is thick (in excess of 15m) and gas saturated.

The multi-lateral programme will be complemented by a corehole programme of up to 20 wells, 180 km of new seismic acquisition and up to 2,000 km of seismic reprocessing. The objective of this programme is to test a range of exploration prospects across the permit and to follow-up on successful wells from this programme to delineate regions that have sufficient potential to satisfy existing MOUs. The 2008 programme will test the CSG potential of both the Bohena and Hoskissons targets at new prospects which include Dewhurst, Yallambee, Turrawan, Coonarah, Kiandool and Blue Hills. Multi-lateral pilots will be strategically located within the delineated areas to enable reserves to be booked during 2009. Following from the early success in Bibblewindi and Dewhurst, seismic will be acquired to assist in locating potential future development locations.