ESG farms in to SA acreage

Eastern Star Gas Limited has expanded its exploration portfolio through an agreement...

  Eastern Star Gas Limited has expanded its exploration portfolio through an agreement with SAPEX Limited for a two-stage farm-in to coal seam gas exploration acreage in the Arckaringa Basin region, near Coober Pedy in South Australia.Stage 1 of the farm-in involves the drilling of three coreholes, one in each of the PEL 117, 121 and 122 exploration licence areas, for which ESG will earn a 25 percent interest in coal seam gas rights of the exploration licences. ESG will operate the farm-in program and said the company envisages the stage 1 program will be completed in late 2008. Stage 2 of the farm-in will involve the drilling and testing of a five-well production pilot, for which ESG will earn a further 25% interest and operatorship in coal seam gas rights of the exploration licences. Performance of the stage 2 work program will be dependent upon the outcome of the stage 1 program. Eastern Star Gas Managing Director, David Casey said the Arckaringa Basin farm-in represents a strategic expansion of Eastern Star Gas’ exploration portfolio. “The Arckaringa Basin region has significant development potential and gas market opportunities are unfolding rapidly, particularly in association with new or expanding mining activity,” Mr Casey said.” Gas is not presently available to service these requirements.”“While the areas of interest, which cover over 27,000sqkm and approximately one third of the Arckaringa Basin have not previously been explored for coal seam gas, the extent and development of target coals are well understood due to previous coal exploration drilling,” he said. The target coals in the area of interest to ESG are sub-bituminous and lie within the Early Permian Mt Toondina Formation. Typically, five to nine seams are present, with an aggregate thickness of 20 to 35m in the areas to be initially targeted. Individual coal seam thicknesses up to 7.3m have been recorded. “The farm-in work program commitments are fully funded and can be undertaken without compromise to ESG’s primary focus, which continues to be the Narrabri coal seam gas project,” Mr Casey said.