Eastern Star launches NSW’s biggest ever CSG appraisal

Eastern Star Gas Ltd together with its joint venture partner, Gastar Exploration...

  Eastern Star Gas Ltd together with its joint venture partner, Gastar Exploration Ltd has commenced its 2008 coal seam gas reserves appraisal programme.Mr. David Casey, Managing Director of ESG, said “The fully-funded PEL 238 programme is the largest CSG focused reserves appraisal programme ever conducted within NSW. The programme has been specifically designed to accelerate major gas reserves upgrades to meet our 2P reserves target for 2009 of 600PJs and potential sales commitments of over 1000PJs under Memoranda of Understanding (MOU) with Macquarie Generation and Babcock & Brown”The sheer size of those MOUs, which together represent a 50% increase in NSW’s gas market, underpins a reserves appraisal programme of this magnitude,” Mr Casey said. As part of the 2008 programme up to 20 coreholes will be drilled, commencing with Dewhurst 2 which was spudded on 12 March and is located to the east of the Bibblewindi pilot. Mr Casey advised that “the corehole programme is designed to both expand upon current reserves in the Bibblewindi and Bohena areas as well as to evaluate the CSG potential across additional portions of PEL238, which has to date only been lightly explored.” He added that “The initial focus on the Dewhurst area builds upon the success of the 2007 corehole programme, which identified a 15 metre thick, high gas content and high permeability coal seam to the south of Bibblewindi. Using seismic data we have identified, and plan to confirm through the core drilling, that this highly prospective coal seam extends through the Dewhurst area.” In addition to the coreholes four multi-lateral production pilots are proposed for 2008, with drilling of the first pilot scheduled to commence in May. The multi-lateral configuration involves two or more lateral wells being drilled from a single location, thereby reducing the overall requirement for (and cost of) vertical drilling. Each lateral will intersect vertical wells through which dewatering and gas production will take place.Mr Casey commented that “the in-seam, or horizontal, section of the lateral wells will have a notional length of around 1 km, and will be drilled perpendicular to the fracture system within the target coal seams to maximise connectivity resulting in many times greater flow rates than can be achieved from vertical, fracture-stimulated wells.” “Like the corehole programme, the pilot production programme builds upon the success of work carried out during 2007, particularly identification of the location for the first two pilots,” Mr Casey said. “It is important to note that the technologies to be employed in drilling and completing the proposed multi-lateral wells are proven, and the wells will be drilled by McDermott Drilling and AJ Lucas who have industry-leading expertise in lateral and surface to in-seam wells. The state-of-the-art Schramm rig, which has been contracted by ESG for a minimum three years commencing mid 2008, was specifically selected as it has the capacity to drill both the vertical and multi-laterals.” To maximise success the laterals will be drilled in areas with seismic data and in many instances along actual seismic lines. Furthermore under-balanced drilling techniques will minimise damage that could otherwise be caused during the drilling process. ESG will also undertake a 150 km seismic programme in PEL238 around mid-year with data from this programme utilised in both the finalisation of corehole locations to be drilled during the latter part of 2008, and design of future production pilots. The programme also includes surface infrastructure to transport and process the produced gas and water from the existing pilots and the new laterals. Water management will include an upgraded gathering system and expanded reverse osmosis plant. Produced gas will be gathered and compressed at Bibblewindi and transported to the Wilga Park Power Station via a new 37 km pipeline. The Power Station will be expanded as required to utilise increasing gas volumes from the various pilots as they dewater.