Southland coal seam gas pilot on track

Wednesday 19th January 2011

Coal seam gas miner L&M Energy has resumed drilling at its Southland pilot well after work stopped for Christmas, and hopes to finish this stage of the project by the end of February.

The company has estimated the size of the reserve at Ohai and is now proving the coal's ability to produce methane gas before moving on to a commercial development.

A vertical production well will be drilled to 750m, intersecting the Morley 2 coal seam. Two lateral wells will then be drilled to intersect the vertical well, passing through about 700m of coal from which gas will be extracted.

The 274 petajoules of gas at Ohai are classed as 3P, which have a 10% certainty of being produced. The project aims to certify the reserves as the country's first 2P coal seam gas, with a 50% certainty of being produced.

Ohai's reserve was a significant size, comparable with gas fields in Taranaki, L&M managing director Kent Anson said.

Further drilling, particularly in the western part of Ohai, was likely to uncover more.

The company hoped to finish drilling the pilot well by the end of February, followed by trial production to see if it was economically feasible. A decision on commercial development was expected later in the year, he said.

Commercial development would take 12 to 18 months.

The company was also considering a number of options for using the gas if it went into production.

"We'd always like to do things quicker, but it's proceeding quite well at the moment," Anson said.

The company was fully funded after a capital raising last year.

Dual-listed L&M holds stakes in several exploration permits for coal seam gas and conventional gas and oil.

NZPA

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