Spud of First Rougemont well
Brisbane, May 17, 2021 AEST (ABN Newswire) - State Gas Limited (
ASX:GAS) has commenced drilling the first well in its new Rolleston-West Gas Project in ATP 2062. Rougemont-1 was spudded at 9:00pm on 14th May 2021. At 6am this morning the well was at 75m.
The Rougemont-1 well is the first of two planned wells being drilled to evaluate the highly prospective Bandanna coals in the eastern arm of the new Rolleston-West permit, which was granted to the Company by the Queensland Government late last year. The Bandanna Formation is well established as a host of commercially viable coal seam gas, producing at the Arcadia Valley (Santos/GLNG) and under development at Mahalo (Comet Ridge/Santos/APLNG) at similar distances to the south-east and north-east of ATP 2062 respectively.
Rougemont-1, with a planned total depth of 800m, is targeting gas-bearing coals between approximately 500m and 780m. Located on the crest of a "plunging nose" in the formation, the coals are expected to host gas content and permeability comparable to the analogue fields.
The Rougemont wells will confirm coal thickness, gas content and the permeability of the coals in this area of ATP 2062. This will be achieved using wireline logs, coal sampling (coring) and specific permeability testing of the coals. The data will provide valuable information as to the potential of the area, to be confirmed through subsequent production testing of the wells. Once the initial testing processes are completed, the wells will be suspended, awaiting subsequent production testing of the wells.
Reid's Dome Gas Project
As previously advised, State Gas is appraising the potential of the Reid's Dome Gas Project (PL231) for development, undertaking production testing of three coal seam gas (CSG) wells in the southern area (Nyanda-4, 7 and 8), and the Serocold-1 well in the central part of the permit.
Production from the Serocold-1 well has been very promising. The well was placed on pump on 7 April, following a workover to clean out and line the well and set the pump some 330m lower than had been possible in the previous test last year. The water level has been lowered to expose just over half of the coals, culminating in production reaching 35,700 cft/day and expected to increase as pumping is optimised. This rate, more than twice the rate achieved in the previous test, indicates the Company has made very substantial progress in "cracking the code" of the coals in this area.
As previously advised the Nyanda-4 well has produced exceptional results, with gas production reaching over 700,000 cft/day as natural fractures were intersected in the well, after which production resumed at the economic rate of around 100,000 cft/day. This production pattern suggests that the free gas in the intersected fractures has been drained. Production at Nyanda-4 has been gradually increasing again, currently at 114,000 cft/day, and we expect that this consistent build-up will confirm the rate at which gas is produced from the natural matrix of the coal.
Production at Nyanda-7 is also slowly increasing, as the rate of water production is reducing.
The higher effective permeability of this well bodes well for future productivity, as natural open fractures provide pathways initially for water and then for gas to be released. Production has built to the current 6,700 cft/day and we expect the productivity of the well to continue to steadily improve.
Gas production at Nyanda-8 is increasing and currently approaching 44,000 cft/day. This well is expected to pass the economic threshold by the end of this financial year.
Combined Development Opportunity in Central Queensland
Executive Chairman Mr Richard Cottee noted that the spud of the Rougemont-1 well was a milestone for the Company. "This is the first well in the new acreage awarded by the Queensland Government to State Gas last year, increasing the Company's potential many-fold.
These core holes are designed to help quantify that increased potential."
"The new Rolleston-West permit covers an area of 1,414km2 adjacent to PL231 in Central Queensland - if all goes well, we have the makings of a major gas development combining the gas from both projects. Knowledge about the potential of Rolleston-West will be vital in informing the development planning for Reid's Dome, enabling the optimum scaling and location of facilities and infrastructure. We will be able to commence at Reid's Dome knowing that Rolleston-West gas will come in, bringing additional cashflow and economies of scale for the benefit of both project areas."
"The synergistic nature of this development coming at the time of a predicted gas shortage, targeted for 2023, will enhance its economics and increase the avenues available for financing such development. In addition, the Company retains significant freedom and optionality for its gas production, as none of its acreage is burdened by any mandated marketing restrictions," Mr Cottee said.
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About State Gas Limited
State Gas Limited (ASX:GAS) (OTCMKTS:STGSF) is a Queensland-based gas exploration and development company with highly prospective gas exploration assets located in the southern Bowen Basin. State Gas Limited's mission is to support east coast energy markets through the efficient identification and development of new high quality gas assets.
It will do this by applying an agile, sustainable but low-cost development approach and opportunistically expanding its portfolio in areas that are well located to gas pipeline infrastructure.
State Gas is 100%-owner of the contiguous Reid's Dome (PL-231) and Rolleston-West (ATP 2062) gas projects, both of which contain CSG and conventional gas. The Projects, together some 1,595km2 , are located south of Rolleston, approximately 50 and 30 kilometres respectively from the Queensland Gas Pipeline and interconnected east coast gas network. State Gas intends to accelerate commercialisation of these assets through the application of an innovative virtual pipeline ("VP") solution which will see the Company transport compressed gas by truck to existing pipeline infrastructure or to an end user.
State Gas also holds a 35% interest in ATP 2068 and ATP 2069 in joint venture with Santos QNT Pty Ltd (65%). These two new areas lie adjacent to or in the near vicinity of State Gas and Santos' existing interests in the region, providing for the potential of an alignment in ownership interests across the region over time and enabling synergies in operations and development.
State Gas is also participating in a carbon capture and sequestration initiative with minerals explorer Rockminsolutions Pty Ltd in respect of EPM 27596 which is located on the western border of ATP 2062. This project is investigating the potential of the unique basalts located in the Buckland Basaltic Sequence (located in EPM 27596) to provide a variety of in-situ and ex-situ carbon capture applications.
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